Mason v Battaglia, Spiller, Norco Co-Operative Ltd

[1997] QCA 193

IN THE COURT OF APPEAL	[1997] QCA 193
SUPREME COURT OF QUEENSLAND

Appeal No. 3765 of 1996

Brisbane

[Mason v. Battaglia]

BETWEEN:

AND:

MYRNA A. MASON

(First Defendant) Appellant

AND:  STEFAN BRUNO BATTAGLIA

(Plaintiff) Respondent

AND:

ANDREW JOHN SPILLER

(Second Defendant)

AND:

NORCO CO-OPERATIVE LIMITED

(Third Defendant)

McPherson J.A.
Dowsett J.

Mackenzie J.

Judgment delivered 27 June 1997

Judgment of the Court

APPEAL ALLOWED WITH COSTS. JUDGMENT VARIED BY REDUCING THE AMOUNT FOR WHICH JUDGMENT WAS GIVEN FROM $676,427.71 TO $322,427.71.

CATCHWORDS:	PERSONAL INJURIES - Damages - Quantum - Plaintiff carrying on business through companies - Ascertainment of loss - Seymour v. Gough [1979] 1 Qd.R. 89.
CONTRIBUTORY NEGLIGENCE - Proof of - Failure to wear seat belt.
Counsel:	Mr P.A. Keane Q.C. S.-G. for the Appellant Mr R.R. Douglas Q.C., with him, C.G.S.L. Jensen, for the respondent
Solicitors:	Clayton Utz for the Appellant Rogers Matheson Clark for the Respondent
Hearing Date:	13 June 1997

IN THE COURT OF APPEAL

SUPREME COURT OF QUEENSLAND

Appeal No. 3765 of 1996

Brisbane

Before McPherson J.A.
Dowsett J.
Mackenzie J.

[Mason v. Battaglia]

BETWEEN:

MYRNA A. MASON

(First Defendant) Appellant

AND:  STEFAN BRUNO BATTAGLIA

(Plaintiff) Respondent

AND:

ANDREW JOHN SPILLER

(Second Defendant)

AND:

NORCO CO-OPERATIVE LIMITED

(Third Defendant)

REASONS FOR JUDGMENT - THE COURT

Judgment delivered 27 June 1997

On 21 August 1986 the plaintiff was injured in an accident involving a motor vehicle in which

he was travelling as a passenger in the front seat. He sustained various injuries, of which the most

serious were a closed head injury with cerebral oedema and laceration of a small bowel mesentery. In

an action in the Supreme Court, he was awarded a total of $676,427.71 for all categories of damage.

It is not necessary to specify each of them in detail because the sole item challenged on this appeal is

the amount of $400,000 awarded for loss of earning capacity, together with a sum of $72,000 representing interest on the pre-trial component of that award, which was $200,000. Apart from that,

the only point in issue on the appeal is the trial judge’s decision not to reduce the damages on account

of contributory negligence arising from the plaintiff’s failure to wear a seat belt.

The plaintiff was 50 years old at the time of the accident and 60 at the time of trial. He came

to Australia from Italy in 1955 and, after a period as a manual labourer, he set up business as a builder,

and later turned to real estate development. In this he was remarkably successful, having, by the time

of the accident, accumulated assets valued at some millions of dollars.

The assessment of the plaintiff’s damages for economic loss presented a number of difficulties

at the trial . In many respects the learned judge formed an unfavourable impression of much of the

evidence of the plaintiff and of his accountant Mr Jackson, whose testimony he described as, for the

most part, deserving of being treated with scepticism. This impression had and has consequences in two

directions. In the first place, it made for difficulty in determining the plaintiff’s true post-accident

condition. As a result of his injuries, the plaintiff had, his Honour found, sustained intellectual and

psychological impairment producing a state of depression, which at one point in the judgment was

described as being “of a marked order”. However, its nature and degree was difficult to determine

because of exaggeration and even misrepresentation on the part of the plaintiff and his witnesses. The

plaintiff has been rendered more vulnerable to stress, and has become less imaginative and decisive in

affairs of business; but, while that entailed some reduction in earning capacity, his Honour concluded

that the plaintiff had not established that he was incapable of transacting business. Indeed, in 1990 and

1991 the plaintiff had taken advantage of his supply of hard currency to make purchases on favourable

terms of houses, commercial premises, and a hardware business in Argentina. There was, his Honour also found, good reason to suppose that he was responsible for the decisions to acquire those

properties, and that it was he who was in control of their general management.

Accepting that the plaintiff suffered some loss of earning capacity, the other and more

formidable obstacle to a substantial award for economic loss in the present case is the way in which the

plaintiff had chosen to structure and conduct his business affairs. At some stage before the accident in

1986, the businesses had been given corporate form, with the further interposition of a family trust

through which the income was channelled in what was no doubt intended to be a tax-reducing

arrangement. The trust deed is not evidence; but what is clear is that the income ultimately reaching the

plaintiff had its origin in three sources, which were: (a) salary paid to the plaintiff by the company or

companies; (b) dividends declared and paid to him; and (c) the advantage that accrued to the plaintiff

personally by having ready access to loans from the companies at rates of interest lower than those

available on the open market.

