McLaren v Dubbo Grazing Services
[2009] VCC 526
•29 April 2009
| IN THE COUNTY COURT OF VICTORIA | Revised |
Not Restricted
AT BALLARAT
CIVIL DIVISION
Case No. CI-07-05094
| ANDREW WAYNE McLAREN | Plaintiff |
| v | |
| DUBBO GRAZING SERVICES | Defendant |
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| JUDGE: | HER HONOUR JUDGE K L BOURKE |
| WHERE HELD: | Ballarat |
| DATE OF HEARING: | 20 April 2009 |
| DATE OF JUDGMENT: | 29 April 2009 |
| CASE MAY BE CITED AS: | McLaren v Dubbo Grazing Services |
| MEDIUM NEUTRAL CITATION: | [2009] VCC 0526 |
REASONS FOR JUDGMENT
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Catchwords: ACCIDENT COMPENSATION – Accident Compensation Act 1985 – injury to the lumbar spine – loss of earning capacity – gross income from personal exertion – worker employed by his own company.
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| APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr J Jordan SC with | Slater & Gordon |
| Mr M Nightingale | ||
| For the Defendant | Mr P Scanlon QC with | Herbert Geer |
| Mr I Gourlay | ||
| HER HONOUR: |
1 This is an application for leave to bring proceedings for damages pursuant to s.134AB(16)(b) of the Accident Compensation Act 1985 (“the Act”) for injury suffered by the plaintiff in the course of his employment with the defendant on 26 November 2003 (“the said date”).
2 The plaintiff seeks leave to bring proceedings for damages in relation to loss of earning capacity only. Counsel for the defendant conceded pain and suffering at the commencement of the hearing.
3 The plaintiff brings this application pursuant to clause (a) of the definition of serious injury to be found in s.134AB(37) of the Act. There, “serious” is defined relevantly as meaning:
“(a) permanent serious impairment or loss of a body function.”
4 The body function relied upon in this case is the lumbar spine.
5 The plaintiff relied upon two affidavits and gave viva voce evidence. He was cross-examined. In addition, both parties relied on medical reports and other material which was tendered in evidence. I have read all the tendered material.
The Plaintiff’s Evidence
6 The plaintiff is presently aged thirty-five, having been born on 10 January 1974.
7 Since leaving school as a fifteen year old in Year 10, the plaintiff has worked as a labourer, and mainly as a shearer.
8 For three to four years prior to the said date, the plaintiff’s work took him to various areas of Victoria and New South Wales. When he returned home to Glen Innes he would also work for various local contractors.
9 During his time in Victoria, the plaintiff worked for the defendant. He was shearing up to 400 sheep per day, a physically demanding job requiring full, free and unrestricted use of his back.
10 In the course of his work, the plaintiff suffered the usual backache and stiffness.
11 On the said date, the plaintiff was aged twenty-nine and his tallies were increasing to the point where he was earning close to $60,000 per year. He was getting better at shearing and he expected to peak in his tallies between the ages of thirty-five and forty-five, when he could then earn up to $100,000 per year. The plaintiff earned $35,380 in 2000-01, $48,703 in 2001-02 and $59,311 in 2002-03.
12 On the said date, whilst working at the “Kalabro” shed, the plaintiff went to the pen to grab a sheep which started hopping backwards on its hind legs. The plaintiff grabbed hold of the sheep’s front legs and it kicked out and propelled him into a nearby wall, hitting his low back with a lot of force (“the incident”).
13 The plaintiff tried to keep working that day but he found it difficult to stand up properly. He felt severe pain in his back and shivers down his legs.
14 The plaintiff attended Dr McLindon in Hamilton the following day. Dr McLindon put the plaintiff off work for a week and prescribed painkillers. The plaintiff then returned to shearing duties but he had a lot of problems with back pain over the next few months. His tallies were down and he found it difficult to do his work.
15 By early February 2004, the plaintiff’s back was so bad he had to stop shearing. He again saw Dr McLindon, who arranged investigations, and referred the plaintiff to a chiropractor.
16 The plaintiff received WorkCover payments for about two years after the incident.
17 The plaintiff applied for work as a meter reader in the local area with Country Energy in May 2005, but he did not get the job because he believed his back condition would have made it difficult for him to cope with the amount of walking involved.
18 The plaintiff initially bought the shearing contract business at Millers in July 2005. He then took out his own ABN and later set up New Age Shearing Pty Ltd (“the company”) in November 2005 to carry out his shearing contracting. He is the sole director of the company.
19 The plaintiff acts as a middle man, finding work for shearers, arranging their food and accommodation and paying their superannuation, tax and compensation premiums. He puts together the whole team, including cooks and roustabouts, to work at the various sheds.
