Lormine Pty Ltd v Xuereb - [2006] NSWCA 200

NEW SOUTH WALES COURT OF APPEAL

CITATION: LORMINE PTY LTD & ANOR v XUEREB [2006] NSWCA 200

FILE NUMBER(S):
40235/05

HEARING DATE(S): 16 February 2006

DECISION DATE: 25/07/2006

PARTIES:
LORMINE PTY LTD
RONALD JAMES HUNTER
JULIET DAWN XUEREB

JUDGMENT OF: Mason P McColl JA Hunt AJA

LOWER COURT JURISDICTION: District Court

LOWER COURT FILE NUMBER(S): DC 5179/03

LOWER COURT JUDICIAL OFFICER: Ashford DCJ

COUNSEL:
Appellants: S G Campbell SC/ C K Hickey
Respondent: P R Arden SC/ T Boyd

SOLICITORS:
Appellants: Barraclough Jones & Associates
Respondent: Herbert Weller

CATCHWORDS:
NEGLIGENCE – Under statute – Civil liability legislation – Plaintiff’s participation in dolphin watch cruise – Whether a “dangerous recreational activity” – Whether travelling on foredeck posed “obvious” risk – Whether risk of rogue wave “inherent” – Civil Liability Act 2002, ss 5F, 5I, 5K and 5L.
NEGLIGENCE – Personal injury – Damages – Economic loss – Assessment – Plaintiff to show diminution in earning capacity productive of financial loss – Civil Liability Act 2002, s 13.
CONTRACTS – Exclusion clause – Incorporation by signature – Whether intended to affect legal relations – Whether for purposes of head count only – Sufficiency of notice – Construction – Contra proferentem.

LEGISLATION CITED:
Civil Liability Act 2002

DECISION:
Appeal allowed in part. Respondent's (plaintiff's) verdict reduced from $171,548 to $64,720.

JUDGMENT:

IN THE SUPREME COURT
OF NEW SOUTH WALES
COURT OF APPEAL

CA 40235/05
MASON P
McCOLL JA
HUNT AJA
Tuesday 25 July 2006

LORMINE PTY LTD & Anor v Juliet Dawn XUEREB

The Civil Liability Act 2002 provides:

5I No liability for materialisation of inherent risk

A person is not liable in negligence for harm suffered by another person as a result of the materialisation of an inherent risk.
An inherent risk is a risk of something occurring that cannot be avoided by the exercise of reasonable care and skill.
This section does not operate to exclude liability in connection with a duty to warn of a risk.

5L No liability for harm suffered from obvious risks of dangerous recreational activities

A person (the defendant) is not liable in negligence for harm suffered by another person (the plaintiff) as a result of the materialisation of an obvious risk of a dangerous recreational activity engaged in by the plaintiff.
This section applies whether or not the plaintiff was aware of the risk.

5F Meaning of “obvious risk”

For the purposes of this Division, an obvious risk to a person who suffers harm is a risk that, in the circumstances, would have been obvious to a reasonable person in the position of that person.
Obvious risks include risks that are patent or a matter of common knowledge.
A risk of something occurring can be an obvious risk even though it has a low probability of occurring.
A risk can be an obvious risk even if the risk (or a condition or circumstance that gives rise to the risk) is not prominent, conspicuous or physically observable.

5K Definitions

In this Division:

dangerous recreational activity means a recreational activity that involves a significant risk of physical harm.

obvious risk has the same meaning as it has in Division 4.

recreational activity includes:

(a)any sport (whether or not the sport is an organised activity), and
(b)any pursuit or activity engaged in for enjoyment, relaxation or leisure, and
(c)any pursuit or activity engaged in at a place (such as a beach, park or other public open space) where people ordinarily engage in sport or in any pursuit or activity for enjoyment, relaxation or leisure.

The first appellant owned and operated a ship skippered by the second appellant. The respondent-plaintiff joined approximately 20 adults and children on a dolphin-watching cruise she had been encouraged to book after reading the shipowner’s brochure indicating “calm ocean waters…suit[able for] people of all ages”. The tour had been booked the day before the trip. On arrival at the dock on the day of the trip, passengers were shown a form with printing at the top and blank spaces below which was required to be ticked for attendance and signed. Advised that the form was for head count purposes, the respondent ticked herself off and the members of her party, initialling for each of them in the space provided. The unread printed portion of the form purported to waive the shipowner’s liability in respect of “SCUBA diving and/or snorkelling activities, as well as the use of any facilities and the use of the equipment” of the Dive Centre. Once out to sea, the captain invited willing passengers to travel on the foredeck by sitting on the bow, holding themselves secure by handling the rails . Having taken up the offer, the respondent was swept astern by the force of a rogue wave which crashed over the bow, causing her to sustain severe injuries.

