Kozuh v Hughes No. DCCIV-94-895 Judgment No. D3525

[1996] SADC 3525

Court

DISTRICT COURT OF SOUTH AUSTRALIA

Judgment of His Honour Judge Lee

Hearing

11/11/96 to 14/11/96.

Catchwords

NEGLIGENCEMotor vehicle accident - plaintiff crossed lanes from right to left - defendant struck plaintiff from behind - defendant drove at excessive speed and without due care - plaintiff's contributory negligence fixed at 15%. DAMAGES- PERSONAL INJURY Strain of lumbar spine - plaintiff 26 year old carpenter -in partnership with father and mother - income tax returns insufficient measure of plaintiff's real loss of earnings from partnership - loss of earning capacity, past $14000 and future $80000 - other damages agreed.

Materials Considered

• Zachopoulos v SGIC (1986) 129 LSJS 216;
• Cole v Ellis (1992) 60 SASR 481;
• Graham v Baker (1961) 106 CLR 340;
• Mann v Ellbourn (1974) 8 SASR 298, referred to.

Representation

Plaintiffs IVAN, STEFAN AND MARIA KOZUH:
Counsel: MR M KERNOT - Solicitors: FRANK WEBSTER &; ASSOCIATES

Defendant KENTON HUGHES:
Counsel: MR B JAMES - Solicitors: WARD &; PARTNERS

DCCIV-94-895

Judgment No. D3525

20 December 1996

KOZUH V HUGHES

Civil

Judge Lee

The first named plaintiff was injured in a road accident on Sherriffs Road, Reynella, on 30 May 1992.He was driving his Jaguar sedan in a westerly direction when his vehicle was struck from behind by a Ford Fairlane sedan being driven by the defendant.His claim for damages is confined to economic loss, the other heads of damages having been agreed. Since it is common ground that the other plaintiffs have no claim, it will be convenient to describe the first named plaintiff as the plaintiff for the purposes of these reasons.

The carriage-ways of Sherriffs Road are divided by a median strip at the place where the accident occurred.Previously the plaintiff had been travelling in the eastern carriage-way.He did a U-turn through a gap in the median strip and then drove in a westerly direction intending to turn left into a car park in front of a take-away food shop on the southern side of the road.The western carriage-way is divided into three lanes.Each lane is approximately three metres in width.The collision occurred in the left lane adjacent to the driveway to the car park.At the time of the impact, the plaintiff's vehicle was angled towards the driveway.The force of the impact spun the plaintiff's vehicle through 180 degrees, and it came to rest against a fence on the southern side of the road.

The plaintiff travelled a distance of 83 metres between the gap in the median strip and the driveway.Over that relatively short distance, he crossed from the right lane to the centre lane to the left lane.He said he may have used his indicator to signal his intention, but I am not satisfied that he did. Whilst the plaintiff was executing this manoeuvre, the defendant was approaching in the centre lane at a speed of no less than 75 kilometres per hour.My finding as to the defendant's speed is based upon his own estimate and upon the evidence of the independent witness, Barbara Morely.The defendant said that he moved gradually from the centre lane to the left lane only to find that the plaintiff's vehicle then crossed sharply across his path. The defendant told the police, on the other hand, that his vehicle and the plaintiff's vehicle crossed into the left lane at approximately the same time. Given the impression created by the evidence as a whole, and the evidence of Barbara Morely in particular, I think that the probabilities are in favour of the version given by the defendant to the police. If the defendant had been driving defensively and with due care, he would not have attempted to pass the plaintiff on the left.If he had been keeping a proper lookout and travelling at a reasonable rate of speed, he would have seen the plaintiff's vehicle in time to take appropriate evasive action. The defendant's manner of driving was the substantial cause of the accident and the plaintiff's injuries.

For his part, the plaintiff, in executing a manoeuvre which took him from the gap in the median strip to the car parkdriveway across three lanes and over a distance of 83 metres, was duty bound to keep a particularly vigilant lookout to the east and to his rear.Had he done so, he would have observed the defendant's rapid approach.He would have been on notice that the defendant would pass him within a very short period of time, and he would not have crossed from the centre lane to the left lane until the defendant's vehicle had passed out of danger.The plaintiff's manner of driving contributed to the accident.I fix the extent of his contribution at 15%.

I turn now to consider the plaintiff's economic loss.The following recitation of relevant facts is based mainly upon his evidence.He was a satisfactory witness.

The plaintiff is 26 years of age.He left high school at the end of year 11 and joined his father in his father's carpentry business.He obtained his licence as a second fix carpenter after about two years.He and his father had decided to concentrate on eaves fixing, which is second fix carpentry work. First fix work is concerned with the frame of a house.Second fix work is concerned with doors, skirtings, architraves, cupboards, eaves and the like.

