Kay v Murray Irrigation Limited - [2009] NSWSC 1411

No judgment structure available for this case.

CITATION: Kay v Murray Irrigation Limited [2009] NSWSC 1411

HEARING DATE(S): 6-9 October 2009

JUDGMENT DATE :
11 December 2009

JUDGMENT OF: Fullerton J

DECISION: 1. Judgment in favour of the plaintiff in the amount of $359,815.
2. Costs are reserved.
3. Liberty to restore on three days notice.

CATCHWORDS: TORTS - negligence - personal injury - defective concrete footboard - ankle injury - pre-existing injury - rice cultivation - TRADE AND COMMERCE - Trade Practices Act 1974 (Cth) - DAMAGES - whether damages assessed at common law or under the Civil Liability Act

LEGISLATION CITED: Civil Liability Act 2002
Civil Procedure Act 2005
Trade Practices Act 1974 (Cth)
Trade Practices Amendment (Personal Injuries and Death) Act (No 2) 2004

CASES CITED: Husher v Husher [1999] HCA 47; 197 CLR 138
Leichhardt Municipal Council v Montgomery [2005] NSWCA 432
Macarthur Districts Motor Cycle Sportsmen Inc v Ardizzone [2004] NSWCA 145
Malec v J C Hutton Pty Ltd (1990) 169 CLR 638 at 643
Penrith City Council v Parks [2004] NSWCA 201
State of New South Wales v Moss [2000] NSWCA 133; 54 NSWLR 536
Zreika v State of NSW [2009] NSWCA 99

TEXTS CITED: David Ipp, Review of the Law of Negligence: Final Report, (2002) Commonwealth of Australia

PARTIES: Robert Francis Kay (Plaintiff)
Murray Irrigation Limited (Defendant)

FILE NUMBER(S): SC 2008/20388

COUNSEL: I Roberts SC/J Sainty (Plaintiff)
R Cavanagh (Defendant)

SOLICITORS: Glowreys The Riverina Law Firm (Plaintiff)
Curwoods Lawyers (Defendant)

- 1 -

IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION

FULLERTON J

11 DECEMBER 2009

2008/20388 ROBERT FRANCIS KAY v MURRAY

IRRIGATION LIMITED

JUDGMENT

The Pleadings

1 By statement of claim dated 17 August 2007 the plaintiff, Robert Francis Kay, seeks an award of damages to compensate him for an injury he sustained to his left ankle on his farming property at Deniliquin in September 2004 when a defective concrete footboard collapsed causing him to fall approximately 1.2 metres onto the base of a concrete irrigation channel.

2 The plaintiff’s claim for damages is brought under Part VA of the Trade Practices Act 1974 (Cth) or, in the alternative, in negligence.

3 The proceedings were originally commenced in the District Court. After the expert evidence was assembled the plaintiff applied to have the proceedings removed to this Court. Although the defendant did not consent to extended jurisdiction, I was not asked to exercise the power under s 144(7) of the Civil Procedure Act 2005 when considering the question of costs.

4 The concrete footboard formed part of a structure known as an irrigation check designed to regulate the flow of water to land laid out for irrigation farming. The footboard (and the irrigation check) was manufactured and supplied by the defendant, Murray Irrigation Limited (“MIL”), in 1998 to the previous owners of the property through one of its subsidiary companies.

5 Without confining its admission to either of the alternate causes of action pleaded in the statement of claim, on 27 February 2009 the defendant admitted liability for the manufacture and supply of the defective footboard. Accordingly, the proceedings were for the purposes of the assessment of damages only.

6 In opening the plaintiff’s case Mr Roberts SC submitted that the plaintiff’s primary cause of action was brought pursuant to s 75AD of the Trade Practices Act which provides that:

(a) a corporation, in trade or commerce, supplies goods manufactured by it; and

7 He also submitted that on a proper construction of the transitional provisions of the Trade Practices Amendment (Personal Injuries and Death) Act (No 2) 2004 (“the Amending Act”), the limitations on an award of damages now incorporated in Part VIB of the Trade Practices Act (limitations that reflect in large part the operating provisions of the Civil Liability Act 2002) do not apply to the plaintiff’s claim and his damages should be assessed in accordance with common law principles. In the event that I am persuaded that the amendments to the Trade Practices Act do apply then, for reasons which were not entirely clear, Mr Roberts invited me to assess the plaintiff’s damages under the Civil Liability Act referable to the alternate cause of action in negligence.

8 Mr Cavanagh of counsel submitted that the plaintiff’s construction of the Amending Act was untenable and, further, that irrespective of whether the defendant’s admission is treated as an acknowledgement of liability in negligence or under the Trade Practices Act, for all practical purposes the statutory regimes that operate to restrict damages provided for in both the Civil Liability Act and under Part VIB of the Trade Practices Act govern the assessment of damages in this case. In the event that I am satisfied that the amendments to the Trade Practices Act apply to the plaintiff’s claim, he also invited me to assess the plaintiff’s damages in negligence under the Civil Liability Act.

Are damages assessed at common law or under the Civil Liability Act?

9 Section 11 of the Amending Act provides that the amendments apply to contraventions of Part IVA, of Division 1A or 2A of Part V or of Part VA that occur after the commencement date. The commencement date was 13 July 2004. Although the plaintiff sustained the injury after that date, Mr Roberts submitted that a contravention of s 75AD, under Part VA of the Act, was complete upon delivery of the defective footboard in 1998, well prior to the commencement date. In his submission it is not necessary that an individual is injured because of the defective goods before there is a contravention of s 75AD.

10 Mr Cavanagh invited me to read contraventions of nominated parts of the Trade Practices Act for the purposes of s 11 of the Amending Act as interchangeable with a breach of those parts giving rise to an actionable wrong. On this construction it would be necessary for each of the elements of the provision under consideration to be satisfied before the provisions of the Amending Act apply.

11 Mr Roberts accepted that an action for damages is not sustainable under s 75AD without proof of injury, but emphasised that s 11 of the Amending Act does not refer to “a breach” of nominated parts of the Trade Practices Act, or the time a cause of action arises under those Parts, instead it specifically utilises the concept of the time when the relevant Part of the Act was contravened. This, it was submitted, is in contrast to other sections of the Amending Act which are concerned with the imposition of a new regime for fixing a three year limitation period beyond which damages are not recoverable for proceedings where death or injury results, including actions brought under s 75AD. For the purposes of fixing the limitation period, the date of discoverability is utilised. The date of discovery is defined as the first date when the plaintiff in a proceeding knows or ought to have known each of the following:

“(a) that the death or personal injury has occurred,
(b) that the death or personal injury was attributable to a contravention of this Act and,
(c) that in the case of a personal injury – the injury was significant enough to justify bringing an action.” (emphasis added)

12 Clearly enough the Amending Act provides that for the purposes of fixing the limitation period in personal injury actions under the Trade Practices Act knowledge that an injury has occurred is distinguished from knowledge that the injury has resulted from a contravention of the Act. That does not, however, compel the conclusion that for the purposes of determining whether the Amending Act applies to an action for personal injury, the fact of injury, or the time it was sustained, is irrelevant to whether a particular section has been contravened. In my view, were that the case it would be productive of the absurd result that the Commonwealth’s stated purpose in introducing reforms in relation to the quantum of damages and the limitations of actions in personal injury actions, namely to bring the Trade Practices Act in line with reforms to civil liability statutes in New South Wales and other State jurisdictions consequent upon the recommendations of the Ipp Report, would be frustrated by limiting the operation of the Amending Act, in its entirety, to those cases where injury has resulted from defective goods that were manufactured after the commencement date but not to those cases where death or injury occurs after that date but where the goods were manufactured and supplied days, months or years earlier (as in this case).

13 Despite the fact that the defective footboard was manufactured and supplied in 1988, I am of the view that s 75AD was contravened after the commencement date because the plaintiff was injured after that date and accordingly that the amendments now incorporated in Part VIB of the Trade Practices Act apply.

The farming enterprise at Caringa and the role of Arkae Pty Ltd

14 The plaintiff’s property at Deniliquin is known as “Caringa”. It is within a region generally known as the Riverina. It comprises 1,367 acres (or 554 hectares). It currently supports large scale dry farming and a sheep breeding operation. It is also laid out for large scale irrigation farming. It was acquired by Arkae Pty Ltd (“Arkae”) in August 2002. Arkae is a trustee company for the Gulpa Creek Trust (“the Trust”) and is the corporate vehicle through which the farming business at Caringa is operated by the plaintiff. The plaintiff and his partner, Ms Stoneham, hold the two issued shares in Arkae and are the only two beneficiaries under the Trust. The plaintiff is, however, the sole person appointed under the Trust Deed to determine the identity of the Trustee.