20 To run his business the plaintiff lives in Mungindi, near the Queensland border, for seven months of the year and for the balance of the time he lives at home in Glen Innes doing clerical work. He does some bookwork but the accountant does most of it. The plaintiff also supervises the mustering and penning of sheep.
21 The plaintiff gives a quote for a shearing job and also adds a loading per sheep of 40 to 50 cents to the costs of the job. In the financial year ended 2006, the company did about 70,000 sheep, resulting in a loading of about $30,000 to $40,000 a year on top of the amounts quoted.
22 This loading payment stays within the company to help cover costs – it is “all going back into the expenses of the business”. The plaintiff could not explain where these payments appeared in either his individual financial documents or those of the company. He said that the loading had all been spent on bills.
23 In his work as a shearing contractor the plaintiff cannot make anywhere near the amount he made as a shearer. Since the financial year ending 30 June 2006, the plaintiff has paid himself a wage, but despite his best efforts, the wage has been small as the company has not been really successful.
24 The plaintiff agreed that his income was made up as follows:
Financial Company’s Total Wages Paid Plaintiff’s
Year Income Wages to the Earnings from Other Employers Expenses Total Plaintiff Claimed Income 2005-06 $273,790 $190,511 $11,469 $9,272 - Dubbo Grazing Services $433 clothing $34,355 $4,745 - J A Livingstone & Partners $640 tools $2,790 - G E & B M Locke $480 working $1,440 - Narrie Holdings dog expenses $3,675 - A W McLaren (own business)
2006-07 $219,516 $148,107 $15,232 $3,380 - J A Livingstone & Partners $155 clothing $20,711 $1,732 - Armidale Shearing Pty Ltd $156 working dog expenses 2007-08 $253,801 $178,630 $5,720 $2,990 - J A Livingstone & Partners $148 clothing $14,628 $4,788 - Armidale Shearing Pty Ltd $219 working $694 - P G & L G Wright dog expenses $168 - Narrie Holdings 25 The plaintiff admitted that he had done some shearing since the incident, having been cross-examined about claims made by him for moccasins and combs and cutters. He has not done much shearing. He has not shorn for a wage and in 2008 he had shorn probably about 50 to 100 sheep. He did the odd sheep and gave the other workers pointers on how to shear.
26 In running the company the plaintiff tries to avoid strain on his back. He has to do most of the shopping for his crew and this also involves unloading stores at the various sheds. This is very heavy work.
27 When he is penning, the plaintiff is basically filling up the shearers’ pens so that they can grab a sheep and keep the sheep flowing to the shed. Penning is sometimes heavy as during a drought the sheep will get poor and they do not like walking so they have to be picked up by the back and the penman has to try to get them to walk in the shed. The plaintiff would be unable to do penning full time because of his back condition.
28 If he is short staffed, the plaintiff is also required to fill in, cleaning up the floor or doing the work of a roustabout. That situation is no good for his back and is becoming harder and harder for him. He has no choice but to do these tasks as he cannot afford to employ further workers. Nine times out of ten the plaintiff gets someone else to pen and supervise. It is also difficult for the plaintiff to work with sheepdogs, as well as sheep. Any physical lifting of sheep causes pain.
29 The plaintiff could work full time in a supervisory role in the sheds but it would not be feasible because there was really no such thing as a paid full time supervisory job. Whilst supervising is not heavy work, it can be frustrating and get physical as the supervisor is required to keep an eye on the men and the sheep.
30 In cross-examination, it was suggested to the plaintiff that he could work as a wool classer. The plaintiff has worked in hundreds of sheds and has only seen one shed where the wool classer was not required to do physical work. The wool classer has to turn over the fleece to inspect it which requires physical effort and he also has to take the wool to the wool bin. The plaintiff could not do this job full time because he would be on his feet all day, bent over a table. Further, he would be required to do a bit of wool rolling which would make his back ache and was “pretty excruciating some days”. Wool classers charge between $200 and $280 per day.
31 In recent times the plaintiff has had twenty-four to twenty-five workers on his books. In the past he has had up to seventy. In cross-examination, the plaintiff agreed that he could do more work if it was available and that there was no reason the company could not increase its workload by in excess of 50 per cent.
32 However, in re-examination, the plaintiff explained that it was unlikely any increased work load would make the business more profitable. There was nothing he could do with his business to increase its earnings closer to the amount he would have earned whilst shearing. He can only work one shed at a time and he could not be in two places at once as he would be expected to supervise the shed. He confirmed he was not physically capable of doing more work.