For some 10 years or so, the plaintiff and his father have performed eaves fixing work for Fairmont Homes, latterly in the southern area.Eaves fixing is commenced at the lock-up stage of construction, and involves the timber work between the gutters and the external walls.The timber is delivered to the site by Fairmont Homes.The plaintiff and his father measure the job and cut the timber.One then assists the other to lift and hold each length of timber and to nail it in place.A typical eave is 2.4 metres from the ground.The holding and nailing work is done above the head, sometimes from a scaffold.It follows that eaves fixing requires a significant degree of bending, lifting and stretching.A normal day would be eight or nine hours, but some days would be ten to twelve hours.There has always been a supply of work from Fairmont Homes.

Until 1991, the business partnership comprised the plaintiff and his father. Then the plaintiff's mother was added to the partnership.Her function was to do the books.

The plaintiff went to the Flinders Medical Centre after the accident.He felt discomfort in his lower back, shoulder and neck.His general practitioner prescribed medication and physiotherapy.He was off work for three or four months.His father had to carry on in his absence.When he went back to work, he started on three hours per day and gradually increased his hours over six to twelve months. In April 1993, Dr Staska recommended that his hours be increased to eight per day.The plaintiff's evidence was that he followed Dr Staska's instructions as to what he thought would be best.Nevertheless, his father undertook the heavier tasks.He was disappointed at letting his father down and angry and frustrated at not being able to do more.

The plaintiff has not returned to his pre-accident level of fitness, and continues to experience soreness and stiffness in his whole back area, but mainly his lower back.He also suffers from a loss of drive and motivation. His condition is aggravated every day by his work.His condition affects both the things that he can do and the pace at which he can work.He sometimes stops work before the end of the day.First fix work would now be too heavy for him.He has thought about giving up carpentry work, and to that end obtained a security licence two or three years ago.He has no other skills, but some years ago modelled clothes at a charity function.He has an obligation to his father, and will continue working with him for the time being.His father is 53 years of age.

The preponderance of medical evidence is to the effect that the plaintiff sustained in the accident a musculo-ligamentous injury to his cervical spine and a strain of his lumbar spine causing or aggravating disc degeneration at the level of L5/S1.The injury to his cervical spine has largely resolved. The injury to his lumbar spine is permanent, and represents a loss of function of about 10 per cent.He should avoid awkward lifting and twisting, regular weight bearing beyond 15 kilograms, and working in awkward postures requiring maintenance of flexion or extension.Although these restrictions do not prevent him from continuing to participate in the family business of eaves fixing, he would be at a disadvantage were he to attempt to find work as a carpenter or other manual work on the general labour market.Dr J C Meegan, occupational physician, said he would not recommend the plaintiff for carpentry work to a prospective employer.Dr Graham Wright, occupational physician, suggests that psychological counselling would assist him to overcome his anger and frustration and improve his motivation.

The starting point for an assessment of the plaintiff's economic loss is the reduction attributable to his injuries in the value of his share of partnership earnings.The relevant principles and authorities are discussed by Bollen J in Zachopoulos v SGIC (1986) 129 LSJS 216 and Mullighan J in Cole v Ellis (1992) 60 SASR 481.According to the partnership tax returns, the income of the partnership was shared equally between the three partners, but I am satisfied that the plaintiff's contribution was closer to one half and that the true value of his share was also closer to one half.He and his father did all the productive work of the partnership and his mother did not join until 1991.The plaintiff boarded with his parents free of charge and thereby received a benefit with respect to accommodation and food at least.The figures disclosed by the tax returns are a guide to the assessment, but what falls to be compensated is loss of earning capacity rather than loss of earnings, at least in so far as loss of earning capacity is productive of financial loss: Graham v Baker (1961) 106 CLR 340.To the extent that his injuries have impaired his earning capacity, the plaintiff has lost the opportunity to exploit that capacity inside and outside the partnership business: Mann v Ellbourn (1974) 8 SASR 298.

For the purposes of assessing the plaintiff's past economic loss, I draw upon the report and evidence of Mr A Campbell, chartered accountant.Mr Campbell had access to the plaintiff's income tax returns and has had considerable experience of the building industry and its volatility in recent years.On the basis of the plaintiff's taxable income of about $23,500 in each of the two years immediately prior to 30 June 1992, he found that the plaintiff and his father were each earning income for the partnership at the rate of $18.36 per hour gross and $12.11 per hour net.Mr Campbell said that that rate was reasonable for subcontract carpentry work at the time.He said that post-accident projections of notional earnings should contain a contingency factor to reflect both a fall in partnership income for the five months which preceded the accident and a downturn in the level of activity in the building industry since 1993.