15 The plaintiff submitted that his status as appointer under the Trust Deed, coupled with the fact that he was, and is, the primary person generating the farming income received by Arkae, with Ms Stoneham contributing little independent of the provision of basic bookkeeping services and general assistance in the handling of livestock, distinguishes the arrangement from the joint venture the defendant submitted is the appropriate way to describe their business arrangements. The plaintiff submitted that neither Ms Stoneham’s legal status as a shareholder of Arkae and beneficiary under the Trust, nor the distribution of part of the net income of the Trust to her as reflected in the financial accounts, has any material bearing on how the arrangement should be classified where the primary reason the farming business operates through Arkae is for taxation purposes. The arrangement was said to be analogous to a partnership determinable at will since it is the plaintiff who exercises effective control over Arkae by directing the way its income is derived and, under advice from his accountant, how the income is disposed of.

16 Analysed in this way, Mr Roberts submitted the plaintiff’s past and future financial loss resulting from the diminution to his earning capacity should not be limited by reference to his 50 per cent share of the net profit of the company. Mr Cavanagh submitted that the farming enterprise at Caringa is a venture in which the plaintiff and his partner jointly share both costs and benefits, and that the loss occasioned by the impairment to the plaintiff’s earning capacity should be limited by reference to his share of the loss suffered by the joint venture.

17 I am not persuaded that the defendant’s analysis should be adopted for the purposes of this case. As was made clear in Husher v Husher [1999] HCA 47; 197 CLR 138 at [23], the task of deciding what value is to be ascribed to the loss of future earning capacity of an injured plaintiff is undertaken on a case by case basis and not by seeking to classify cases concerning “sole traders” or “partnerships” or “wage earners” or “trading trusts” and then attempting to apply some rule of general application to cases falling within the designated classification. Rather, the inquiry focuses on what the plaintiff would (as opposed to could) have had under his or her disposal by the exercise of earning capacity if there had been no injury. To that end “control” and “disposal” are the concepts that are utilised since what is lost are the financial rewards the plaintiff would have been able to direct to whatever purpose or destination he or she chose. The fact that the plaintiff in Husher would probably have continued to organise his financial affairs in accordance with the partnership with his wife – a partnership very much like the plaintiff’s in this case in the sense that effectively all of the income of the partnership came from the plaintiff’s efforts and the exploitation of his earning capacity with an income splitting arrangement adopted for taxation purposes - was not definitive. What was definitive was that it was his choice as to whether those arrangements were maintained. As the Court observed at [20] –[21]:

“…If he chose to make some other arrangement concerning the fruits of his labour, effect would be given to that choice, whatever view his wife may have held. What the appellant would have had under his control and at his disposal but for the accident was, therefore, the whole of the fruits of his skill and labour…

…Nevertheless, his capacity to terminate the partnership at will, and to bring an end to, or vary, the arrangements made with his wife concerning the manner in which income generated by his activities was derived, resulted in an effective control which is of critical significance in measuring his earning capacity and his financial loss.”

18 Although the plaintiff gave evidence that it is his intention in the future to split the net income of the Trust with Ms Stoneham as he claimed to have done in the past, it is equally clear from Ms Stoneham’s evidence that she has little to no appreciation of how the financial affairs of Arkae are structured, and that all decisions concerning the business are made by the plaintiff while her domain is the house and garden. She also gave evidence that the plaintiff gives her money for household expenses, and that she also has the use of a company credit card, but she did not recall directly receiving any proceeds from the Trust at the end of the accounting period. In light of this evidence, and the plaintiff’s effective control of Arkae as appointer under the Trust Deed, I do not propose to limit the plaintiff’s damages in the way contended for by the defendant.

19 It will, however, be necessary to return to consider the significance of the role of Arkae in the assessment of damages in order to deal with the defendant’s further submission that irrespective of the way Ms Stoneham’s role in the company is classified, and irrespective of the particular financial arrangements between her and the plaintiff, the corporate arrangements that have been adopted by the plaintiff in the management of his financial affairs remains one of a number of reasons why damages for future economic loss should be awarded on the basis of a buffer and not calculated by reference to the plaintiff’s schedule of damages. At this stage it is sufficient to note that together with holding title to Caringa and being the entity through which it is farmed, Arkae also owns commercial real estate in Victoria from which the plaintiff operated a profitable business known as Northern 4 Wheel Drive from 1984 until 2002 when he sold the business enabling Caringa and other farming capital to be purchased. The property in Victoria continues to generate significant rental income which is received by Arkae on an annual basis. Without the injection of those funds over successive financial years from 2002, it is clear from the financial records tendered in the proceedings that the company would not have been able to meet the expenses involved in producing the farming income.

The plaintiff acquires Caringa and commences farming as a business

20 In January 2002 the plaintiff was involved in a motorcycle accident fracturing the medial femoral condyle and tearing the anterior cruciate ligament in his right knee. The evidence established that the plaintiff had a protracted recovery from the knee injury which impacted adversely on his ability to work in the four-wheel drive business. It was not suggested by the defendant that this had any direct bearing on the plaintiff’s decision to sell the business later that year. The injury to the plaintiff’s right knee is, however, a factor the defendant relies upon as limiting the plaintiff’s claim for future economic loss, it being the defendant’s case that the injury would have progressively compromised his capacity for the hard physical work demanded of dry and irrigation farming at Caringa to the extent that he would likely have needed to employ replacement labour before age 65 irrespective of the injury to his left ankle. In the defendant’s submission this is a further reason the plaintiff’s damages for future economic loss should be awarded on the basis of a buffer. I will return to consider that submission later in this judgment.

21 The defendant accepted that the plaintiff’s primary motivation in selling the four-wheel drive business in 2002 was a career change with both the plaintiff and Ms Stoneham having decided to permanently abandon their city based lifestyle and to live in a farming community. The funds generated from the sale of the business enabled Arkae to acquire Caringa; the extensive plant and equipment the plaintiff considered necessary to enable the property to be exploited for its potential profitability under rice and wheat cultivation and, on the plaintiff’s case, to enable him to undertake contracting work on other properties as an additional source of income. Most importantly, given that rice is an irrigation crop, the funds form the sale of the business also financed the acquisition of a total of 1,234 megalitres of “C Class” Murray Irrigation water entitlements. The Murray irrigation system operates so that a farmer with a C Class entitlement is allocated water according to his or her entitlement but only after other priority users have had their water needs met. Assuming availability, water is allocated on a monthly basis through the irrigation season from July through to May as a percentage of a farmer’s entitlement and is delivered by the Murray irrigation system to those entitled to receive it.

22 Between 2003 and 2006 the water allocated to the plaintiff varied considerably. In 2002 he received 100 per cent of his entitlement whereas in the following year he only received 10 per cent. Between 2004 and 2006 he received an average of about 50 per cent whereas in the years 2007 and 2008 he received no water at all. When the plaintiff might reasonably expect to next receive an allocation of water sufficient for an irrigation crop of rice (assuming that it is a question that permits of an answer on the available evidence) has a direct bearing on quantum of his claim for damages since, for various reasons which I will return to consider, the plaintiff’s future economic loss, by far the largest component of his claim, does not crystallise until that time.

23 There was an existing irrigation system at Caringa when it was acquired by Arkae but it required considerable remodelling before rice could be profitably cultivated. The plaintiff also identified the need to introduce a fresh approach to the management and retention of the average 400mm of annual rainfall to ensure that other grain crops could be successfully cultivated and livestock watered. In addition, because the soil over much of the property was degraded after many years of cattle farming, very substantial rehabilitation work was needed to render the soil suitable for irrigation rice farming on a large scale; for the production of a viable winter crop of wheat and other grain and to maximise the capacity of the soil to sustain livestock. The rehabilitation of the soil was part of the wholesale restructuring of the mixed farming enterprise.

24 At the time that Caringa was acquired in 2002 the plaintiff was 47 years of age and Ms Stoneham 46 years of age. Although the plaintiff had some exposure to rural life prior to purchasing Caringa through friends in country Victoria and a small property he purchased as a hobby farm at Echuca some years earlier, and although Ms Stoneham commenced, without completing, a Diploma in Agricultural Science after secondary school, they had no experience working the land as a business. Despite the fact that the plaintiff (and Ms Stoneham) were, in a practical strict sense, novices to large scale dry and irrigation farming and the farming of livestock, the defendant did not challenge the plaintiff’s commitment to developing Caringa into a viable mixed farming operation, or his success, to date, in redeveloping the land to optimise the prospects of sustainable and potentially profitable farming on a commercial scale. The defendant also acknowledged that the plaintiff’s determination to succeed as a farmer prior to the injury to his ankle in 2004 was underpinned by considerable research and sound and informed decision making, and that his determination to continue to farm Caringa, albeit on a reduced scale because of his injury, also sources from his capacity for hard work and his determination to succeed despite his disabilities.

