Leigh Ann Holloway (Respondent) v Stephen Paul Thurston (Appellant) No. SCGRG 93/0012 Judgment No. 4047 Number of Pages 8 Damages

[1994] SASC 4047

COURT IN THE FULL COURT OF THE SUPREME COURT OF SOUTH AUSTRALIA LEGOE CJ(1), MULLIGHAN(2) AND PERRY(3) JJ

CWDS
Damages - general principles - Negligence - personal injury - road accident - appeal against award for past and future economic loss - 20 years of age and employed at time of injury - resigned from employment and worked in own business - findings of loss of earning capacity and consequential economic loss challenged - findings justified by the evidence - approach of trial judge to assessment of damages for economic loss correct - appeal dismissed. Giorginis v Kastrati (1988) 49 SASR 371; Arthur Robinson (Grafton) Pty Ltd v Carter (1968) 122 CLR 649 and Mann v Ellbourn (1974) 8 SASR 298, applied.

HRNG ADELAIDE, 10-11 May 1993 #DATE 25:2:1994

Counsel for appellant:     Mr P C Heinrich

Solicitors for appellant:    Baker O'Loughlin

Counsel for respondent:     Mr J R Rau

Solicitors for respondent: Johnston Withers

ORDER
Appeal dismissed.

JUDGE1 LEGOE ACJ I have had the advantage of reading the judgment of my brother Mullighan J and in my opinion this appeal should be dismissed for the reasons and conclusions given by him. I would, however, like to add a few brief comments of my own. In so doing, I do not propose to: (a) set out the relevant background facts in this matter; (b) describe the injuries suffered by the respondent in the accident which resulted in considerable medical attention including operations on her continuing shoulder disability; (c) discuss the respondent's work record from the time of the accident in September 1987 until the time of the trial in September 1992; or (d) consider the conclusions reached by the learned Chief Judge in assessing:
    (i) past economic loss at $30,000; and
    (ii) future economic
    loss at $40,000 as these matters were succinctly and
    accurately covered by my brother and there is no need for me
    to repeat them.

2. In the case of Giorginis v Kastrati (1988) 49 SASR 371 at 374 von Doussa J held that:
    "Where damages are claimed for a loss of earning capacity, the
    plaintiff must prove the extent of his (or her) pre-accident
    earning capacity, the extent to which that capacity would have
    been productive of income had the accident not happened, and
    the extent to which the compensable injuries have diminished
    his (or her) ability to exercise the pre-accident earning
    capacity."

3. In the case at bar, I agree with my brother Mullighan J that the learned trial judge should have made his finding as to the pre-accident earning capacity only on the evidence contained in her taxation returns of about $350 per week.

4. Counsel for the appellant developed his argument on the footing that the respondent had voluntarily resigned her position at the Casino, and that she did not prove any loss of income during the subsequent period when working jointly with her husband in a delicatessen business. Counsel submitted that the issue is "whether the plaintiff (respondent) lost any income, not whether she experienced difficulty whilst at work" (at the delicatessen). In my opinion, this submission is totally misconceived. Damages under this head are awarded for an immediate diminution in the capacity to earn rather than for loss of earnings as such - Luntz on Assessment of Damages (2nd edn 1983) Chapter 5, p.227 and a long time of authority in the High Court of Australia and this court, particularly Arthur Robinson (Grafton) Pty Ltd v Carter (1968) 122 CLR 649, 658 per Barwick CJ and Mann v Ellbourn (1974) 8 SASR 298 at 302 per Bray CJ.

5. Once the fallacy in the approach to the assessment as submitted by the appellant has been exposed, it becomes clear that the learned judge made no error in law in the approach he made to the respondent's past economic loss. The numerous grounds of appeal must then fail as no error appears and it cannot be said that $30,000 is a manifestly excessive sum to award for the respondent's 3 five years of partial lost earning capacity, even when the court takes into account the period of some income earning work by the respondent during that five year period. In order to come to that conclusion this court would have to say that the findings of a diminution of earning capacity which caused financial loss was wholly erroneous. This just not so. Clearly the respondent did suffer, and continued after the trial to suffer, financial loss by reason of her reduced earning capacity.

6. I adopt reasons and conclusions of Mullighan J for rejecting the appeal both as to past and future economic loss.

7. The appeal should be dismissed.

JUDGE2 MULLIGHAN J This is an appeal against the economic loss components of an award of damages for injuries sustained and loss suffered by the respondent in consequence of a motor vehicle accident on 10th September 1987. The respondent was a passenger in a motor vehicle which was struck from behind whilst stationary by a motor vehicle driven by the appellant. Her action proceeded to trial for assessment of her damages only. The learned Trial Judge assessed her damages at $81,950.85 which included an award of $30,000 for past economic loss and an award of $40,000 for future economic loss.