Mr Campbell's method of calculating the plaintiff's pre-trial loss was to multiply an estimate of hours lost overall by an hourly wage rate, with adjustments for inflation and contingencies.Assuming that hours lost were 40 per week between 1 June 1992 and 23 September 1992, 27.5 per week between 23 September 1992 and 23 December 1992, 15 per week between 1 January 1993 and 30 April 1993, and 4 per week thereafter, and adopting the inflation and contingency factors set forth in a calculation handed up by counsel for the defendant during his closing address, the pre-trial net loss to the partnership would be $20,940, of which a one half share would be $10,470.One of the assumptions of this method is that the plaintiff's loss of earning capacity is measured exclusively by hours of work lost.The plaintiff's evidence, however, is that his injuries have also affected the things that he can do and the pace at which he can work.

An alternative method would be to use the plaintiff's pre-accident earnings to project what he might have earned in subsequent years but for the accident, with adjustments for contingencies, and to deduct actual earnings post-accident from notional earnings post-accident.Adopting the assumptions made in another calculation handed up by counsel for the defendant, the plaintiff's pre-trial net loss to 30 June 1996 would be $10,494.One of the assumptions of the alternative method is that a one third share of the taxable income of the partnership is representative of the plaintiff's earning capacity.I have already said that the true value of his share is closer to one half.

I assess the plaintiff's pre-trial net loss at $14,000.

As for future economic loss, I must again bear in mind that the loss to be compensated is the loss of the capacity to earn both inside and outside the partnership.The plaintiff's loyalty to his father makes the loss of his capacity to earn outside the partnership less relevant in the short term. Nevertheless, given the father's age of 53, I would expect that the plaintiff will need to look beyond the partnership for an income within the next 10 years or so.

Again I draw upon the report and evidence of Mr Campbell.The following table projects notional earnings from a net base of $19,000 in the year ended 30 June 1992 (representing $23,500 less tax), and compares actual net earnings with notional net earnings over the three completed financial years since the plaintiff returned to full time work in April 1993.

FINANCIAL YEAR ENDED 30 JUNE ACTUAL NET EARNINGS BASE NET NOTIONAL EARNINGS ADD INFLATION FACTOR DEDUCT CONTINGENCY FACTOR ADJUSTED NET NOTIONAL EARNINGS LOSS

199219,000 1.9% 10% 17,425

199317,425 1.9% 10% 15,980

1994 17,157 15,980 1.7% 10% 14,627 2,530

1995 14,049 14,627 1.7% 20% 11,900 2,149

1996 12,332 11,900 2.25% 22.5%9,430 2,902

On these figures, the average loss over the last three financial years has been in the order of $2,500 per year or $50 per week.Again the assumption is that a one third share of the taxable income of the partnership is representative of the plaintiff's earning capacity.I consider that his present real loss is more likely to be in the order of $70 per week.

According to Table 3B in the Appendix of Luntz on Assessment of Damages (Third Edition), the present value at 5% (being the prescribed rate pursuant to s35A(1)(e) of the Wrongs Act 1936) of payments of $1 per week to a 26 year old male until age 65 or earlier death is $879.The present value of $70 per week in those circumstances is $61,530.The partnership will not, of course, continue indefinitely.As I have said, the probabilities are that it will come to an end within the next 10 years or so.Then the plaintiff will be subject to the vagaries of the general labour market.His back condition will put him at a disadvantage.He will still have a working life ahead of him of some 25 to 30 years.If he finds work in the security industry or elsewhere, he may find himself as well or better off.Even then, he will not have the opportunity, free of the limitations imposed by his back condition, to fall back on his capacity as a manual worker and his skills as a carpenter.I consider that the chance that his loss will increase is higher than the chance that his loss will diminish or remain the same.In other words, I consider that the plaintiff is entitled to a higher award than would result merely from a capitalisation of his present real loss of earnings.I need to make some allowance for acceleration of benefit.Doubtless there are other contingencies, favourable and unfavourable, but I will assume that they cancel each other out.

I must guard against giving the above figures and calculations an authority which the necessarily vague nature of the evidence does not permit them to bear.At best they provide, hopefully, a check against gross error.

I assess the plaintiff's future economic loss at $80,000.

All other damages have been agreed.The plaintiff is entitled to 85% of the following:-

non economic loss$10,960.00

economic loss

past earning capacity$14,000.00

future earning capacity$80,000.00

future medical expenses$500.00

unpaid special damages$1,540.35

Beck & Farrelly damages$250.00

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$107,250.35

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In the result, there will be judgment for the first named plaintiff against the defendant in the sum of$91,162.80.Counsel for the plaintiff has acknowledged that the defendant is entitled to a part credit of special damages already paid to reflect a finding of contributory negligence.The claims against the other two plaintiffs will be dismissed.I will hear the parties concerning interest and costs.