25 The defendant did, however, advance the submission that the plaintiff’s inexperience as a rice farmer is relevant to the calculation of his past economic loss given that a primary component of the claim is attributable to his inability to exploit the acreage he had already prepared for rice cultivation in the 2004/2005 rice season because of his injury in September of that year. The defendant also submitted that without doubting the genuineness of the plaintiff’s ambitions, or the sincerity of his hopes and desires to farm Caringa as a profitable enterprise (including his expectation that he would secure contracting work to supplement the farming income on an annual basis), when measured against the weight of the empirical evidence these considerations are irrelevant to the enquiry into what would have been the likely profitability of the enterprise for the purposes of assessing damages.

The plaintiff’s injury

26 As a result of the fall through the defective footboard onto the concrete irrigation channel the plaintiff sustained complex fractures of the left ankle, including a fracture of the medial malleolus, comminution and compression of the surface of the tibia and displacement of the lateral malleolus. Despite extreme pain the plaintiff managed to drag himself out of the irrigation channel to a nearby tractor and back to the house. He was transported initially to the hospital at Deniliquin and then some distance to Bendigo Hospital by ambulance. Three days later he underwent surgery to fix the fractures and to realign the ankle joint. He was discharged after one week with his leg and foot in plaster. He was effectively bed ridden for eight weeks, unable to weight bear on his left ankle because of the complete disruption of the structure of the ankle joint.

27 I accept that the pain the plaintiff suffered at the time of injury and throughout the period of convalescence was considerable and that he has suffered pain and discomfort to varying degrees on a daily basis since then. He was originally prescribed Oxycontin for pain relief but became concerned at the effect of the drug on his mood and progressively weaned himself from reliance on it for pain relief. He now only uses over-the-counter medication. Eight weeks after the initial surgery part of the internal structure fixing the fractures was removed after which his ankle was permanently fixed with two screws on the medial malleolus and a plate on the fibula. He was required to wear a protective boot and to utilise crutches for eight weeks after this procedure. He was able to weight bear on his ankle by increments and was free of all walking aids by January 2005. He has the permanent need for orthopaedic footwear as he is unable to walk with his heel on the ground, and even with orthopaedic footwear, to the extent that he needs to weight bear on his left leg, he walks on the ball of his foot. From March or April 2005 he resumed some farm work. He purchased a motorised mustering device which he could drive without using his left ankle at all and endeavoured, albeit with only moderate success, to modify the tractor to avoid using his left ankle.

The extent of the plaintiff’s disability and his claim for domestic care

28 The defendant did not put in issue the severity of the plaintiff’s injury or the fact that he is left with permanent displacement of the architecture of the left ankle joint and permanent damage to the joint surface of the ankle, and did not seek to minimise the range of disabilities impairing the plaintiff’s capacity to work on Caringa, particularly the arduous manual work involved in rice cultivation. The defendant did not challenge the plaintiff’s evidence of the daily pain and discomfort he is forced to endure or the fact that he is prone to accidentally falling when walking on uneven ground. It was also accepted that the injury severely limits the plaintiff’s pursuit of previously enjoyed recreational activities including bush walking, fishing and camping. I note that prior to the accident the plaintiff was a keen motorcycle enthusiast. He sold a motorbike he owned at the time of the injury but has since purchased another motorbike (a BMW 1200) which he has modified slightly to allow for the changing of gears without over use of the left ankle. He has undertaken some long rides since the injury, covering 500 kilometres a day with regular breaks over two or three days. This is said to be consistent with his compromised ability to work the tractor on Caringa in that prior to the accident he could work for up to 18 hours at a stretch whereas as a result of the injury he is forced to limit his tractor work to 5 hours, or thereabouts, because of swelling in the ankle joint and the associated pain. His other disabilities include the following:

29 Within 14 months of the ankle injury degenerative changes were developing in the plaintiff’s ankle joint. In his report of 9 August 2006, Dr Isbister, an expert orthopaedic surgeon called by the plaintiff, expressed the view that the damage to the joint surface of the plaintiff’s ankle has caused an osteoarthritic change which is likely to be progressive and associated with increasing pain and stiffness. Although in Dr Isbister’s view the ankle pain may be able to be treated surgically with arthrodesis, that procedure will not address the plaintiff’s underlying disability which is permanent. The plaintiff gave evidence that he is reluctant to undergo fusion of his ankle at this time as this will deprive him of the option of an ankle replacement should the medical technology advance to the stage where this is an option in the future. He gave evidence that he would contemplate fusion of the ankle only on medical advice. In the result, while the claim for future surgery is pressed, it is accepted by Mr Roberts that it is uncertain when, and if, the surgery will be undertaken.

30 Future out of pockets are not in significant dispute. The issue is whether I should allow a claim for remedial massage at a weekly rate or some other interval. The evidence did not support the need for massage or other treatment on a weekly basis. I propose to allow for remedial treatment on a fortnightly basis. There is also an issue as to whether the plaintiff’s claim for gratuitous attendant care is made out on the evidence. Section 15 of the Civil Liability Act provides that no damages be awarded for gratuitous attendant care unless the services are provided for at least six hours per week for a period of at least six consecutive months. Accordingly, in order for the plaintiff to recover damages under this head he needed to establish that for six consecutive months from 17 September 2004 he was receiving domestic or nursing services from Ms Stoneham and/or services to alleviate the consequences of his injury for at least six hours per week.

31 Ms Stoneham’s evidence was to the effect that she provided attendant care services for up to 20 hours per week in the intense period of months of convalescence up to the end of January 2005 when the plaintiff’s boot was removed and his mobility improved, assistance with showering and other aspects of personal hygiene, massage, and attending to all shopping and food preparation. She also gave evidence that the need for these services progressively reduced such that by June 2005 she was providing assistance for about five hours per week. On the basis of this evidence I am satisfied the threshold test in s 15 has been satisfied but I am not satisfied that the plaintiff has made out a claim for future attendant care. Ms Stoneham’s evidence was to the effect that, aside from the need to provide some assistance to the plaintiff getting in and out of the shower, he is capable of attending to his own personal needs and that to the extent that she is doing more cooking than was the case prior to the plaintiff being injured, she was of the view that the only thing holding him back from barbecuing the evening meal was his mental attitude.

32 From the time that Caringa was acquired in 2002 until the injury in September 2004 the plaintiff successfully cultivated secondary crops of oats, canola and barley and commenced a sheep breeding operation. By the date of the injury he had 800 ewes and 700 lambs. After the considerable work required to prepare irrigation bays for the cultivation of rice, after Caringa was purchased he sowed his first crop on Caringa in 2003 on a share farming operation with a neighbouring farmer. From the 70 acres (or 28 hectares) of rice sown he produced a yield of 229 tonnes of rice. This was despite the fact that the plaintiff received a reduced water allocation that year and had to purchase temporary water, and despite the fact that one of the six irrigation bays failed to produce at all due to his overzealous cultivation of the soil in the preparatory phase. He gave evidence that he addressed that problem in preparation for sowing in the 2004/2005 season by readjusting the soil composition in all irrigation bays he had prepared for planting his second rice crop of 150 acres (or 56 hectares) which was to occur within weeks of the injury. He was unable to sow the crop due to his injury and sold his water entitlement. He also sold his flock of ewes and lambs within months of his injury as he was unable to engage safely and effectively with the physical work involved in the breeding program and Ms Stoneham was unable to assume the responsibility alone.

Damages for non-economic loss

33 The plaintiff submitted that he was entitled to an award of damages on the basis that the severity of his non-economic loss, as defined in s 3 of the Civil Liability Act, approximated 40 per cent of a most extreme case of its kind, as that concept is utilised in s 16(3) the Act. The defendant submitted that the severity of his loss approximated something in the order of 30 per cent of the worst case.

34 I do not minimise in any way how devastating the injury has been for someone with the plaintiff’s work ethic, made worse, in one sense, because at the time of the injury he had only recently embarked upon a new phase of his mid life with the resources and the demonstrated capacity and resolve to make a success of his new endeavours. I also accept, without qualification, his evidence concerning the impact of the injury on all aspects of his daily life on the farm and take into account Ms Stoneham’s insights into the impact of the injury on the plaintiff’s mood and outlook, and the consequential impact upon their relationship, as he has struggled to deal with the reality of his permanent impairment.

35 I am not, however, persuaded that the severity of his non-economic loss justifies an assessment of more that 35 per cent of a most extreme case of its kind. In coming to that view, I am mindful that the plaintiff perseveres with his daily routine in spite of pain and discomfort, and that his condition is likely to worsen over time. Against that consideration the plaintiff has reasonable mobility, albeit that he relies on various vehicles (some of which have been modified by his ingenuity) to get him around the farm and is able to pursue his passion for long distance motorcycle riding.