The trial judge found that the captain had failed to keep a proper lookout for the wave meaning he did not have sufficient time to turn the boat directly into the path of the wave.

HELD:

(Per Mason P, McColl JA and Hunt AJA agreeing) The defendant bears the onus of proof under s 5L. The question is determined objectively and prospectively. The standard lies between triviality and likelihood. Significance is informed by both the elements of risk and physical harm. (at [31])

Falvo v Australia Oztag Sports Association [2006] NSWCA 17 and Fallas v
Mourlas [2006] NSWCA 32, followed.

The appellant’s brochure admitted of the gentle activity in which the respondent had been invited to engage. There was nothing to suggest getting swamped by a wave was one of the expected thrills of the cruise. (at [32])

Although s 5L applies whether or not the plaintiff is aware of the risk, the tribunal of fact is entitled to assess the matter from the perspective of what the defendants had or had not represented would be involved. (at [33])

The risk was not obvious. (at [34])

The risk was not inherent in the statutory sense of being unavoidable by the exercise of reasonable care and skill. It had in fact been want of care and skill that caused the injuries. (at [36])

A signed contract does not require proof that its terms were brought to the notice of the signing party. However, there was evidence which raised doubt as to whether the signature was to affect legal relations and whether the effect of the waiver terms, in any event, were misrepresented as being only for head count purposes. Whether the form was intended to effect a variation of an existing contract was not conveyed. (at [17], [20])

Toll (FGCT) v Alphapharm Pty Ltd (2004) 219 CLR 165, referred to.

Ambiguous clauses may be read contra proferentem. The clause’s preamble confined its scope to diving and snorkelling; “use” of “facilities” and “equipment” are well capable of being read as references to facilities and equipment in connection with those activities. (at [18]-[19], [21]-[22])

The award of damages for non-economic loss did not give sufficient allowance for the respondent’s pre-existing condition and was otherwise excessive. (at [48]-[49])

The award for economic loss could not be supported on the evidence and had to be reduced. (at [57]-[58])

A plaintiff must show that any diminution of earning capacity was or may be productive of financial loss. (at [59]-[60])

Graham v Baker (1961) 106 CLR 340 at 346-347, referred to.

ORDERS: Appeal allowed in part. Respondent’s (plaintiff’s) verdict reduced from $171,548 to $64,720. Respondent (plaintiff) to pay one half of the appellant’s costs of the appeal.