2. The learned Trial Judge, in his reasons for judgment, made findings which may be summarized as follows.

3. The respondent was aged 20 years at the date of the accident and 25 years at the date of the trial. She left school at her tenth year when she was aged 15 years in order to obtain work in a supermarket. In 1985 she applied for work at the Adelaide Casino. She attended a training course of twelve weeks' duration in her own time and then obtained employment as a card dealer and croupier for a trial period of three months which was later extended by a further six months. Her position was then made permanent.

4. Whilst at work the respondent met her husband who also worked at the Casino. After they had agreed to marry, they decided that he should leave his employment and purchase a delicatessen that was for sale. She would retain her position at the Casino and work in the delicatessen in her spare time. These plans were put into operation and they commenced in business as proprietors of the delicatessen on 19th October 1987, about five weeks after the accident. This finding was made despite the respondent's evidence that they commenced this business only a few days after the accident.

5. In consequence of the accident the respondent's left shoulder and the left side of her face were thrown against the dashboard. She suffered considerable pain and stiffness and was unable to move her neck, left shoulder or left arm. She was treated at the Flinders Medical Centre. The diagnosis was that she had suffered injuries to the soft tissues of her neck and shoulder. She wore a cervical collar for a time and was prescribed medication.

6. It is unnecessary for present purposes to mention in detail all of the treatment which the respondent has since received. She suffered considerably and had non-manipulative physiotherapy. She took sick leave from the Casino.

7. She commenced to work in the delicatessen when it was acquired, however, due to soreness in her neck and shoulder, she was unable to perform any heavy lifting after the accident. The learned Trial Judge found that the respondent resigned from the Casino on the day that she commenced to work at the delicatessen but the evidence establishes that she did not resume working at the Casino after the accident and did not resign from that employment until 19th October 1987. In her evidence she said that she did so because her neck and shoulder were too painful to undertake her normal duties. However, she told her employer that she was resigning in order to work in the delicatessen. At that time, staff of the Casino Authority, who reported to management, expressed the view that the respondent had lost her early enthusiasm for her work at the Casino.

8. The respondent worked long hours in the delicatessen. The discomfort in her neck improved with the passage of time but not the condition of her shoulder. Crepitus and pain persisted, including sharp pain if she undertook heavy work. She could not do all of the work she had anticipated when contemplating the purchase of the delicatessen. The condition in her neck resolved within two to three months of the accident. In view of the continuing condition of her shoulder her general practitioner referred her to a specialist orthopaedic surgeon, Mr. von der Borch. The respondent saw him for the first time on 11th February 1988. He advised conservative management of her condition. Her pain and discomfort continued. She again saw Mr. von der Borch on 6th March 1989 and, at his suggestion, saw Mr. Wicks on 3rd April 1989. His diagnosis was that she was suffering from a supra-spinatus tendonitis with a secondary impingement syndrome. He advised injection of local steroid which advice was rejected by the respondent due to an aversion to injections.

9. Mr. Wicks saw the respondent on many subsequent occasions. As her condition had not improved, he performed an arthroscopy of the gleno-humeral joint which revealed some redness of the under surface of the capsule and a large hiatus around the biceps tendon. He then performed an operation of sub-acromial space and removed the thickened bursa, the anterior surface of the acromion and coraco-acromial ligament. Her condition did not improve and the scars from the operation are unsightly. The relationship between the respondent and her husband became strained. They sold the delicatessen business in late 1989 and they separated at the end of January 1990. On 8th November 1989 Mr. Wicks arranged for further radiological examination of the respondent's shoulder joint and formed the view it was progressing satisfactorily.

10. About three weeks after the separation, the respondent commenced to work in the business of manufacturing slate hearths for fireplaces which had previously been conducted by her brother. Her father gave her some assistance in lifting the heaviest pieces of slate but otherwise she carried out all of the work herself which included cutting the base board for each hearth, cutting the pieces of slate to the appropriate size and shape and mounting them on the board. She claimed that she could manage the tasks as long as she could work at her own pace.