The claim for past economic loss

36 The parties disagreed about the quantum of plaintiff’s past economic loss. However, after the commendable approach of both parties to compromising the extent of their disagreement in closing submissions, this was limited to the loss attributable to the fact that the plaintiff was unable to cultivate rice in the 2004/2005 season, and a claim for the loss of income he would otherwise have generated from contracting work for the five years since the injury. Despite some persisting disagreement between the experts the loss that resulted from a reduction in the plaintiff’s earning capacity in the dry farming activities of wheat cultivation and sheep on Caringa in the 2004/2005 season was ultimately agreed at $20,000.

37 Apart from the issue of the loss of contracting income going forward, no loss from a reduction in the plaintiff’s earning capacity is claimed after the 2004/2005 season. This is due to a conjunction of two factors. The first the overlay of drought conditions which have adversely affected farming across the region, and the second because the resumption of farming operations from about June 2005 has returned gross income which, on average, is not markedly less than in the pre-injury financial years of 2002 and 2003. In the absence of water from the irrigation system, the dry farming operations at Caringa since 2005 have been entirely dependent on rainfall (or the acquisition of temporary water) which, while well short of even average annual rainfall, has been sufficient to support the cultivation of wheat and lucerne and the resumption of the trade in livestock.

38 Because of the progressively worsening drought conditions from 2002 (with the last water allocation to Caringa being in 2006 with no water allocated at all in the years 2007 and 2008), apart from the 2004/2005 season, it is the lack of water and not the plaintiff’s injury that is the reason why rice has not been cultivated on Caringa.

39 The plaintiff’s claim for past loss associated with the 2004/2005 rice crop was based on his evidence and the evidence of Mr Booth, an expert agronomist. The defendant’s experts also gave evidence bearing on the plaintiff’s claim. After the service of comprehensive reports about many matters that did not fall to be resolved in the proceedings because of the way the plaintiff ultimately framed his claim for damages, the experts furnished a joint report where some components of likely income generated from a rice crop and the expenses involved in production of the crop were agreed. However, even after the experts gave their evidence concurrently, marked fault lines of disagreement remained about both this aspect of the plaintiff’s claim for past loss and the claim for the loss of contracting income. In addition, the quantum of the plaintiff’s future economic loss and the appropriate way to approach an assessment of that loss with the uncertainties and complexities involved in that assessment, also remained the subject of significant disagreement in closing submissions. This was in part because of the differing opinions of the experts about material aspects of the plaintiff’s claim for replacement labour.

(a) The loss associated with the plaintiff’s inability to cultivate rice in 2004/2005 due to the injury

40 The plaintiff’s claim for the net financial loss resulting from the fact that no rice was cultivated in the 2004/2005 growing season is $25,235. It is summarised as follows:

Estimated income
*Source*		*Estimated yield (tonnes per hectare)*		*Estimated price per tonne*		*Total*	*Defendant’s position*
Rice		7		$284.13		$111,379	Disagreed
Rice stubble		8		$35		$15,680	Disagreed
Soil moisture		N/A		$350		$19,600	Not taken into account
Total estimated income						$146,659	Disagreed
Estimated outgoings
*Type of outgoing*	*Cost per unit*		*Estimated units*		*Total*			*Defendant’s position*
Expenses	$1050/ha		56 ha		$58,800			Disagreed
Temporary water	$86/ML		518 ML		$44,548			Agreed
Sale of water	N/A		N/A		$18,076			Agreed
Total estimated outgoings					$121,424			Partial agreement.
Total estimated loss					$25,235			Disagreed

41 The defendant submitted that on a proper analysis of the plaintiff’s evidence, including, in particular, a critical appraisal of Mr Booth’s evidence, no loss was sustained because the likely expense involved in producing the rice crop would have exceeded the income likely to have been generated by at least a margin of 10 per cent.

Estimated income
*Source*		*Estimated yield (tonnes per hectare)*		*Estimated price per tonne*		*Total*	*Plaintiff’s position*
Rice		6.2		$284.13		$98,649	Disagreed
Rice stubble (McDougall)		8		$20		$8,960	Disagreed
Soil moisture		Not calculated		-		-	-
Total estimated income						$107,609	Disagreed
Estimated outgoings
*Type of outgoing*	*Cost per unit*		*Estimated units*		*Total*			*Plaintiff’s position*
Expenses	$1165/ha		56 ha		$65,240			Disagreed
Temporary water	$86/ML		518 ML		$44,548			Agreed
Sale of water	Not calculated		-		-			-
Total estimated outgoings					$109,788			Disagreed
Total estimated loss					No loss			Disagreed

42 In the plaintiff’s schedule of damages Mr Booth’s calculations were not adopted as a wholesale approach to calculating loss - Mr Roberts adopting a compromise between the positions advocated by the experts on both yield per hectare, the price of rice stubble and the average costs of producing a rice crop on a per hectare basis. I would still need to be persuaded, however, that the likely yield generated from the 56 hectares that the experts agreed would have been available for sowing the rice would have exceeded the average yield of 6.2 tonnes per hectare in the district as calculated by the Department of Primary Industry (the position favoured by the defendant’s experts as both reliable and independent); that the rice stubble would be productive of almost double the price that the defendant’s experts factored into their assessment, and that Mr Booth's assessment of the costs incurred in cultivating the rice crop were also less than the average posted by the Department of Primary Industry by a margin of $165 per hectare, before, as a matter of pure arithmetic, there is sufficient income over expenses to generate a loss that is compensable in damages.

43 However attractive the approach of “splitting the difference” on the calculation of expenses or adopting the compromise Mr Roberts proposed on yield and other factors, I am of the view that at least in so far as yield is concerned I should resolve to either favour Mr Booth's approach or apply the Departmental average.

44 Mr Roberts urged me to give Mr Booth's opinion as to the likely yield from the 2004/2005 season greater weight when compared with the opinion of the defendant’s experts, Messrs McDougall and Tremain, whose primary fields of expertise are (Tremain) accounting and (McDougall) loss assessment/adjustment. It was submitted that because of Mr Booth's expertise as a successful large scale irrigation rice farmer in his own right, and his expertise as a private consultant to the industry, his evidence as to the calculation of the rice yield (as well as the value of rice stubble and the costs of production) has greater currency given the vagaries of rice farming as a specialist irrigation industry and the fact that across the industry there is a wide divergence in farming practices and methodologies. In addition, Mr Roberts emphasised that Mr Booth's approach to calculating both the plaintiff likely rice yield from the 2004/2005 season and the associated expenses was “site, situation and resource specific”.

45 It is clear from reading Mr Booth's detailed report that his views about the plaintiff’s likely performance in the 2004/2005 rice season, as with all matters upon which his views were solicited by the plaintiff’s instructing solicitors, is based on his inspection of the plaintiff’s farming operations at Caringa in 2008 together with considerable input from the plaintiff as Mr Booth sought, quite legitimately, to supplement his instructions for the purpose of appraising the plaintiff’s dry and irrigation farming business for the purposes of the litigation. While it is equally obvious that the defendant’s experts did not undertake that exercise, I do not consider that evidence is inferior for not having visited Caringa and not having developed a dialogue with the plaintiff. They undertook what I consider to be a diligent and detailed appraisal of the farming operations from the perspective of their instructions and by reviewing and analysing all available data consistent with their particular fields of expertise.

46 Mr Cavanagh did not challenge Mr Booth's expertise or his approach to the preparation of his report. He simply pointed out that his approach was one amongst other approaches equally as appropriate. In his submission, however, it was the very fact of the on-site inspection many years after the 2004/2005 growing season, together with the development of a close working dialogue with the plaintiff, that has compromised his impartiality so as to be ultimately productive of an overly optimistic appraisal of the likelihood of the plaintiff producing a rice yield for the 2004/2005 season above the Departmental average.

47 In his evidence and in his report I note that Mr Booth made it clear more than once that he was impressed with the plaintiff’s determination and drive, and his capacity to learn and to adapt his commitment to best farming practices responsive to the prevailing conditions. While I do not doubt that he was genuinely impressed with the plaintiff, and that he genuinely believed the plaintiff was capable of producing a yield in 2004/2005 above the average for the region, I cannot overlook the fact that when Mr Booth made his assessment not only was his perspective (and that of the plaintiff) retrospective, with all the added insights and advantages that brings. Mr Booth also resisted, in my view without adequate justification, factoring into his assessment that the plaintiff had only cultivated rice for one season prior to 2004/2005, and even then on a share basis with an experienced rice farmer. In addition, he ignored completely that one of the six irrigation bays cultivated in the plaintiff’s first year as a rice farmer failed altogether, and about 20 per cent of another bay had a very low to negligible yield, giving rise to at least a margin of risk that the plaintiff (a relatively inexperienced rice farmer) might make another error of judgement adversely affecting yield a second time. Mr Booth’s justification for giving the plaintiff the benefit of an above average yield factor was the plaintiff’s advice to him that the seed bed he had prepared for sowing within weeks of the injury had not been damaged by overzealous preparation and, in the plaintiff’s view, was in excellent condition for receiving seed. Mr Booth also noted that the plaintiff was ready to sow early in the season which would have avoided the adverse impacts of a chill period suffered by some farmers who delayed sowing until later that season hopeful of improved water conditions.