IN THE SUPREME COURT
OF NEW SOUTH WALES
COURT OF APPEAL

CA 40235/05
MASON P
McCOLL JA
HUNT AJA
Tuesday 25 July 2006

LORMINE PTY LTD & Anor v Juliet Dawn XUEREB

JUDGMENT

MASON P: The first appellant (the shipowner) operated and the second appellant (the captain) skippered a 10 metre power-driven catamaran, "Avanti". The foredeck is fitted with stainless steel rails and is accessible through a hatch from the main cabin area. Astern of the small, partially enclosed cabin is an open deck area. The vessel is navigated from a control console immediately astern of the windscreen and located at the forward end of the cabin.
The respondent (the plaintiff) was in a group of approximately 20 adults and children who were enjoying a dolphin watching cruise on "Avanti" not far from shore just north of Forster on 29 November 2000. She and her husband had been encouraged to book a tour upon reading the shipowner's brochure that relevantly stated:
Forster has its own unique pods of resident Dolphins which reside in the calm ocean waters 10 minutes offshore....Dolphin Watch Cruises suit people of all ages. For the more adventuresome (adults-15 years and over) you will have the opportunity to get in the water and swim with our dolphins.
Accepting the evidence of the plaintiff and her witnesses, the trial judge (Ashford DCJ) found that, after the vessel got out to sea, the captain advised that passengers were permitted to sit on the bow so long as any children were accompanied by an adult. The plaintiff chose to do so and took up a position on the starboard side, looking out to sea as the vessel moved north.
The vessel was in what was described as the wave zone, perhaps as close as 35 metres from the beach. The captain was assisting those passengers on the aft deck who were preparing to swim with the dolphins. He was the only employee on board.
A large wave was spotted, bearing down at 90 degrees to the vessel. The captain moved back to the controls and endeavoured to turn the vessel eastwards, but was too late to get it beyond 45 degrees or a little less into the wave. According to the captain's statement, he was still turning when the wave "popped onto the vessel" (Blue 295).
The force of the wave dislodged the plaintiff although she was holding onto her daughter and the bow rail. As the wave crashed over the bow she was swept astern, slamming her back into the rear of the bow area. She ended up wedged in the hatchway and was quite severely injured. The wave was considerably more than one metre high.
The trial judge held that the captain was negligent in that he did not keep a proper lookout considering the area he was in, and that as a result of this negligence he exposed the passengers to the risk that the vessel would collide with a significant wave, which it did. The defendants did not deny that the risk in question was foreseeable (to themselves). In such circumstances, it was held that:
... the defendant should have taken precautions by removing passengers from the bow of the vessel whilst in close proximity to the wave zone and/or removing the vessel from that area.
The trial had been conducted on the basis that the shipowner was vicariously liable for any negligence on the part of its captain.
The grounds of appeal that were pressed raised the following issues:
Reliance on an exemption/waiver clause;
Factual challenges to negligence finding (including complaint about reliance upon the expert evidence of Peter Burge);
Invocation of the Civil Liability Act;
Challenges to damages.
There was a cross-appeal in which the plaintiff contended for a different costs order than awarded. During argument in this Court, it became common ground that the costs order in the plaintiff's favour made at trial should be treated as an order for costs as between solicitor and client for the whole of the proceedings in the District Court. This was in accordance with the District Court Rules at the time. On that basis, the cross-appeal was ordered to be dismissed with no order as to costs (CA Tr p76).
Exemption/ waiver clause
The plaintiff booked the tour for her group on the day before the trip.
When families arrived at the dock on the day of the trip one of the adults was shown a form with printing at the top and several spaces below. He or she was asked to tick a space for every person in the particular group and to sign the form. The appellants' representative, Mr Stinson, told the plaintiff that the form was for the number of people on the boat and that it was necessary for her to tick for the number of people going on the cruise (in her party). The plaintiff ticked for six attendees, being herself and her husband, their three children and a child who was travelling with them. She also initialled the form six times. Her husband did not sign, nor was he asked to do so. The evidence is unclear as to whether the form-signing occurred before or after the tickets were paid for and whether, if it was after, anything was said at the time of payment to indicate that the contract was then incomplete.
The printed portion of the form read (emphasis added):
RELEASE OF LIABILITY, WAIVER OF CLAIMS
EXPRESS ASSUMPTION OF RISK AND INDEMNITY AGREEMENT
By signing this document you waive certain legal rights, including the right to sue.
Express assumption of the risks associated with diving and related activities.
I, who's [sic] signature appears below, hereby apply for a charter, SCUBA dive and/or sightseeing trip upon the following terms;
1.            I will pay to the business the appropriate fee as determined by it and notified to me from time to time and in accordance with such notification.
2.            I will comply with all the directions and instructions of the business and any of its servants, agents throughout the dive, snorkel and/or sightseeing.
3.            I do hereby affirm and acknowledge that I am a certified SCUBA diver and have been fully informed of the inherent hazards and risks associated with SCUBA diving and/orsnorkelling.
4.            In consideration of participating in SCUBA diving and/or snorkelling activities, as well as the use of any facilities and the use of the equipment of the Forster Fishermans Wharf Dive Centre, I hereby agree to waive and release any and all claims that I may have in the future against the Forster Fishermans Wharf Dive Centre.
5.            To release the Forster Fishermans Wharf Dive Centre, their officials, directors, employees, representatives, agents and volunteers, from liability and responsibility, whatsoever, for any claim or cause of action that I, my estate, heirs or executors or assigns may have for personal injury, property damage or wrongful death arising from SCUBA and/or skin diving activities.
6.            I further acknowledge that the effect of this waiver has been fully explained to me and I sign it freely and voluntarily acknowledge its full force and effect.
I hereby declare that I am of legal age and am competent to sign this agreement … I have read this agreement, I understand it, I agree to be bound by it.
The defendants pleaded that the form released them from liability.
The plaintiff gave evidence denying that she had read the document before signing it and stating that, because of what Mr Stinson told her, she believed it to be in respect of passenger numbers. This evidence was apparently accepted by the trial judge (J29). Her Honour also found that the defendant "did not discharge its obligation to do what was reasonably sufficient to give the plaintiff notice of the existence or content of the conditions" (J29). She also found that the waiver was not properly explained to the plaintiff (J30).
The appellants submit that this reasoning betrays the error exposed by the High Court in Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 where the Court pointed out that a signed contract does not require proof that its particular terms were brought to the notice of the party sought to be bound.
Some uncertainty surrounds the issues that were fought at trial in relation to the document that the plaintiff signed. There is, however, evidence that raises doubt as to whether the document was signed on the basis of affecting the legal relations of the parties (ie was it truly contractual?) and/or whether its terms were misrepresented to the plaintiff. The statements in the judgment as to what Mr Stinson said and what the plaintiff believed about the document suggests findings of material misrepresentation, although they are not expressed in such terms. The appellants invite this Court to decide the contract issue itself, according to the Toll principles.
During argument, the Court also raised the proper interpretation of the waiver clause, pointing to the references in clauses 4 and 5 to "SCUBA diving and/or snorkelling activities" and to the "Foster Fishermen's Wharf Dive Centre", a body whose relationship with the shipowner was assumed but not proved at trial. The heading as to "Express assumption of the risks associated with diving and related activities" was also suggestive of a narrower reading of the waiver and release clauses, even though the sentence following that heading and clause 2 embraced "sightseeing". Senior counsel for the appellants indicated that it was clause 4 that was relied upon. He submitted that the scope of the clause was not to be read down by reference to SCUBA diving and snorkelling. Alternatively, it was submitted that the plaintiff had used "facilities" and "equipment" of the Dive Centre when she boarded the vessel itself.
In this Court, the plaintiff invoked the principles as to strict construction of ambiguous exemption clauses as well as the contra proferentem rule.
I am quite unpersuaded that the waiver/release defence succeeds. The primary contract that was made either the day before the trip or when the tickets were paid for did not contain the terms of the form, nor did it give notice that there were express terms to be incorporated. The oral communications that led the plaintiff (fortuitously) to be the signing party for her family group did not convey that the document was contractual in intent or was to form a variation of an existing contract. Indeed, any contractual impact was misrepresented by the statement about head count.
In any event, clause 4 is so ambiguous both in its overall context and standing alone that I am unable to construe it as a release of claims for injury stemming from sightseeing. Its preamble confines its scope to SCUBA diving and snorkelling and the references to "use" of "facilities" and "equipment" are well capable of being read as references to facilities and equipment in connection with those activities.
Unfortunately for the plaintiff she signed the form, but fortunately for her she did not participate in any SCUBA diving or snorkelling activities.
The contractual defence therefore fails.