33 The plaintiff would like to think that he could continue with his business but it is not financially viable. He is concerned at how long he will be able to do keep the business going. He did not think the current financial year would be up to other years. He has recently been approached by people wanting to buy the business and he will more than likely to sell it by the end of the financial year.
34 Other employment opportunities open where the plaintiff lives are very limited and involve mainly labouring work which he is incapable of performing.
35 The plaintiff is not trained in any field but shearing. He could not cope with a computer course in which he enrolled. He did not pass a Certificate IV in Workplace Training Assessment.
36 Before the incident, the plaintiff enjoyed a wide range of sporting activities, including motorbike riding and hunting, and he enjoyed an active sexual and social life. Since the incident, his back condition has interfered with activities, such as gym work, running, social cricket and golf. He no longer enjoys these activities to the extent he used to prior to the incident. The plaintiff is no longer able to carry out repairs at home and the heavier domestic tasks are not easy for him, thus he cannot maintain his house as he wants to. Looking after his working dogs is also difficult.
37 Before he ultimately came to surgery in February 2008, the plaintiff received chiropractic and physiotherapy treatment and massage, and he took painkillers and anti-inflammatories.
38 Over the years the plaintiff’s condition deteriorated to the extent where he had to go back to his specialist in Sydney, who advised surgery, which was aimed at helping his leg symptoms.
39 Following the surgery in February 2008, there was some improvement, mainly in the plaintiff’s leg pain, however he continues to suffer disabling back symptoms and symptoms in his left leg, and less occasionally in his right leg. On occasion his leg left feels weak and there have been times when it has given way, and that worries him as it may result in falling.
40 The plaintiff’s back pain is always there but it varies in intensity. The more he does the worse it gets. Physical activity placing strain on his spine and travel, walking long distances or sitting or standing for long periods can result in an increase in his symptoms. Frequently his back flares up for no reason at all and can be aggravated by coughing and sneezing.
41 The plaintiff was off work for a couple of months after the surgery and it has not been easy for him getting back to work.
42 The plaintiff continues under the care of Dr Brownlie at Glen Innes. His current treatment comprises seeing the chiropractor and doing home exercises.
43 The plaintiff has not taken significant amounts of prescription medication. He presently takes Valium once a week for sleep and on occasion he takes Panadeine Forte. He does not take Panadeine Forte before long drives as he thought he was not meant to do so as it made him feel drowsy. It also made him feel constipated and sick in the stomach.
44 When he last saw Mr Sheehy in December 2008, the plaintiff was getting physically worse.
The Plaintiff’s Medical Evidence
45 Dr McLindon first saw the plaintiff at Hamilton on 27 November 2003, when he presented with pain focally over the sacrum following the incident. Dr McLindon diagnosed a sacroiliac joint strain and requested x-rays and encouraged the plaintiff to use slings at work for shearing.
46 Dr McLindon noted that the lumbosacral spine x-rays showed no particular abnormalities and the plaintiff was prescribed Voltaren and advised to take four days off work.
47 The plaintiff re-attended on 10 February 2004, complaining of low-back pain and the possibility of early left sciatica. A CT scan arranged showed small disc bulges at L4-5 and L5-S1 with slight left lateralisation.
48 The plaintiff was referred for chiropractic review and treatment and was reviewed again on 17 February 2004, at which time he advised his pain was “okay” and he was planning on returning home.
49 Dr McLindon thought it appropriate the plaintiff have a month off work and return to his usual medical practitioner. He was given a prescription for Panadeine Forte to be used cautiously.
50 Dr Brownlie, the plaintiff’s general practitioner in Glen Innes, reported in late October 2008 that the plaintiff continued to have back pain and was depressed. The plaintiff found driving on rough roads detrimental to his back. He had full back movement but was slow to do anything with the passage of time. In Dr Brownlie’s view, the plaintiff was fit for work that was not severely physical.
51 On review on 9 April 2009, the plaintiff continued to have low-back pain with radiation down the left leg with some paresthesia in the left sole. He had a flat affect and appeared depressed. The plaintiff had full back movement, albeit slow. Dr Brownlie prescribed Panadeine Forte for pain.
52 Mr John Sheehy, neurosurgeon at St Vincent’s Clinic in Sydney, first saw the plaintiff on referral from Dr Brownlie in October 2004.
53 The plaintiff told Mr Sheehy his main ongoing problem was low-back pain; there was some leg pain but no true buttock pain. The plaintiff’s leg symptoms were worse when the plaintiff walked.
54 Having seen the CT scan of February 2004, Mr Sheehy concluded that at neither level did there appear to be significant nerve root compression, although there was certainly potential for nerve root irritation at the lumbosacral junction.