48 While I do not reject Mr Booth’s views as unfounded I am of the view that they are overly optimistic. In the result, I propose to calculate loss on the basis of the Departmental average of 6.2 tonnes per hectare and not Mr Booth's 8 tonnes per hectare or Mr Robert’s compromise of at least 7 tonnes per hectare.

49 In so far as rice stubble and residual soil moisture is concerned, the evidence established that it is accepted practice in the rice industry to sow a winter cereal or oilseed into the rice stubble to convert the residual soil moisture into net revenue and to slash and burn the rice stubble in the process. The evidence also established that in times of drought the rice stubble is mown, raked and baled at the purchasers expense and sold at a price per tonne. The experts agreed that the value of the crop that may have been produced from the residual soil moisture produces a gross margin of $350 per hectare which calculates to an amount of $19,600. The schedule prepared by Mr Cavanagh did not make allowance for this amount. He made no reference to it when cross-examinating the experts or in final submissions. In these circumstances I propose to allow that aspect of the plaintiff’s claim.

50 The experts disagreed as to the value of the rice stubble. Mr Booth relied upon what he described in the joint report as “separate confidential client data” to support a price of $40 per tonne which he claimed was reflective of the known market in the district, while Mr McDougall relied upon advice from a wholesale purchaser of rice straw who paid a maximum of $20 per tonne for the 2004/2005 season. There being no cross-examination on the issue, I propose to adopt the median position of $30 per tonne.

51 In total I allow damages for the loss associated with the 2004/2005 rice season as follows:

Income

Source

Estimated yield (tonnes per hectare)

Estimated Price per tonne

Total

Rice

6.2

$284.13

$98,649

Rice Stubble

8

$30

$13,440

Soil moisture

N/A

$350

$19,600

Total

$131,689

Outgoings

Type of outgoing

Cost per unit

Estimated unit

Total

Expenses

$1,108/ha

56 ha

$62,048

Temporary water

$86/ML

518 ML

$44,548

Sale of water

N/A

N/A

$18,076

Total

$124,672

Total loss

$7,017

(b) The loss associated with the fact that the plaintiff has not secured contracting work from 2004 - 2009

52 The plaintiff claimed $37,500 ($7500 per annum after a 25 per cent discount for expenses) for the loss of income he would have likely derived from contracting work for the five years since the injury in 2004. The plaintiff gave evidence that he purchased major pieces of equipment for planting and harvesting wheat and other grain at considerable expense when Caringa was acquired because it was his intention to both purchase additional acreage over time to extend his farming operations and to use the equipment in the short term as an owner/operator in a small contracting business.

53 In the 2003/2004 season Arkae received $9357 as contracting income generated by the plaintiff sowing canola and soft wheat on a neighbouring farm. No income from contracting has been earned since that time and no offers for contracting work have been made and refused. The plaintiff gave evidence that prior to his injury he was in discussion with another farmer about the potential for contracting work but that since the injury he has not been contacted. It was his understanding that was due to the fact that his disabilities were well known to others in the district, and out of courtesy no one approached him with offers of work, and not because of the drought, since his equipment was of high quality and well suited to dry conditions.

54 The defendant’s position was not that the plaintiff failed to mitigate his loss by hiring out the equipment (it being apparently accepted that the equipment is sufficiently delicate not to be entrusted to even an experienced farmer) but that given the plaintiff’s stated ambition to exploit the potential in Caringa to cultivate wheat and other dry crops on the available hectarage, quite simply, there would not have been the hours in a day to commit to sowing crops elsewhere, and for that reason alone no provision should be made for the loss of contracting income. In addition, the defendant relied upon the views of Mr McDougall that demand for contractors is variable, and that downturns in the season increase the numbers of contractors seeking work with a corresponding decrease in the amount of contracting work available. Mr Booth gave evidence that although there are growing numbers of farming businesses that own little equipment and contract out most of their farming operations, specialist contractors tend to develop long term relationships and prioritise long term contractual relationships, which I assume also reduces the demand for work on an ad hoc basis.

55 In the result I am not persuaded that the plaintiff’s claim for the loss of contracting income on an annual basis over five years is established. I am however prepared to allow an amount of $15,000 for what I am satisfied is the real prospect that were the pre-injury offer of work from a neighbouring farmer to have materialised, the plaintiff would have had the chance to demonstrate his competence and reliability as a contractor and that repeat offers of work may have been forthcoming despite the predictable decrease in demand because of drought and his primary commitment to farming on Caringa.

The claim for future economic loss

56 Although the plaintiff’s injury necessitated various modifications to his dry farming practices, over successive seasons from 2005 Caringa has been farmed relatively productively although, as I have noted, Arkae has been able to rely upon the income stream from the commercial property in Victoria to supplement the income generated from the farming operations. The fact that the plaintiff resumed farming progressively from about June 2005 is in large part due to his resolve to continue to exploit the potential in the land by undertaking exclusively dry farming operations despite the drought and to do so without employing anyone to assist him despite his disabilities. I accept that over this period he has maintained the integrity of the irrigation infrastructure and has regularly monitored the quality of the soil in the irrigation bays in readiness for what he expects will be the imminent resumption of water allocations thereby enabling him to resume rice cultivation. The plaintiff gave evidence that to maximise Arkae’s investment in Caringa he believes he needs to be in the business of cultivating rice. It is in this context that his claim for future economic loss was advanced. In the presentation of his evidence, and in final submissions, the claim was advanced on the basis that the loss will only materialise when water is available to be allocated from the irrigation system in sufficient quantities to permit him to resume rice cultivation. He has the added expectation that temporary water will also need to be purchased to supplement allocations throughout the growing season and that he will have the funds to acquire it.

57 Because the plaintiff is unable to undertake the particular physical work demanded of a rice farmer due to his injury, he seeks to be compensated for the cost of replacement labour on an annual basis until his retirement which, in the schedule of damages, Mr Roberts appointed at age 65. (I note that in his evidence the plaintiff said he intended to work beyond age 65 and that Mr Booth was of the view that the statistics maintained by the Australian Bureau of Statistics support the view that farmers retire after the age of workers in the wider community. I propose, however, to adopt the retirement age of 65.) The plaintiff does not make a separate claim for the cost of replacement labour for other aspects of the farming enterprise that he is currently either unable to attend to, or unable to attend to properly, without suffering significant pain. To the extent that the person employed to work the rice would only be committed to that task for the growing season which extends over six months of the year the plaintiff intended to utilise the worker to assist with other farm work, including fencing. In these circumstances Mr Roberts allowed for an increase in the discount for vicissitudes from 15 per cent to 25 per cent.

When will the water return?

58 I am urged by the plaintiff to conclude that the probabilities favour the resumption of allocations of water within the next year. That submission is said to be based on the evidence in a number of respects. Firstly, Mr Booth's observations that over the last 11 years, during which time the Riverina has been drought declared, there has been water allocated in sufficient quantities for rice cultivation in 9 of those years with only 2007 and 2008 attracting nil allocations. I was asked to give weight to the fact that an allocation of water was made this year, albeit not in quantities that made rice cultivation a realistic prosect, but that this was nevertheless indicative of the potential in the irrigation system to support increasing allocations for rice cultivation next year, and over successive years, until the plaintiff’s retirement. While these statistics are encouraging (and doubtless give irrigation farmers in the region some basis for optimism) as I understand the plaintiff’s submission the statistics alone would not be sufficient to entitle me to infer that there will be water available for allocation next year, much less that it will be in sufficient quantities to allow for rice cultivation on a commercial scale. However, in conjunction with the statistical approach referred to above, the plaintiff also referred me to Mr Booth’s analysis of the records retained by the Department of Irrigation and Energy in Deniliquin of closing allocations of irrigation water for the past 11 years on the basis of which he expressed the view that the likely average future availabilities of water for irrigators in the plaintiff’s position is 40 per cent of a farmer’s entitlement over the next 20 years with temporary water at $200/ML. In expressing that view Mr Booth said:

“The report author recognises that in the midst of a major drought there is widespread concern over when the drought will break and what will be the prevailing circumstances after that drought. The report author is aware of the wide discussion as to the likely impact of climate change and what may be the range of future outlook scenarios for irrigation farms.”