Findings of negligence

There was a miscellany of factual challenges to the finding that the captain was negligent in permitting passengers to sit at the bow when taking the vessel into or near the wave zone, in not seeing the large wave in time, and in not turning the boat into the wave quickly enough.
In large part, the appellants sought to challenge findings of fact that were well open on the evidence and supported by the testimony of several of the passengers (the plaintiff, her husband (J17-18), Mr Olsson (J12, 13), Mrs Olsson(J14-15) and Mr Boys (J21)). I agree with the trial judge's conclusions.
There were difficulties with the captain's evidence. He was contradicted by the passengers as regards him rushing to the wheel in a last-minute attempt to get the vessel pointing into the wave. His evidence was also found to be inconsistent with the passengers' evidence in stating that the wave was only one metre high (J23), itself a proposition hard to fit with the appellants' general case that the wave was freakish and entirely unexpected in its impact.
The appellants complain in their written submissions that the judge erred in preferring the evidence of the plaintiff's expert, Mr Burge, over that of the appellants' expert, Mr Duncum. It is unclear whether the appellants press the ground of appeal that contends that Mr Burge's evidence was inadmissible. At the end of the day nothing turns on this, because the particular matter referred to by the judge on which she accepted and preferred Mr Burge's evidence was "the need to keep a proper lookout whilst close to the vicinity of the wave zone". This is really commonsense given the appellants' case that wave action was foreseeable. Reference to this item of expert testimony did not occasion any substantial miscarriage.