55 At that time Mr Sheehy’s inclination was strongly to a conservative plan and he recommended an MRI. He considered it problematical as to whether the plaintiff would ever return to shearing, and certainly not for six months. He thought it wiser if the plaintiff considered retraining in a more sedentary position.
56 The plaintiff next saw Mr Sheehy on 15 October 2007. The plaintiff told him of ongoing back problems and pain in either buttock at times, radiating to either thigh, and a numbness of the right foot. Symptoms were intermittent and were worse after heavier activities.
57 On examination, straight leg raising was to 60 degrees, there was mild restriction of lumbar flexion and extension was painful. Having seen the 2004 MRI scan for the first time, Mr Sheehy recommended a further MRI scan.
58 On examination on 27 November 2007, Mr Sheehy had the recent MRI scan. He noted that it had changed from the earlier investigation, and showed a disc disruption on the left at L5-S1, compressing the S1 nerve root. He also noted the L4-5 disc had a small midline tear without neural compression.
59 On that examination, straight leg raising was 40 degrees on the left and 70 degrees on the right.
60 In view of the plaintiff’s significant ongoing left buttock pain and the MRI changes, Mr Sheehy thought it was appropriate to carry out a left S1 nerve root decompression via an inter laminar approach. He thought that surgery would improve the plaintiff’s leg symptoms but it would not render him fit to go back to shearing.
61 On 25 February 2008, Mr Sheehy performed an elective decompression of the plaintiff’s left S1 nerve root.
62 Mr Sheehy next saw the plaintiff for review on 18 March 2008, three weeks post surgery. He noted that the pain had gone from the plaintiff’s leg and his walking was quite normal. The plaintiff had at that time begun increasing his activities. Mr Sheehy did not think the plaintiff should return to organising shearers for another month and he considered that the long distance driving would be the main problem.
63 In Mr Sheehy’s view, as a consequence of the injury, there would be a permanent restriction against work involving bending or lifting, and the plaintiff would be unable to return to shearing. He considered over time that the plaintiff would be likely to resume more supervisory type duties.
64 When he was last reviewed on 16 December 2008, the plaintiff reported that in some ways he had improved but in other ways there were significant ongoing problems. The plaintiff complained of intermittent problems with low- back pain, and at times pain radiating into either leg.
65 Straight leg raising was to 60 degrees. The left ankle jerk was depressed compared with the right. The plaintiff’s range of spinal movement was only mildly restricted and the plaintiff found extension helped with pain.
66 Mr Sheehy noted that the new MRI scan showed a tear in the posterior surface on the left side of the L5-S1 disc with mild discal prominence as a consequence. He noted there was good adipose tissue behind the S1 nerve root on the left and no significant nerve compression occurring. He noted the presence of lost height in the L5-S1 disc space.
67 Mr Sheehy thought no further surgical option was appropriate and that the plaintiff’s treatment should continue conservatively.
68 He thought that the penning duties were too much for the plaintiff and that he would be best advised not to have any contact activities or activities involving lifting and twisting. He supported the plaintiff’s intention to become retrained into a lighter type of activity as he was certainly unfit for shearing.
69 Mr Grahame Mahony, orthopaedic surgeon, examined the plaintiff on 30 November 2004. In his view, it was consistent that the incident had produced thinning of the L4-5 and lumbosacral disc spaces associated with disc lesions.
70 Mr Mahony advised further treatment in the form of intermittent physiotherapy and hydrotherapy, and suggested a lumbar support. He thought the plaintiff was unfit for work and advised him to seek other employment as he considered him permanently unfit to work as a shearer. In Mr Mahony’s view, the degeneration of the plaintiff’s low discs would be accelerated working as a shearer, and he suggested the plaintiff avoid activities involving significant bending or lifting.
71 Dr Michael Lowy, sexual health physician, examined the plaintiff on 30 November 2004. The plaintiff was then continuing to experience chronic low- back pain which was slowly improving, but in Dr Lowy’s view, it was evident that the plaintiff would no longer be able to work as a shearer.
72 Dr Lowy noted, in particular, that the plaintiff was unable to engage in sexual intercourse with the same frequency and enjoyment as in the past, with attempts at sexual intercourse resulting in increased back pain. In his view, there was no evidence the plaintiff had damaged the erectile mechanism, and he did not consider that the plaintiff’s injury had substantially contributed to his sexual dysfunction. He thought the plaintiff’s prognosis depended on the outcome of his chronic pain condition.