59 He also said:

“In making the above assumptions, consideration has been given to the actual government buy back of water licences to be at around 50% of the proposed levels of intended buy-back; and

60 Finally, the plaintiff invited me to infer from a document identified by Mr Booth in the course of his evidence that was said to support the proposition that because the Commonwealth is actively engaged in buying back water entitlements from irrigators who have access to water in the river systems in New South Wales and Queensland but who no longer which to pursue irrigation farming, that there will be both more water to be allocated to those who do wish to pursue irrigation farming and less irrigators with whom the water needs to be shared. Mr Booth gave evidence that this not only enhanced the view expressed in his report that the plaintiff can expect to receive 40 per cent of his entitlement on average over the next 20 years but that future allocations in the area where Caringa is located were likely to be improved very dramatically.

61 The defendant submitted that the exercise the plaintiff urged upon me is fraught with the danger that any prediction as to when there will be a resumption of water allocations is so uncertain as to amount to pure speculation, and that I should conclude that there is no reasoned or reliable basis for projecting when there will be sufficient water within the 11 years before the plaintiff’s retirement at age 65, much less whether the water will be allocated in sufficient quantities for irrigation farming over successive years throughout that same period. The defendant also pointed to a further range of imponderables in the assessment of future economic loss, in particular, questions as to how Caringa will be farmed in the future given the changing nature of market conditions for rice, the uncertainties associated with rice farming given the current persistence of drought conditions and the likelihood of problematic climatic conditions in the future. Given that on the plaintiff’s case the return of water is the trigger for his future financial loss, the defendant emphasised that if I am unable to appoint a time (or appoint a time frame) during which the water will likely return, then I cannot proceed to an assessment of damages in accordance with the plaintiff’s schedule of damages, since that assessment presumes the return of water before the cost of the replacement labour the plaintiff is unable to commit to rice farming because of his injury falls to be determined.

62 The defendant submitted that it is for all these reasons, in combination with the role of Arkae and the pre-existing injury to the plaintiff’s right knee which would have necessitated him employing replacement labour for the cultivation of rice in any event, that I should award damages by reference to a buffer. The defendant did not specify a figure but submitted that in all the circumstances it would be a modest sum.

63 In keeping with the otherwise mandatory requirements of s 13 of the Civil Liability Act in the assessment of damages for future economic loss, in an appropriate case the use of a buffer has been an approach sanctioned by the Court (see Penrith City Council v Parks [2004] NSWCA 201 at [3]-[5]. See also Zreika v State of NSW [2009] NSWCA 99 at [30] where Ipp JA noted that the observations of Giles JA had been followed in several cases in the Court of Appeal). The question is whether this is such a case.

64 In Parks Giles JA said the occasion for the application of a buffer is when the impact of the injury upon the economic benefit from the plaintiff exercising earning capacity after injury, as compared to the economic benefit before the injury, is difficult to determine. As his Honour made clear, this does not mean that the comparative exercise under the statute does not have to be undertaken, or the assumptions about future earning capacity or the other events on which the award is based specified. It is simply that where the comparative difference cannot be determined a buffer is awarded to allow for the potential financial disadvantage to the plaintiff in the future because of the injury, most usually because there is considerable residual earning capacity or a risk that otherwise secure employment prospects may come to an end (see Leichhardt Municipal Council v Montgomery [2005] NSWCA 432 per Mason P at [2]). In these circumstances, the percentage by which damages are adjusted to take account of the assumptions about earning capacity do not need to be stated as required by s 13(3) of the Act. By way of example, in Parks the injury to the plaintiff’s finger was relatively minor. Although the negative impact of the injury on her earning capacity was assessed as likely to occur at some time before her retirement from clerical duties within the remaining 15 years of her working life, even if only because of the risk that she may lose her employment at some time, the extent to which the injury diminished her earning capacity by reference to the loss of whole or part of her weekly wage was uncertain, and a modest buffer of $15,000 was awarded without any discount for vicissitudes.

65 Mr Roberts submitted that the defendant has exaggerated the difficulties involved in the assessment of the plaintiff’s future loss and, in any event, that this is not a case where the awarding of a buffer in a modest amount will adequately compensate the plaintiff for loss he is likely to suffer in the future where, on the agreed evidence, he cannot undertake the manual tasks required of a rice farmer because of the injury to his ankle. Mr Roberts accepted the necessity to consider the interplay of the various issues to which the defendant refers in making a reasoned assessment as to when the water will return. He submitted, however, that even if I were not satisfied that the water would return next year, it is possible to specify a time frame within the next 11 years when there is likely to be sufficient water for rice cultivation (even if not over successive years) and, accordingly, that damages should be assessed in the conventional way under the statute.

66 By reference to what Heydon JA observed in State of New South Wales v Moss [2000] NSWCA 133; 54 NSWLR 536 Mr Roberts emphasised that an assessment of damages for loss of the capacity to earn income in the future in a manner productive of financial loss is by its nature an imprecise enquiry, being an exercise in the estimation of possibilities not proof of probabilities, and the mere fact that quantum is difficult to assess does not mean the plaintiff is entitled to only a nominal sum. This is entirely consistent with the observations of Bryson JA in Macarthur Districts Motor Cycle Sportsmen Inc v Ardizzone [2004] NSWCA 145 where his Honour observed at [55] in reference to s 13 of the Civil Liability Act that:

“…Section 13 does not provide that if the assumptions referred to cannot be established in a clear and concrete manner there cannot be an award of damages for future economic loss. As recurringly happens when Courts are called upon to assess damages, it is necessary, and with the enactment of s 13 it remains necessary to make the best assessment the Courts can notwithstanding the indefinite nature of integers on which the assessment is based…”

67 At [87] of Moss Heydon JA said

“…The task of the trier of fact is to form a discretionary judgment by reference to not wholly determinate criteria within fairly wide parameters. Though the trier of fact in arriving at the discretionary judgment must achieve satisfaction that a fair award is being made, since what is involved is not the finding of historical facts on a balance of probabilities, but the assessment of the value of a chance, it is appropriate to take into account a range of possible outcomes even though the likelihood of any particular outcome being achieved may be no more than a real possibility…”

68 Earlier in the same judgement his Honour noted the views of the majority (Deane, Gaudron and Mc Hugh JJ) in Malec v J C Hutton Pty Ltd (1990) 169 CLR 638 at 643 as follows:

“… when the law takes 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 in a range from just above the speculative to just below the certain. The inquiry - the process of estimation of possibilities - is thus an imprecise and indeterminate one to be carried out within very broad parameters. The trier of fact may have to form conclusions on “slender materials”…”

69 Mr Roberts accepted that the operation of s 13 of the Civil Liability Act required an adjustment to the award for future economic loss beyond the generally accepted 15 per cent for vicissitudes, but not for all the reasons advanced by the defendant. In particular, he submitted that there was no justification on the evidence for regarding the plaintiff’s pre-existing knee injury as likely to have impacted adversely upon his earning capacity as a rice farmer in the absence of the injury to his ankle. He did accept, however, that the taxation advantage to Arkae as employer of a full time employee over 11 years (equally as over some shorter period) should attract a discount, as should Ms Stoneham’s contribution to the income earned by Arkae. In addition, as I have already noted, he accepted that there should be an allowance for the contingency that a full time employee would not be employed immediately or continuously. In total, he proposed a total discount of 55 per cent against an award of $532,920.

70 Although there is scant evidence of an empirical nature upon which I can rely for the purposes of determining with certainty when the water in the irrigation system will allow for the resumption of the allocation of water in sufficient quantities to support the cultivation of rice on Caringa, doing the best I can as part of the inherently imprecise process of estimating possibilities, I propose to allow for the cost to the plaintiff (through Arkae as employer) of engaging replacement labour for 5 of the next 11 years.

71 In coming to that conclusion I am conscious that although Mr Booth was not asked to venture a view as to when the water will return, his assessments about the likely level of allocations in the future are regularly undertaken by him and that they are necessarily predicted on the fact that, despite the persistence of the drought, it will break eventually. He was not challenged on the validity of that assumption. I note that neither of the defendant’s experts was invited to express a view on the question. In addition, no evidence in the form of short, medium or long term projections form the Bureau of Meteorology was placed before me and no evidence from the defendant, as the relevant Irrigation Authority, as to the degree of probability of water being allocated by them to irrigation farmers in the position of the plaintiff in the short to medium term.

What type of replacement labour should be allowed?

72 It is the accepted industry practice that contractors are employed to sow the rice, apply the fertiliser and harvest the crop leaving the remaining tasks to be done by the farmer. The plaintiff gave evidence that involves negotiating on foot the rough terrain of the irrigation bays, physically getting into the muddy soil of the bays to check water levels and to manipulate the irrigation checks to ensure there is no leakage of water from the irrigation bays through breaches in the structure of the walls. Water levels need to be adjusted on a regular, sometimes daily, basis over the four to six week period before the rice crop is established and thereafter on multiple occasions a day during the growing season to ensure both adequate drainage and no wastage of water. The plaintiff also gave evidence that it is necessary to manually remove weeds in the irrigation bays and to manually test the readiness of the rice crop to receive the fertiliser, also by physically getting into the muddy waters in the irrigation bays.