Statutory issues

The appellants pleaded that participation in the Dolphin Watch Cruise was a dangerous recreational activity engaged in by the plaintiff and that the harm she suffered was a result of the materialisation of an obvious risk of that activity (Civil Liability 2002, ss5K, 5L). Section 5I of the Act was also invoked in that the wave was said to be an inherent risk that materialised.
Other statutory defences relating to the absence of duty of care because of risk warnings were pleaded, but are no longer pressed.
Judge Ashford characterised the activity in which the plaintiff was engaged as that of dolphin watching and held that this was not a dangerous recreational activity. Her Honour said that the plaintiff:
... was travelling on a licensed dolphin watch cruise under the hand of a master with the appropriate coxswain's certificate.... I do not believe any warning in relation to that activity was given to the plaintiff at the time of setting out on that cruise. The activity at that time was sitting on the vessel watching dolphins, a pleasant recreation. She and other members of the party had been invited by the defendant to sit on the bow to watch this activity. She had no intention of engaging in swimming with the dolphins or of diving.
The principles as to how an activity is to be characterised to determine if it is a "dangerous recreational activity" (ie a recreational activity that involves a significant risk of physical harm) are discussed in Falvo v Australia Oztag Sports Association [2006] NSWCA 17 and Fallas v Mourlas [2006] NSWCA 32. The defendant bears the burden of proof in establishing a defence under s 5L. The question is to be determined objectively and prospectively. The standard lies somewhere between a trivial risk and one that is likely to occur. Significance is to be informed by the elements of both risk and physical harm. The characterisation must take place in the particular context in which the plaintiff places himself or herself (see Fallas at [38]-[50], [92]). Accordingly, it is irrelevant for the appellants to rely upon evidence from the plaintiff about the risks of crossing the English Channel.
The first appellant's brochure (extracted above) was available by way of admission as a categorisation of the gentle activity that the plaintiff and her children were being invited to engage in. There was nothing to suggest to the reasonable reader that the particular vessel would go so close to the wave zone or generally into conditions where getting swamped was one of the expected thrills of the cruise. The plaintiff said that she did not even expect to get wet when she went up to the bow.
Section 5L applies whether or not the plaintiff was aware of the risk (see s 5L(2)). However, I do not accept the appellants' submission that the trial judge determined the character of the activity by reference to the plaintiff's subjective perception. Her Honour was entitled to assess the matter from the perspective of what the appellants had or had not represented would be involved.
It is unnecessary to consider whether an obvious risk of the activity materialised.
There is even less scope for the application of s5I which provides:
No liability for materialisation of inherent risk
(1)         A person is not liable in negligence for harm suffered by another person as a result of the materialisation of an inherent risk.
(2)         An inherent risk is a risk of something occurring that cannot be avoided by the exercise of reasonable care and skill.
(3)         This section does not operate to exclude liability in connection with a duty to warn or a risk.
The appellants did not establish that the harm suffered by the plaintiff was a result of the materialisation of an inherent risk, in the statutory sense of being unavoidable by the exercise of reasonable care and skill. On the contrary, it was established by the plaintiff that want of reasonable care and skill caused the injuries.
The statutory defences were properly rejected.