73 Mr Schofield, orthopaedic surgeon, examined the plaintiff on 27 March 2009.
74 The plaintiff complained of constant pain in the lumbar spine, mainly to the right of the midline, which was aggravated by prolonged sitting, standing or walking. The plaintiff had had no right sciatic pain since the surgery but he had some left leg numbness. The plaintiff told Mr Schofield that he felt his condition was not improving.
75 Mr Schofield felt the incident was consistent with the development of an acute lumbar disc prolapse which probably affected both L4-5 and lumbosacral discs – the latter being more severe and persistent – causing initial bilateral leg pains which over time became more laterally placed towards the left. As a result of the surgery, the degenerative disc, which was non-symptomatic and pre-dated the incident, had become more degenerate, demonstrated by a significant reduction of the lumbosacral disc height on plain x-ray. In addition, Mr Schofield thought the plaintiff had developed a recurrent disc prolapse causing his long term disability. Mr Schofield considered the scarring from the surgery was probably causing some of the plaintiff’s leg symptoms and that a positive cough impulse also indicated persistence or recurrence of a prolapse.
76 Mr Schofield diagnosed aggravation of pre-existing but non-symptomatic degenerative change affecting the lower two lumbar levels, with prolapse at the lumbosacral level becoming gradually increased and left sided, necessitating surgery. In his view, the plaintiff’s prognosis was guarded. He considered that the current MRI scan showed evidence of a recurrent prolapse without neural compression, causing the plaintiff’s persistent back pain and restriction of activities. He thought the plaintiff’s condition had stabilised and that there was a likelihood of surgery in the future. He considered the prolapse may stabilise or increase. In Mr Schofield’s view, if surgery was not undertaken, the plaintiff would remain restricted in his activities and he may need regular physiotherapy and medication.
77 Mr Schofield believed the plaintiff had no capacity for his pre injury work but that he had a capacity to perform restricted duties with only minimal physical activity.
78 In Mr Schofield’s view, the injury suffered was the development of a posterior annular rupture at both L4-5 and lumbosacral levels, finally resulting in a disc prolapse causing bilateral sciatica. This had prevented the plaintiff’s return to his pre injury occupation and previous sporting activities. The plaintiff was able to work in alternative employment with restrictions of lifting, bending and twisting, and his condition was likely to continue into the foreseeable future.
79 Dr David Murphy, consultant physician in rehabilitation medicine, examined the plaintiff on 24 March 2009. Dr Murphy found that there was some reduction of lumbar spine movement and there was a particularly tender spot over the L5-S1 facet. Pain in that area was aggravated by extension, and straight leg raising was uninhibited. There was reduction in sensation in the instep of the left foot and reduced power of plantar flexion, and the plaintiff had some difficulty standing on his toes.
80 In Dr Murphy’s view, the plaintiff had sustained an L5-S1 disc prolapse as a result of the incident, ultimately requiring surgery. Dr Murphy noted there had been some mild improvement in the plaintiff’s symptoms but that he remained significantly incapacitated and he was unable to continue his usual occupation as a shearer.
81 Dr Murphy considered the plaintiff’s prognosis fair. He thought that the plaintiff’s situation should stay quite stable if he was not exposed to further workload. He thought the plaintiff’s condition had stabilised and that there was a fairly small likelihood of further surgery in the short to medium future. He considered the plaintiff had no capacity for his pre injury work and that he should not work in occupations requiring lifting of more than 5 kilograms or any repetitive, lifting, bending or twisting. He thought the plaintiff should avoid prolonged periods of sitting or standing, and he had some concerns about the plaintiff driving for prolonged periods. Dr Murphy considered that if there was a further deterioration of the plaintiff’s condition there would be additional limitations in his abilities to undertake work.
Investigations
82 An x-ray of the lumbosacral spine taken on 27 November 2003 showed normal lordotic curve was preserved and vertebral body height and intervertebral disc spaces were normal. The sacrum was intact and the S1 joints were normal. The coccyx was intact.
83 A CT scan of the lumbar spine taken on 12 February 2004 showed a very small broad-based disc bulge present at L4-5 without significant displacement of the thecal sac or impingement on emerging nerves. At L5-S1 a small broad-based disc bulge had left a paracentral component that possibly impinged on the S1 nerve root as it emerged from the thecal sac. It was noted that the disc bulge also extended out into the neural foramina on the left (lateral disc) and may well be impinging on the emerging left L5 nerve root.
84 An x-ray of the lumbar spine taken on 22 March 2004 showed no spondylosis or spondylolisthesis. The lumbar discs were of normal height, and vertebral alignment was normal. No pelvic bone or soft tissue lesion was detected.