The plaintiff’s economic loss falls to be assessed against this background. It is true that, as is

sometimes said, a plaintiff must be compensated for the loss of earning capacity inflicted on him by the

wrongdoer; but the starting point for measuring any such loss is the amount he was earning before the

injury and the amount that, without the injury, he would probably have earned in the future. An injured

plaintiff recovers “not merely because his earning capacity has been diminished but because the

diminution of his earning capacity is or may be productive of financial loss”: see Graham v. Baker

(1961) 106 C.L.R. 340, 347. If, notwithstanding such impairment, his employment and his right to

remuneration remain and are likely to continue, the impairment he has suffered will not readily be proved

to have resulted in recoverable loss; cf. Graham v. Baker, at 347.

In the present case, therefore, the prima facie measure of the plaintiff’s loss is the difference

between the amount he was receiving, directly or indirectly, from his exertions before the accident, and

the amount he has since received and is likely to continue receiving from that source in the future. The

quantum of that loss is not to be confused with the amount of the loss that might have been, or may yet

be, sustained by the companies themselves as a result of the injuries to the plaintiff: see Seymour v.

Gough [1996] 1 Qd.R. 89. The plaintiff’s loss is only a part of the corporate loss, and can of course

never exceed it. It is nevertheless right to add that, accepting that in this case the interposition of the

corporate structure and trusts has had a depressing effect on the income which the plaintiff would

otherwise have received in person, it would no doubt have been open to him at any time to withdraw

his services and strike out again in business on his own. The impairment of his business acumen and

consequent diminution in his earning capacity would or might in that event have been reflected in a

greater loss by him of income, and consequentially in the amount of damages he would expect to

receive. That is a factor to be borne in mind in making the assessment here; but even if some allowance

is made for it in arriving at the plaintiff’s future loss, it cannot in this instance count for very much. There

is in the evidence nothing to suggest that, apart from the accident, he would have severed, or been

forced in the future to sever, relations with the corporate business, nor that at some indeterminate future

time he will be thrown upon the vagaries of the labour market encumbered with the disability of the

diminished earning capacity from which he now suffers.

Equally, and contrary to the respondent’s submission on appeal, it is not possible to award him

some conjectural lump sum as compensation for the lost opportunity of intercepting a larger part of

increased corporate earnings in the future. There is nothing before us to show the nature of the rights

attaching to shares in the companies, or the consequences that would follow if the plaintiff were minded and able to place them in liquidation, or otherwise to effect an authorised distribution of their assets to

the members. Even assuming that, as a consequence of impairing the directing mind and will of the

corporate structure, it is now worth less than before, the loss is one that the company and not the

shareholders have suffered, and it confers on them no right or claim for or in respect of it. See Roberts

v. Coventry Corporation [1947] 1 All E.R. 308; and Gould v. Vaggelas (1996) 137 C.L.R. 215.

In so far as the value of the plaintiff’s investment in the company has been diminished, that loss is not

an item which is recoverable in this action by the plaintiff: Seymour v. Gough [1996] 1 Qd.R. 89, 91.

With these considerations in mind, it is necessary to return to the evidence given at trial in

support of the plaintiff’s claim for economic loss. The learned judge, it will be recalled, awarded

$400,000 for the reduction in earning capacity over a working life which his Honour fixed at 12 years

from the date of the accident, apportioning that sum as to half for the past and half for the future. To

arrive at that result, the learned judge adopted an average annual loss of $30,000 as representing the

reduction in salary and dividends which would have been received, together with the advantages of

having access to substantial loans at low interest rates which would have been but had presumably

ceased to be available. The taxable or gross income required to earn an average nett annual income

of $30,000 during the period 1989 to 1996 was between $45,000 and $40,000 approximately. The

appellant compares this with the income of the plaintiff from salaries and dividends actually received in

each of the years ending June 30, 1981 to June 30, 1988, which is said to produce an average figure

of a little over $10,000 p.a. That average is, it must be said, substantially reduced by the last three

income figures of $13,983 for 1987 (which included $10,400 salary); nil for 1988; and $5,000 for

1989. It is possible that the income reduction in those years was in fact related to the fact that the

plaintiff was then still recuperating from the effects of the accident in 1986, and was paid less for his services as a result. There is, however, no evidence to that effect; and it must also be borne in mind that

the amounts of payments in fact received after the accident ought to be brought into account in reduction

of the claim for loss of earnings.

Even if the three figures for the years 1987, 1988 and 1989 are excluded from the calculation,

the average remains only some $16,000 p.a. for the period from 1981 to 1986, which is well short of

the amount of $30,000 p.a. nett in fact adopted by the trial judge for the purpose of his assessment.