Damages

The trial judge awarded a verdict of $171,548 made up as follows:
non-economic loss (30% of a most extreme case) $92,000
past "wage loss"   $28,800
future loss of earning capacity   $32,028
past out of pocket expenses for treatment (agreed) $8,720
future medical and medication   $10,000
Nothing was awarded for interest, although this was claimed.
The accident on 29 November 2000 fractured the plaintiff's right patella and a rib on the right side. There were also injuries to the left hip and right foot and ankle. The plaintiff continued her Forster holiday, but she needed to use a wheelchair. For the next two months she used a walking stick due to the pain in her right knee. Between 26 December 2000 and 4 February 2001 she went with her mother to Guernsey on a pre-arranged holiday. There were many things she was then unable to do because of pain in her chest, knee and foot. She required pain medication. She continued to experience pain in the right knee and leg, although the pain in the chest and ribs had subsided. In May 2001 she was referred to a psychologist because of continuing distress and upset that she attributed to frustration and pain as a result of the injury.
The injury coupled with existing knee and back problems and the plaintiff's obesity triggered intermittent right lower back pain down to the right foot and persisting right knee pain worsened by walking, negotiating stairs or prolonged sitting.
A November 2004 assessment by Dr Adler, a consultant in pain management and musculoskeletal medicine with expertise in rehabilitation medicine, noted that the plaintiff continued to suffer chronic and quite significant disability with complaints of intermittent lower back pain referred down the right leg, intermittent right-sided sacroiliac joint pain, persisting right knee pain, intermittent left knee pain and intermittent right hip pain.
Dr Adler and other specialists considered many of the continuing problems to relate to a pre-existing right knee osteoarthritis which caused the plaintiff to limp and therefore strain her back. The plaintiff had an arthrotomy done when she was 15 years of age and had undergone arthroscopies in 1991 and 1992. (She was born on 24 September 1964 and was thus 36 at the date of the accident.)
Dr Scougall, an orthopaedic surgeon who examined the plaintiff on behalf of the appellants in 2003 and 2004, identified chronic soft tissue lesions in the back, right and left knees. He thought the boating injury described had aggravated pre-existing degenerative changes to the lower back. He referred to aggravation of moderate pre-existing osteoarthritic changes in the right knee caused by the undisplaced fracture of the upper part of the kneecap. He considered that there had been some aggravation of the left knee degeneration changes as well.
Several other doctors indicated that the plaintiff should lose a substantial amount of weight to alleviate her symptoms. Dr Scougall also considered a chondroplasty of the right knee and even total right knee replacement as possible surgical needs, although the pre-existing condition of the right knee was described by him as a substantial contributing factor for the need for such treatment. This prognosis was reflected in the award for future medical treatment.
The trial judge regarded the plaintiff's evidence as to her medical problems to be straightforward, although with some tendency to exaggeration. Her honour held that the accident aggravated and made symptomatic a pre-existing osteoarthritic right knee condition. The plaintiff played sport with no apparent right knee problem until the accident. The judge also accepted that there were some early degenerative changes in the left knee probably as a result of favouring the right knee; and that there had been some minor aggravation of these degenerative changes on that basis. There were no ongoing sequelae of the right seventh rib fracture.
The judge obviously accepted that some ongoing depression and mental distress stemmed (in part) from the accident (J45), although there had been some resolution of these symptoms and the plaintiff continued to receive some psychological counselling and medication. They had also been some alleviation of the back and leg pain although it continued and requires medication from time to time.
The judge found the plaintiff to be 30% of a most extreme case. Her Honour did not, at this stage in her reasons, make any allowance for the pre-existing difficulties or their capacity to have become symptomatic regardless of the tortious accident. This is said to involve error by the appellants who also contend that 30% is too high in any event.
It is unfortunate that the primary judge did not demonstrate explicitly that she had confined her assessment to the injuries stemming from the tort, although her earlier findings do describe the injuries in terms of progressions and aggravations of earlier degenerative changes. I think that this Court can do justice to the parties, and avoid the evil of a new trial, by confining itself to the question whether the assessment of the non-economic loss was beyond the range of a sound discretionary judgment. The appellants ask this Court to assess even if we hold the judgment below inadequate for want of reasons.
I consider 30% to be too high when one has regard to the pre-existing problems with the right knee (from age of 14), the pre-existing back pathology, the evidence of Dr Scougall as to the substantial impact of the existing condition together with the prognosis offered by him, the fact that there were signs of depression before the accident, the significant improvement to symptoms noted at the conclusion of the Back to Life program in September 2002 and the plaintiff's capacity to alleviate her symptoms by losing weight.
I would allow 25% of a most extreme case. This translates to an award of $26,000 in place of $92,000 for non-economic loss.
The other items of damages challenged on appeal relate to past and future economic loss.
The plaintiff has training and experience as a senior accounts clerk. She has also worked as a sales consultant, a personal assistant and in data entry. Between 1998 and 2003 she conducted a party plan business known as "Bags, Bears N Country Wares". She gave demonstrations at the homes of prospective purchasers who invited friends to a party. Orders would be taken and commissions earned. The job involved five or six demonstrations a week with the plaintiff transporting merchandise in boxes sometimes weighing up to 20 kg. Sometimes the plaintiff employed staff to assist her. It is far from clear whether this business was more remunerative than the plaintiff's earlier employment. In addition, the plaintiff was doing some part-time work from home for ACP Action at the time of the accident, working up to 30 hours per week and earning about $8,000 per year (Black 45).
Between September 2002 and the date of trial (November 2004) the plaintiff was a sole trader carrying on business as "V J Giftware Agency".
The plaintiff claimed past loss of earning capacity at $100 per week, a total of $28,800. The mathematical basis for this claim was not demonstrated in the plaintiff's evidence or the submissions filed at trial. The figure was accepted by the judge on the basis that "the plaintiff has experienced difficulty in physical activities necessitating bending and lifting and to that end I accept the assessment of $100 per week for that period." (J46). Her Honour had previously found (correctly in my view) that she gained no assistance from a schedule of tax returns from June 1999 to June 2004 that detailed business income, expenses and net income but offered no breakdown of expenses; and where the amounts varied without apparent explanation. The judge held that "it is not clear from the schedule prepared as to which amounts relate to which business" (J46). See also Orange 45-6.