85 An MRI scan dated 20 October 2004 showed disc degenerative changes with dehydration and annular tears at L4-5 and L5-S1. There was possible left S1 nerve root compression associated with a small left posterolateral L5-S1 disc protrusion.
86 An MRI scan of the lumbar spine taken on 1 November 2007 showed a right paracentral annulus tear and bulge of the L4-5 disc. There was left focal disc protrusion/extrusion of the L5-S1 disc.
87 In the report of the MRI scan of the lumbar spine taken on 16 December 2008 it was noted that since the 1 November 2007 MRI scan there had been some left-sided discectomy and laminectomy at L5-S1 level, with the left paracentral disc extrusion moderately reduced in size. A small residual left L5-S1 paracentral disc protrusion persisted. It did not result in compression of the left S1 nerve in the lateral recess. There was mild peri neural scarring.
The Defendant’s Medical Evidence
88 Mr Klug, neurosurgeon, examined the plaintiff on 19 December 2005. The plaintiff told him that he continued to suffer from chronic low-back pain spreading to either side, being worse on the right. The plaintiff was having intermittent physiotherapy, chiropractic treatment and doing exercises at home. If his pain was severe he took Voltaren intermittently.
89 The plaintiff told Mr Klug that he was coping satisfactorily with the requirements of working as a shearing contractor, an activity not involving any physical activity on his part.
90 On examination, Mr Klug noted that there was some loss of normal lumbar lordosis. The plaintiff had a remarkably good range of spinal movement and there did not appear to be any restriction of lateral flexion or rotation. Mr Klug noted the plaintiff appeared to have some genuine pain when he extended from the fully flexed position.
91 Mr Klug could not detect any evidence of a radiculopathy regarding the plaintiff’s lower limbs. On sensory testing there appeared to be some ill- defined dulling of perception in the right lower limb which did not follow any strict anatomic pattern.
92 Mr Klug had available to him the MRI scan of 20 October 2004 and the CT scan of 12 February 2004.
93 In Mr Klug’s view, there was no doubt the plaintiff had a mechanical derangement of his lumbar spine at two levels, particularly L5-S1. He considered that the changes shown on imaging were consistent with the plaintiff’s complaints and physical findings.
94 As this was an impairment assessment for the purposes of the AMA Guides, Mr Klug offered no view as to the plaintiff’s employment capacity.
95 Mr John O’Brien, orthopaedic surgeon, first examined the plaintiff on 20 December 2005. The plaintiff described to him constant low-back pain and bilateral leg pain which fluctuated in severity. His back pain radiated distally as a shooting pain down the posterior aspect of the right leg affecting the whole of the right foot and toe. In addition, there was pain shooting down the posterior aspect of the left thigh to the knee, sometimes associated with numbness.
96 On examination, Mr O’Brien noted that there was some limitation of lumbar movement. There did not appear to be any local evidence of tenderness. Passive straight leg raising was 70 degrees bilaterally. Reflexes and power were normal, although the plaintiff described some alteration to light touch over the lateral aspect of the right thigh and calf.
97 Mr O’Brien had available the MRI scan of 20 October 2004.
98 Mr O’Brien noted the plaintiff demonstrated an excellent range of spinal movement with no signs of nerve root irritation or compression. In his view, the sensory alteration did not appear to be associated with the nerve root or peripheral nerve distribution.
99 Mr O’Brien considered that the plaintiff’s history indicated employment was a significant contributing factor. He noted there was some discrepancy between the degree of symptoms reported as pain of ten out of ten and the excellent range of movement, and the fact that the plaintiff did not use any analgesic medication. He noted that would suggest there was no severe underlying pathology, nevertheless he commented that the MRI scan showed some degenerative disc change which was a potential source of symptoms secondary to injury.
100 In 2004, Mr O’Brien was of the view that the plaintiff, despite describing persistent pain, was reasonably active and the residual disability was mild. He certainly suggested the plaintiff would not be capable of returning to shearing and that that may well be permanent. The plaintiff indicated to him that he was able to perform all current duties, which he described as light. In conclusion, Mr O’Brien stated that the plaintiff had a very mild pathology associated with the incident and that he was capable of continuing his current full time work, which apparently was basically confined to modified duties.
101 Mr O’Brien re-examined the plaintiff on 1 October 2008. The plaintiff told him he continued to experience constant low-back pain radiating into both legs, mainly the posterior aspect of the thighs and calves, to the soles of the feet. His right leg was worse than his left.
102 The plaintiff told Mr O’Brien that in mid 2007, there was some increase in the severity of his back and leg pain, after which he was referred to Dr Sheehy, who arranged an MRI scan and undertook a lumbar decompression in February 2008.