11. By this time the respondent had moved to Yankalilla and consulted another general medical practitioner. She made much the same complaints to him as she had made to the other medical practitioners. He referred her to Mr. Teague, also a specialist orthopaedic surgeon. He performed another operation on 28th October 1991 and excised the lateral end of the left clavicle. A remnant of the left clavicle was then anchored with a transfer of the coraco-acromial ligament. Despite undertaking physiotherapy, this operation did not relieve the respondent's symptoms. Her brother resumed operation of the slate hearth business in May 1991 with the consequence that her shoulder was under less strain. She has not undertaken any paid employment since that time. Mr. Fry, another orthopaedic surgeon, examined the respondent before and after the operation performed by Mr. Teague. He formed the opinion that the respondent had suffered a mechanical injury to the rotator cuff mechanism with a consequential impingement syndrome and that further surgery, the procedure of decompression, might assist her. Whilst Mr. Teague was inclined to the same view, a radiologist's report on an ultra-sound study performed on 10th April 1992 persuaded him that more conservative treatment was indicated. Mr. Fry agreed but also expressed the opinion that the respondent may require further surgery at some future time. According to the respondent, her condition has not improved although Mr. Teague thought that there had been some improvement when he examined her on 19th May 1992.

12. The respondent's mother became very ill in early 1992 and died in March 1992. Her illness and death placed physical and emotional strain on the respondent, apparently due to housekeeping and other duties she had undertaken for her parents, including nursing her dying mother.

13. The learned Trial Judge found that the earning capacity of the respondent had been impaired in consequence of the injury to her shoulder. She can only perform light work and her condition may improve but the impairment to her earning capacity is permanent. That is how I interpret his finding that the repsondent "will probably remain restricted to the lighter forms of work in future". He rejected the contention that the true measure of the respondent's past economic loss was the amount which she would have earned had she remained in the employ of the Casino. No doubt that contention included deducting from those earnings the amounts earned by her in the delicatessen and slate business. The learned Trial Judge said:-
    "The plaintiff must, of course, be compensated for the
    diminution in her earning capacity between the date of the
    accident and the date of the trial. Her earning capacity was
    by no means totally lost. She was physically fit to do many
    kinds of work. She was not, however, fully fit to do the type
    of work that she had expected to perform at the delicatessen.
    Her capacity to do other work has been limited. Her
    performance in her brother's business shows, however, that she
    was not by any means totally incapacitated for work. The
    combination of pain and restriction of movement have limited
    the types of work and other activity that she has been fit to
    undertake. It is now five years since the accident occurred.
    Taking all of the factors and the contingencies into account,
    I am satisfied that justice will be done between the parties
    if I award the plaintiff $30,000.00 in damages for the loss of
    her working capacity in the past."

14. With respect to damages for future economic loss, the learned Trial Judge said:-
    "The loss of her earning capacity is significant. Her
    education was not taken very far. Her experience in the
    work-force has not been great. I am satisfied, however, that
    she will be able to work at bench level or below that level.
    She will be handicapped for some time in her search for
    employment. Even after obtaining employment, she will be more
    vulnerable than a physically fit employee to having her
    services terminated. On the other hand, I am satisfied that
    the function in her shoulder will improve with the passage of
    time, and that her level of discomfort will progressively
    lessen. I must take into account that there is a distinct
    possibility that she will have to have a further operation.
    She is a person of spirit, however, and I think that the
    probabilities are that she will find suitable work in the not
    too far distant future."

15. The grounds of appeal occupy in excess of three pages. They relate to almost every finding made by the learned Trial Judge in relation to damages for economic loss. I do not propose to mention all of the grounds of appeal. I have had regard to them but, in the main, they are no more than particulars of the bases for the contention that the awards for damages for past and future economic loss are manifestly excessive, that the learned Trial Judge erred in making certain findings and that he failed to make other findings. I mention only those which assumed particular significance at the hearing of the appeal.

16. The appellant contends that the evidence justified the finding that the respondent resigned her employment at the Casino for reasons unconnected with her injuries and so that she could work in the delicatessen business and that the learned Trial Judge should have made such a finding. He further contends that the learned Trial Judge should have found that the respondent did not suffer any loss of income as a result of her injuries caused by the accident when she was working in the delicatessen business and in the slate hearth business. Furthermore, he should have found that since ceasing to work in the slate hearth business, she had not sought employment or to utilize her residual earning capacity in any way. It was contended that the evidence discloses that the respondent had not suffered any loss of income since she resigned her employment at the Casino and there were only relatively brief periods since that time during which she was unable to work on account of her injuries. The appellant also challenges the finding of the learned Trial Judge that after the appellant had obtained permanent employment at the Casino, she earned about $500 per week after deduction of income taxation.

17. In her evidence the respondent said that her earnings at this time were, on the average, about $500 per week after deducting income taxation. However, her income taxation return for the period from 1st July 1986 to 30th June 1987 discloses a gross income of $24,000 for that employment and a net income of a little in excess of $18,100, nearly $350 per week. Her base rate of pay was $381.60 per week gross, together with penalties for shift work. The discrepancy between the respondent's evidence and what was disclosed in the income taxation return was not explored in evidence. It seems that the learned Trial Judge was inclined to accept the evidence of the respondent without having regard to the disclosure in the income taxation return. There is no reason to suppose that the information contained in the income taxation return is not accurate and it was represented by the respondent to the Taxation Department as an accurate disclosure of her income. In my view, the learned Trial Judge should have made his finding on the basis of the disclosure in the return and found that her net earnings were about $350 per week.