The tax returns show gross income from the plaintiff's business as follows:
Year ended   Gross income
June       1999  $47,347
2000   93,285                  2001   78,480
2002  109,909
2003   96,692
2004   75,105

For most years the deductible expenses claimed in the returns were close to gross income (in 2003 they exceeded gross income). Nothing in the evidence or the nature of the expenses discloses material that points to the impact of the accident.

Future loss of earning capacity was assessed at $50 per week, thereby awarding the plaintiff half of what she claimed. No reasons were given to explain the mathematics of this assessment, although there are findings that the plaintiff continued to have some difficulties particularly in relation to personal exertions involving lifting, carrying and bending. The judge also held that the aggravation of pre-existing symptomology was continuing but lessening. Using the 5% tables with a multiplier of 753.6 less 15% for vicissitudes this produced a total sum of $32,028.
The appellants challenge the awards from economic loss on the basis that the $100 per week and $50 per week assessments for past and future loss were not substantiated by the tax returns or the evidence. They were nothing more than round figures claimed on the plaintiff's behalf. I have already endorsed the trial judge's critical remarks about the tax return schedules that were provided as the basis of the plaintiff's claims at trial.
The appellants also point to the findings as to the changes to the party plan business that responded to the plaintiff’s difficulties with carrying heavy loads as well as the findings of improvements to the plaintiff’s tortiously affected injuries.
In addition to challenging the (lack of) evidence upon which the economic loss awards were based, the appellants submit that the trial judge failed to apply the principle in Graham v Baker (1961) 106 CLR 340 at 346-7 requiring an injured plaintiff to show that any diminution of earning capacity was or may be productive of financial loss. See also Civil Liability Act s13. Her Honour paid no apparent regard to the plaintiff’s skills and experience; her part-time work with ACP Action at the time of the accident; or her capacity to obtain alternative forms of suitable employment in lieu of the somewhat problematic party plan business, that by the time of trial had been successfully modified in response to the lifting problems experienced by the plaintiff.
The appellants recognise that damages assessment in this area cannot be a precise mathematical exercise. And they must also accept that an increase in business earnings may mask a financial loss, given that a plaintiff might have earned even more if uninjured. However, the evidence does not really support any such hypothesis. The appellants concede that something in the order of $10,000 to $15,000 should have been awarded for the past and between nil and $5,000 for the future. I would hold the appellants to the upper levels of these somewhat generously conceded figures. The sums of $15,000 and $5,000 should be substituted for $28,800 and $32,028.

Disposition

The cross-appeal has already been disposed of (see above). Given the appellants’ limited success in the appeal I would award them one half of their costs in this Court. The trial costs order stands unaffected by the appeal unless there are Calderbank-type issues applicable to the adjusted damages to be awarded by this Court.
I propose the following orders:
1.Appeal allowed in part.
2.Reduce the plaintiff’s verdict from $171,548 to $64,720.
3.Respondent to pay one-half of appellants’ costs of the appeal and to have a certificate under the Suitors' Fund Act 1951, if qualified.
4.Liberty to apply to adjust the costs order referable to the trial costs in light of any settlement offers made at or before trial. If the parties
cannot agree on the sum within 21 days the party seeking variation is to file written submissions within 14 days, the other party to respond within 14 days. The matter will then be determined by this Court on the papers.
McCOLL JA: I agree with Mason P.
HUNT AJA: I agree with Mason P.

**********

LAST UPDATED: 31/07/2006