103 The plaintiff told Mr O’Brien that following surgery he had constant low-back pain radiating down the posterior aspect of both legs to the feet, the right being worse than the left. He told Mr O’Brien that he was not using any painkilling medication, he occasionally took Valium at night and on occasions had some chiropractic treatment. The plaintiff was finding it increasingly difficult to cope with living away from home for six months as a shearing contractor and in fact he was looking to sell the business.
104 Mr O’Brien noted that physical signs had changed a little since the initial examination in relation to lumbar movement which was now restricted. However, he could not find signs of nerve root irritation or compression and he thought that the current sensory change in the plaintiff’s right leg did not represent specific nerve root pathology. In his view, the most recent MRI scan showed little change from November 2007, and he felt it was unlikely to be causing any nerve root compromise.
105 Mr O’Brien believed the plaintiff had a chronic pain syndrome with organic back pathology, definitely now influenced by psychosocial factors. He regarded the plaintiff’s employment as a contributing factor to his chronic pain.
106 Mr O’Brien thought the plaintiff’s prognosis was poor. He did not consider the plaintiff physically capable of returning to work as a hands-on shearer – a situation which was permanent. He thought the plaintiff had some permanent impairment of function of the lumbar spine; however he regarded the plaintiff as being physically capable of continuing his employment involving what Mr O’Brien regarded as modified duties.
Loss of Earning Capacity
107 The narrative requirements having been conceded, to obtain leave in relation to loss of earning capacity the plaintiff must also establish that –
(a) at the date of the hearing he has a loss of earning capacity of 40 per cent or more – S.134AB(38)(e)(i); and also (b) after the date of hearing the relevant loss of earning capacity will continue permanently – s.134AB(38)(e)(ii). 108 The measurement of loss of earning capacity is set out in paragraph (f) which requires a comparison between:
(i) “without injury” earnings; and (ii) “after injury” earnings. 109 The former must be calculated by reference to the six year period specified in s.134AB(38)(f).
110 “Without injury” earnings consist of the gross income (expressed at an annual rate) that the worker was earning or was capable of earning from personal exertion or would have earned or would have been capable of earning from personal exertion had the injury not occurred.
111 It is to be calculated by reference to that part of the period within 3 years before and 3 years after the injury as most fairly reflects the worker’s earning capacity.
112 The plaintiff carries the onus of proof in relation to economic loss and particularly in establishing satisfaction of the criteria in paragraphs (e), (f) and (g) therein.
113 I am therefore required to determine a “without injury” earnings figure.
114 Counsel for the plaintiff submitted that I should accept the plaintiff’s earnings of $59,000 in the financial year ending June 2003 as the “without injury” earnings figure. The plaintiff was then a young shearer on the “up” whose tallies were increasing. On that basis, it was submitted that there was no reason to take an average of $50,000, as counsel for the defendant submitted was the correct figure.
115 I accept, in this case, that the figure of $59,000 most fairly reflects the plaintiff’s “without injury” earning capacity given the increase in his tallies over the three years before the incident.
116 The issue then is how to assess the plaintiff’s “after injury” earnings in circumstances where the plaintiff’s present income consists of a salary paid to him by a corporate entity established by him, together with wages from other sources.
117 Quite simply, if the approach suggested by counsel for the defendant is accepted, namely that the company’s income should be seen as the plaintiff’s gross income from personal exertion, the plaintiff’s claim in relation to loss of earning capacity would fail, as the company’s income has always exceeded $200,000.
118 If a different view was taken that the “after injury” earnings were the wages actually paid to the plaintiff by the company and others, the plaintiff would clearly succeed as the total income the plaintiff was paid by his company and other farmers in the financial year 2007-08 was $14,628.00, $20,000 in 2006- 07 and $34,000 in the 2005-06 financial year.
119 The expression “income from personal exertion” as defined in s.134AB(38)(a) of the Act is to be given the same meaning as in s.6(2) of the Transport Accident Act.
120 Subsection (a) includes in the definition:
“The amount that is the income of that person consisting of earnings, salaries, wages, commissions, fees, bonuses, pensions, retiring allowances and retiring gratuities, allowances and gratuities received in the capacity of employee or in relation to any services rendered; ….”
121 Subsection (b) includes in the definition:
“The proceeds of any business carried on by that person either alone or
in partnership with any other person.”
122 This subsection makes no reference to whether such proceeds are net of expenses.
123 Counsel for the defendant relied upon the following authorities in support of his submission that the earnings of the company should be accepted as the plaintiff’s gross earnings from personal exertion.
124 In Husher v Husher (1999) 197 CLR 138, the High Court considered circumstances where there was a partnership between a husband and a wife for income splitting purposes where the husband’s physical labour and skill generated the entire income of the partnership.