73 In the plaintiff’s opinion an employed labourer would be required to be on call 24 hours a day throughout the greater part of the rice growing season to be an effective substitute for the role he would otherwise perform. He emphasised that both the work in preparation for aerial sowing of the crop and the maintenance work to which I have referred needs to done in a timely fashion, and that his injury inhibits him to such a degree that the commercial success of the venture would be put at serious risk if he attempted rice cultivation without assistance. This evidence was not the subject of challenge. In these circumstances I propose to resolve as best I can the dispute between the experts by reference to the plaintiff’s evidence.

74 On the assumption that water in sufficient quantities for irrigation purposes will be available at some time over the next 11 years there remained considerable debate between the experts about both the type of replacement labour the plaintiff required to be able to cultivate rice profitably and the way to cost that labour. Again, aside from some narrowing of the areas of disagreement in the course of the experts giving their evidence concurrently, significant disagreement remained as to both issues.

75 In summary, Mr Booth considered that a skilled worker/assistant manager employed on a full time basis was justified at an annual salary package of $75,000, comprised of a base salary of $55,000 with the additional financial benefits of superannuation, accommodation, and the provision of a travel and communications allowance. In the course of giving evidence it was clear that Mr McDougall did not disagree with the salary estimate for a worker of that calibre, being someone who would be likely to remain in the position over the medium to long term and to take on the responsibility of managing the resources the plaintiff has committed to irrigation farming. He was not satisfied, however, that a worker of that calibre was required to compensate the plaintiff for a number of reasons, not the least of which being that it was his understanding that the plaintiff intended to manage and supervise the replacement worker who would be responsible for the manual aspects of rice cultivation for that part of the year when the rice was under cultivation. In his view, the cost of replacement labour on this basis would not exceed $45,000 per annum. (The figure of $45,000 per annum was agreed between the defendant’s experts allowing for a margin of $10,000 over the award for the need to attract a responsible and reliable worker).

76 Mr Tremain was of the view that a contract or part time worker costed at an hourly rate was an alternate and less expensive option to engaging a full time employee, particularly when the future viability of rice cultivation was uncertain and where there is a risk that some seasons will be so adverse that it would be unprofitable to retain an employee full time. I accept Mr Booth’s evidence that in his experience contract labourers are inherently unreliable, a factor which impacts adversely on a range of operational issues which may be productive of a cost that the plaintiff should not have to bear, and further that while some large scale operations are able to cope with a large staff turnover the plaintiff’s could not. I am also conscious that there is evidence that the pool of available contract workers is a diminishing resource in rural communities. In my view, however, there remains considerable force in the approach taken by the defendant’s experts.

77 It was also Mr Tremain’s view that the replacement labour costed by Mr Booth would be productive of a capacity to exploit the plaintiff’s resources, and enhance the potential profitability in the farming enterprise generally, beyond what the plaintiff could have produced were he not injured, even if that benefit was largely intangible because of a range of factors that are increasingly driven by climate. Mr Booth accepted the proposition that there was an intangible benefit in these circumstances but considered it was one to which the plaintiff was entitled given the very favourable view he held as to the plaintiff’s pre-injury capacity to farm successfully and to develop the business to very profitable levels without engaging paid assistance. Again while I accept that Mr Booth genuinely holds those views I consider them to be overly optimistic, as I do the plaintiff’s evidence that despite the fact that he came to farming in his 50’s as a relatively fit and strong man and that the physical work of rice farming is exacting (as are other aspects of the mixed farming enterprise at Caringa), he had decided that he would not employ workers to assist him on the farm. I accept the views of the defendant’s experts that farmers who do not have a second generation to look to for some of the most physically arduous aspects of farming, and who reject the option to selling land or reducing the scale of operations, tend to engage workers to assist in maintaining profit levels as they age into their 60’s.

78 Replacement labour on a contract basis at an hourly rate of $21.44 was determined by the defendant’s experts in accordance with the following table:

Casual rate (Pastoral Employees (State) Award Grade 3 $16.88 per hour
Plus
Above award margin 10% $1.69 per hour
Superannuation 9% $1.52 per hour
Workers Compensation Premium 8% $1.35 per hour

Total Cost $21.44 per hour

79 Depending on the hours worked the plaintiff’s future economic loss calculated over a period of 11 years to retirement was calculated by them as follows:

Replacement labour (hours per week) 6 12 18

Net Annual Loss (after tax)
Period to retirement (years)
Annual Discount Factor (5%) $4,329
11.98
9.08 $8,658
11.98
9.08 $13,962
11.98
9.08

Present value of loss $39,289 $78,579 $126.722

Less
Vicissitudes (15%) $5,893 $11,787 $19,008

Net Loss $33,396 $66,792 $107,714

80 I am satisfied that the plaintiff’s future economic loss should be calculated on the basis of a contract labourer working a 30 hour week for a period of six months each year over a period of five years. Utilising the approach of the defendant’s experts, without any deduction for vicissitudes, this is calculated as follows:

Replacement labour (hours per week) 30

Net Annual Loss (before tax)
Period over which replacement labour is provided (years)
Annual Discount Factor (5%)
$33,446.40
5
4.75

Value of loss $158,870.40

Loss (not including tax deductions) $135,039.84

The application of s 13 of the Civil Liability Act to assessing damages for future economic loss

81 In assessing damages for future economic loss in this case s 13 of the Civil Liability Act imposes the obligation on the plaintiff to satisfy me that the assumptions about future earning capacity, and other events upon which the award is based, accord with his most likely future circumstances were he not injured and to adjust the award by reference to the percentage possibility that the events might have occurred but for the injury. The percentage by which damages are adjusted, and which are to be stated as required by s13 (3), is a statutory implementation of the established practice of reducing an award of damages for future loss for vicissitudes.

The significance of the pre-existing injury to the plaintiff’s right knee

82 I have already made reference to the fact that the plaintiff suffered a debilitating injury to his knee in January 2002 from which he was slow to recover (see [20] above). The plaintiff was cross-examined about the nature, extent and duration of impairment referable to the injury to his knee, it being the defendant’s case that these factors would have likely necessitated Arkae employing additional labour to assist in the plaintiff’s rice farming business within eight years of the injury to his knee irrespective of the ankle injury and a very significant discount should be applied to any award of damages calculated in the ordinary way. The time frame of eight years is appointed referable to the date of the injury in 2002 and Dr Isbister’s evidence that within ten years of sustaining the injury the condition of the plaintiff’s knee was such that he would have had great difficulty undertaking hard physical farm work irrespective all of the injury to his ankle.

83 In support of that submission the defendant tendered a letter dated 7 May 2002 forwarded by the plaintiff’s then treating doctor to the Transport Accident Commission of Victoria. In that letter it was Dr Holland’s expectation that the plaintiff’s condition would continue to improve. He did, however, express doubts about the stability of the knee joint in the long term and the impact of the injury upon the plaintiff’s capacity to undertake employment involving “steps or uneven ground”.

84 By letter dated 1 May 2003, after the plaintiff had ceased treatment under Dr Holland, the plaintiff wrote to his insurer in the course of a dispute concerning his claim under an income protection policy with that insurer in the course of which he said:

85 Under cross-examination the plaintiff conceded that what he said to the insurer accurately reflected the ongoing impact of the injury to his knee 17 months after the motorcycle accident, and that he would not have written a letter unless he genuinely felt he had a significant disability. On the other hand the plaintiff gave evidence, supported by Ms Stoneham’s evidence, that at the time of writing the letter he had already adjusted to rural life on Caringa and was attending to the multitude of physical tasks involved in both reconfiguring the property, cultivating and harvesting his first grain crop and developing a sheep breeding operation, all without incident or incapacitating pain by reason of his knee.

86 It is difficult to reconcile what the plaintiff said to the insurers (18 months before the ankle injury) and in his evidence before me in July 2009 (almost 5 years later) as to the impact of his knee injury on his general mobility and capacity before the ankle injury unless I am prepared to accept that both accounts have contextual truth. The defendant did not ask me to find that the plaintiff was a dishonest witness. To the contrary, I was invited to accept him as a truthful witness and a genuine claimant for damages for a compensable injury. What the defendant submitted was that because the plaintiff was not a person who was a “whinger” prone to exaggeration, his account to the insurers was more likely to be an accurate reflection of his self assessed incapacity when he commenced life as farmer than his evidence in the hearing before me. He also invited me to draw an inference adverse to the plaintiff because he did not call any treating doctors, and his claim to have had no recall of what doctors (if any) he had sought treatment from for his knee over the years was unconvincing.