18. The learned Trial Judge did not say in his reasons for judgment that the respondent had resigned her employment at the Casino in consequence of her injuries but it is implicit in his reasoning that he took that view. He mentioned that in her evidence she said that she had resigned because her neck and shoulder were too painful for her to be able to do her customary work. No doubt he had in mind the well-settled principles governing the assessment of compensatory damages in tort, namely that the injured party should receive compensation in a sum which, so far as money can do, will put that party in the same position as he or she would have been in if the tort had not been committed: Haines v. Bendall (1991) 172 CLR 60 at p 63 and that diminution of earning capacity must be productive of financial loss: Graham v. Baker (1961) 106 CLR 340 at p 347 and Griffiths v. Kerkemeyer (1977) 139 CLR 161 per Gibbs J at p 165. In making an award for past economic loss, the learned Trial Judge obviously concluded that the respondent had suffered a diminution in her earning capacity due to the injuries sustained in the accident which was productive of financial loss. Whilst he did not expressly say so, it may be accepted that he found that the injuries sustained by the respondent caused her to alter her plans to continue to work at the Casino and to work at the delicatessen in her spare time. It would appear that the evidence contained in the records of the Casino relating to the respondent did not cause him to doubt that the respondent resigned her employment because of her injuries.

19. The information contained in the taxation returns of the respondent admitted into evidence reveal that the gross income of the respondent from the delicatessen business and the slate hearth business was considerably less than her earnings at the Casino. The contention that the learned Trial Judge should have found that the respondent did not suffer any loss of income as a result of her injuries must be rejected. The learned Trial Judge found that she did and that finding is fully justified by the evidence.

20. The respondent did not seek paid employment after she had ceased to work in the slate hearth business and she devoted her time to what she regarded as family responsibilities. If the damages for past economic loss were to be measured by the amount which the respondent would have earned had she not been injured, a finding to that effect would have been appropriate. However, it appears that the learned Trial Judge has not adopted that approach. He has accepted that the respondent had suffered a diminution of her earning capacity. She could not undertake all of the work which she would have done in the delicatessen business but for her injuries and shehe had to give up her work at the Casino.

21. The finding that the respondent had suffered a diminution in her earning capacity was fully justified by the evidence. If she had not been injured she would probably have continued to work at the Casino and in the delicatessen business on a part-time basis. The period embraced by the damages for past economic loss is about five years. Given the nature of the injuries and the continuing symptoms, an award of $30,000 for all of that period does not appear excessive even after making due allowance for those periods when the respondent chose not to seek paid employment. I do not think for one moment that the learned Trial Judge, in arriving at that amount, was attempting to calculate a constant loss over the whole period. No doubt he accepted that the respondent suffered less by way of loss whilst working in the delicatessen and hearth slate businesses and that since that time she had not sought paid employment. There is no reason to suppose that he attributed a substantial part of the award to that period.

22. There is a suggestion in a written submission of the appellant as to the calculation of past loss of earnings that the respondent abandoned, at trial, her claim for past economic loss during the period she worked in the delicatessen business. It is clear from the transcript that she did not abandon that claim. Due to lack of discovery, she in effect conceded that there would not be any claim for loss of profits of that business as opposed to loss of her earning capacity.

23. I have considered whether the apparent error of the learned Trial Judge as to the level of the respondent's earnings at the Casino has resulted in the awards for past and future economic loss being excessive. I do not think so. Both of these awards have been made on the basis of an estimate, in money terms, of the extent of the loss of earning capacity. They have not been made on the basis of strict arithmetical or actuarial calculations.

24. The complaint about the award for future economic loss is that the learned Trial Judge failed to have sufficient regard to his finding that the respondent will find suitable work in the not too far distant future and that he failed to have sufficient regard to her choosing not to seek paid employment since May 1991 for reasons not related to her injuries. In my view there is no merit in this complaint. The reasons for this award are justified by the evidence. Apart from those stated by the learned Trial Judge, it must be remembered that she is a young woman who has a long working life ahead of her. Even if she does find suitable work, it may not be at the level of remuneration which she may have received had she not been injured, due to her incapacity. As the learned Trial Judge observed, she will always be vulnerable to loss of employment because of her injuries.

25. In my view there is no reason to suppose that either the award for past economic loss or the amount for future economic loss is a totally erroneous estimate of the respondent's true loss. I would dismiss the appeal.

JUDGE3 PERRY J I agree that the appeal should be dismissed for the reasons given by Mullighan J.