Assuming that some further allowance is made for the loans advantage of low-interest loans, an award

of $400,000 remains unduly generous. Loss of the opportunity to obtain loans at low interest rates could

not account for more than the difference between the market interest rate and the rate of interest

payable by the plaintiff to his companies for loans of similar amounts. In any event, there is no evidence

from which it would be possible, with any degree of accuracy, to calculate what that difference would

or might have been.

The whole assessment of economic loss is extremely speculative. Even if that is in the nature

of things necessarily so, the task has not been made easier either for the trial judge or this Court by the

plaintiff’s distinct lack of candour in evidence concerning his commercial activities in the period since

the accident. There is not much reliable evidence about these matters. On one view, which his Honour

was prepared to some extent to entertain, the plaintiff’s incapacity might fortuitously have prevented

him or his companies from suffering severe losses during the economic downturn of 1990-1991 in

Australia, and instead enabled them or him to take advantage of the state of affairs prevailing in

Argentina then and thereafter. In the end, the judge’s award of $400,000 for economic loss finds little

tangible justification in the preceding findings which he made but, on the contrary, is to a considerable

extent belied by them. A “global” assessment was plainly called for, but not one as substantial as that made below. From the standpoint of recovering damages for economic loss, the problem facing the

plaintiff is that much of his pre-accident income derived not from salary or wages, but from property and

investments (including dividends received) that have, so far as the evidence goes, not been substantially

reduced by the effects of the accident or the injuries he sustained. All things considered, we would

substitute for the sum of $400,000 a figure of $100,000 as compensation for the plaintiff’s economic

loss, to be apportioned equally between the past and the future. The sum of $50,000 for past loss will

bear interest at 6% for six years = $18,000.

The total amount of damages awarded will, to that extent, therefore require reduction before

consideration is given to contributory negligence, which is the matter to which we now turn.

It is common ground that the plaintiff was not wearing a seat belt at the time of the accident.

The vehicle was owned by the appellant/first defendant who was also the driver. The plaintiff was

travelling in the front passenger seat. The first defendant said that she had, on three occasions that day,

asked that he use his seat belt. On the third occasion, a backseat passenger handed the plaintiff’s seat

belt to him saying, "She's asked you two or three times to put it on". The plaintiff replied, "I hate the

bloody things". He then pulled it across his body but did not buckle it. The first defendant said that at

the time of the collision, the plaintiff had gone to sleep and was still holding the belt in front of him. She

said that immediately after the collision, he was under the dashboard, having come off his seat. Other

evidence suggested that the plaintiff’s seat was pushed up against the front of the vehicle. The witness

Bradley had the impression that the plaintiff’s head had hit the pillar between the door and the

windscreen.

The plaintiff suffered extensive head injuries involving contusion to the brain with a small area of intracerebral haemorrhage and local oedema. He also suffered substantial damage to his abdomen. The learned trial Judge concluded that it was impossible to say that the absence of a seat belt was a

cause of the plaintiff's injuries because it had not been shown that they were caused as a result of his

being thrust into contact with the pillar and the dashboard by his forward movement. His Honour also

concluded that it had not been demonstrated that had the seat belt been in use, his injuries would have

been less severe.

There can be little doubt that by 1986 the use of seat belts was widespread and their role in

providing protection against personal injury in the event of collision was well-known. The plaintiff

argued that it had not been proven that the seat belt was in working order. It was said that this was a

necessary condition precedent to establishing a claim for contribution. In light of the evidence of the first

defendant that she had on three occasions asked the respondent to use his seat belt, we can see no

impediment to an inference that there was an appropriate seat belt and that it was in working order. As

much was clearly implicit in the first defendant’s evidence. The contrary was never suggested to her.

There was, however, no direct evidence as to the likely extent of the plaintiff’s injuries had he been

wearing a seat belt, or at least we were not referred to any such evidence. The first defendant preferred

to argue that an appropriate inference could be drawn from the fact that the driver walked away with

little if any substantial injury. She was wearing a seat belt.

In a simple case, the logic of such an argument may be acceptable. However, in this case there

was evidence that the plaintiff’s seat had moved. In those circumstances, it is more difficult to

reconstruct the sequence of events which led to his injury and to predict the likely outcome had he been

wearing his seat belt. We do not imply that it will always be necessary to call engineering or medical

evidence to establish that, had a particular plaintiff been wearing a seat belt, his or her injuries would

have been less severe. In the present case, however, we conclude that it is not possible on the evidence

to be satisfied on the balance of probabilities that such was the case.

In the result, therefore, the appeal fails with respect to the issue of contributory negligence; but,

for the reasons given, the appeal is allowed to the extent of varying the amount for which judgment was

given by reducing it from $676,427.71 to $322,427.71. The respondent is ordered to pay the costs

of the appeal.