87 After having heard the plaintiff give his evidence over the course of two days, and despite what Mr Cavanagh submitted were open concessions by the plaintiff under cross-examination about the extent of ongoing problems with his knee in 2003, I consider that the letter to the insurer in May 2003 was not written with a view to misleading the insurer or overstating his claim but in a frustrated attempt to impress on the insurer the legitimacy of his claim.

88 The defendant also relied upon a further letter forwarded to the Transport Accident Commission of Victoria in May 2007 in support of the plaintiff's claim against the third party insurer. This was a letter written by Dr Kirwan, an orthopaedic surgeon the plaintiff consulted in February 2007 where doctor reports as follows:

“(The plaintiff) presented with 5 years of right instability, following a motorcycle accident…

Examination in February 2007 revealed bilateral valgus hyper-extending knees… The anterior cruciate ligament was deficient and there was soft crepitus in the medial compartment also. X-rays confirmed lowgrade osteoarthritis.

The current status of Mr Kay's right knee is consistent with both the wear and tear that occurs with age, compounded or accelerated by the damage which occurs as a result both of chronic instability and the initial injury which caused the ligament to tear and therefore caused this instability.
…
I confirm that Mr Kay admitted to 5 years of intermittent instability in his right knee when I first met him in February 2007…”

89 In cross-examination the plaintiff confirmed the accuracy of Dr Kirwan’s report that he had admitted to five years of intermittent instability in his right knee. However, in re-examination, he said that this did not cause him to fall or to be unable to negotiate uneven ground prior to the injury to his ankle. Dr Kirwan did not give evidence. His report does not make clear the extent to which the status of the plaintiff's right knee was accelerated by the injury to the ankle. In fact he makes no reference to the ankle injury at all. Dr Isbister, on the other hand, while conceding that the plaintiff would have suffered a permanent loss of the efficient use of his right lower limb over time because of the motorcycle injury, also gave unchallenged evidence that the ankle injury accelerated the osteoarthritic changes in the right knee because the plaintiff’s right limb bears the greater part of his body weight to facilitate even ordinary perambulation because of the ankle injury.

90 The plaintiff submitted that the evidence favours a finding that despite the admitted intermittent instability in the plaintiff’s knee, on a careful reading of Dr Isbister’s evidence this was not likely to have incapacitated the plaintiff to the extent contended for by the defendant, as distinct from the injury becoming a likely source of persistent pain as osteopathic change in the structure of the knee became entrenched. In keeping with the demonstrated resilience of the plaintiff, it was submitted that he would likely deal with the pain in his right knee by simply adjusting his work practices, or increasing his use of pharmaceutical pain relief, rather than engaging additional labour, and that he would most likely have worked in this way well past the notional eight years the defendant calculated by reference to Dr Isbister’s evidence.

91 The conflict in the evidence on this aspect of the case is not easily resolved by reference to the evidence or the arguments of counsel. In the result I consider that the plaintiff's claim for damages for future economic loss ought to be adjusted to take account of the pre-existing injury to the knee by 10 per cent in addition to the ordinary allowance of 15 per cent for vicissitudes. Since I have already discounted the plaintiff's claim for future economic loss by reference to the contingency associated with the climatic conditions to which Caringa is subject as a rural property. I propose to increase the ordinary allowance for vicissitudes of 15 per cent by a further 5 per cent.

The significance of Arkae in the calculation of damages on the basis of replacement labour

92 I have already noted that Arkae is the Trustee company through which the farming enterprise at Caringa is operated and that for taxation purposes, the expenses involved in operating the farm, including the cost of maintaining the home on Caringa and the plaintiff’s and Ms Stoneham’s living expenses, have been met by Arkae from a dual income stream, namely the farming enterprise and the commercial real estate in Victoria. Because of the corporate structure underpinning the arrangement of the plaintiff’s financial affairs, the defendant submitted that in calculating damages for the costs of replacement labour provision needs to be made for the fact that the actual cost of employing replacement labour does not equate to a loss the plaintiff will personally bear since it will be an expense borne by the company and the ultimate cost in financial terms is dependant upon various tax and accounting strategies that may be employed by the company's financial advisers in the future. Mr Roberts accepted that provision should be made for these contingencies. I propose to increase the 25 per cent deduction for vicissitudes by a further 5 per cent.

93 In accordance with the attached schedule the orders I propose are as follows:

Schedule of damages

Head of damages	Amount
Damages for non economic loss (35% of most extreme case)	$165,725
Past economic loss
Out of pocket expenses (Agreed)	$9,470
Gratuitous attendant care (21 hrs/pw until end of Jan ‘04, 6hrs/pw until end of June ‘04) at $20 p/hr	$10,790
Economic loss associated with the 2004/2005 season Rice Wheat (Agreed) Sheep (Agreed)	$7,017 $10,000 $10,000
Loss of contracting income 2004-2009	$15,000
TOTAL FOR PAST ECONOMIC LOSS	$62,277
Future economic loss
Future out of pocket expenses: Medication (as per the plaintiff’s schedule of damages) Footwear (as per the plaintiff’s schedule of damages) Massage (at $50 per fortnight for 20 years less 15% for vicissitudes) Surgery and associated costs less 25% to allow for the potential that the plaintiff will resist surgery.	$5,000 $2,460 $22,100 $7,725
Cost of replacement labour (less 30% for vicissitudes)	$94,528
TOTAL FOR FUTURE ECONOMIC LOSS	$131,813
TOTAL DAMAGES	$359,815

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Citations

Kay v Murray Irrigation Limited [2009] NSWSC 1411

Cases Citing This Decision

0

Cases Cited

7

Statutory Material Cited

4

Husher v Husher [1999] HCA 47

Penrith City Council v Parks [2004] NSWCA 201

Zreika v New South Wales [2009] NSWCA 99

CITATION:	Kay v Murray Irrigation Limited [2009] NSWSC 1411
HEARING DATE(S):	6-9 October 2009
JUDGMENT DATE :	11 December 2009
JUDGMENT OF:	Fullerton J
DECISION:	1. Judgment in favour of the plaintiff in the amount of $359,815. 2. Costs are reserved. 3. Liberty to restore on three days notice.
CATCHWORDS:	TORTS - negligence - personal injury - defective concrete footboard - ankle injury - pre-existing injury - rice cultivation - TRADE AND COMMERCE - Trade Practices Act 1974 (Cth) - DAMAGES - whether damages assessed at common law or under the Civil Liability Act
LEGISLATION CITED:	Civil Liability Act 2002 Civil Procedure Act 2005 Trade Practices Act 1974 (Cth) Trade Practices Amendment (Personal Injuries and Death) Act (No 2) 2004
CASES CITED:	Husher v Husher [1999] HCA 47; 197 CLR 138 Leichhardt Municipal Council v Montgomery [2005] NSWCA 432 Macarthur Districts Motor Cycle Sportsmen Inc v Ardizzone [2004] NSWCA 145 Malec v J C Hutton Pty Ltd (1990) 169 CLR 638 at 643 Penrith City Council v Parks [2004] NSWCA 201 State of New South Wales v Moss [2000] NSWCA 133; 54 NSWLR 536 Zreika v State of NSW [2009] NSWCA 99
TEXTS CITED:	David Ipp, Review of the Law of Negligence: Final Report, (2002) Commonwealth of Australia
PARTIES:	Robert Francis Kay (Plaintiff) Murray Irrigation Limited (Defendant)
FILE NUMBER(S):	SC 2008/20388
COUNSEL:	I Roberts SC/J Sainty (Plaintiff) R Cavanagh (Defendant)
SOLICITORS:	Glowreys The Riverina Law Firm (Plaintiff) Curwoods Lawyers (Defendant)

Income
*Source*	*Estimated yield (tonnes per hectare)*	*Estimated Price per tonne*	*Total*
Rice	6.2	$284.13	$98,649
Rice Stubble	8	$30	$13,440
Soil moisture	N/A	$350	$19,600
Total			$131,689
Outgoings
*Type of outgoing*	*Cost per unit*	*Estimated unit*	*Total*
Expenses	$1,108/ha	56 ha	$62,048
Temporary water	$86/ML	518 ML	$44,548
Sale of water	N/A	N/A	$18,076
Total			$124,672
Total loss			$7,017

Replacement labour (hours per week)	6	12	18
Net Annual Loss (after tax) Period to retirement (years) Annual Discount Factor (5%)	$4,329 11.98 9.08	$8,658 11.98 9.08	$13,962 11.98 9.08
Present value of loss	$39,289	$78,579	$126.722
Less Vicissitudes (15%)	$5,893	$11,787	$19,008
Net Loss	$33,396	$66,792	$107,714

Replacement labour (hours per week)	30
Net Annual Loss (before tax) Period over which replacement labour is provided (years) Annual Discount Factor (5%)	$33,446.40 5 4.75
Value of loss	$158,870.40
Loss (not including tax deductions)	$135,039.84