125 The majority of the High Court concluded it was incorrect to award damages on the footing that the husband’s damages must be limited to his share of the profits he would have received from the continuation of the partnership arrangements.
126 In Glazebrook & Accident Compensation Commission (1998) VR 454, the worker was employed as a truck driver who was required to meet various outgoings from the wages paid to him. The Full Court interpreted the word “earnings” as it was found in s.93 of the Act to mean the full sum for which a worker is engaged to work without deduction of any expenses incurred by him to put himself in a condition to derive earnings.
127 In the case of Paterson v Stanmorr Pty Ltd (2000) 2 VR 460, the Court of Appeal came to a similar conclusion. In that case, the worker was employed as the manager of a guest house. She was paid a wage plus food and accommodation in return for her services. It was held that the value of her non pecuniary benefits should be taken into account in calculating her average weekly earnings.
128 His Honour Judge Strong in Boskovic v Road Maintenance Pty Ltd [2006] VCC 51, and Her Honour Judge Wilmoth in Caratozzolo v Metroll Pty Ltd & Anor [2007] VCC 1006, also came to a similar conclusion.
129 In Boskovic, Judge Strong dealt specifically with paragraph (f) of the Act and held that the expenses incurred in producing gross income from personal exertion were not to be deducted.
130 In that case, the plaintiff was described by his counsel as an independent contractor although His Honour queried whether the plaintiff was in fact an employee. I note that in that case, there was no involvement of any other person in the running of the plaintiff’s business.
131 I was also referred to the decision of Her Honour Judge Pannam, who took a different view in Peoples v I & C Hunt Pty Ltd [2005] VCC 1138, where she equated the expression “gross income” with taxable income in circumstances where the worker had set up a business working alone teaching the responsible serving of alcohol.
132 However, in factual circumstances similar to the present case, and quite different to the facts of the cases relied upon by the defendant, His Honour Judge Misso, in the matter of Alter & Elcon Laboratories Australia Pty Ltd [2008] VCC 713, followed the approach urged by counsel for the plaintiff in the present case.
133 In Alter, the plaintiff was employed as an electronics technician when he suffered injury to his back on 23 March 2000. At the date of hearing, the plaintiff was self-employed in a company which he incorporated in June 2003. The company’s business involved applying the technical knowhow the plaintiff obtained through his earlier training and subsequent working experience.
134 Judge Misso noted in Alter that it was not a simple matter to determine the level of gross income from personal exertion when an employed worker subsequently reinvented into self-employment.
135 His Honour accepted that Alter differed from Husher on the basis that in Alter both the plaintiff and his wife were employees undertaking legitimate roles, whereas in Husher the husband and wife were in partnership for the purposes of an income splitting arrangement and no more.
136 Secondly, His Honour accepted that the company was a distinct legal person from the plaintiff and his wife. He was not convinced that Husher necessarily permitted the corporate veil to be pierced, although he noted that was a matter he need not determine given the conclusions he had reached about the roles the plaintiff and his wife played as employees of the company.
137 Whilst in Alter the company’s trading profit in the financial year 2007-08 was $111,000, accepting that the expenses incurred generating the trading profit were legitimate expenses and that the wife legitimately performed the administrative work, Judge Misso accepted that the proper approach was to treat the plaintiff as an employee of the company and take his wages of $27,253 as his gross earnings from personal exertion.
138 Thus in the present case, following the approach of Judge Misso in circumstances where the plaintiff employs a large team of workers to carry out shearing contracting work and the plaintiff only engages in supervision and he is paid a salary by his company, the correct method of assessing his gross earnings from personal exertion is by looking at the wage paid to him by the company and other farmers.
139 Accordingly, I find that the plaintiff’s “after injury” earnings are those set out in on in the summary of his financial position at paragraph 24, which totalled $14,628 in the 2007-8 financial year.
140 It was also submitted by counsel for the defendant that the plaintiff has a greater capacity for employment than he is presently exercising. Reliance was placed on the plaintiff’s apparent agreement with the proposition that he was physically capable of undertaking contracting work which would result in an increase in the company’s income of 50 per cent.
141 It was submitted that the relevant issue was one of physical capacity for work not the availability of work as held by the Court of Appeal in State of Victoria v Rattray [2006] VSCA 145, and specifically in the judgment of Bongiorno JA, in which His Honour said that “the question of loss of earning capacity fell to be determined by reference to the physical capacity of the claimant only” and “that the existence or non-existence of a job vacancy in the claimant’s region within the claimant’s capacity was irrelevant”.
142 However, in re-examination, the plaintiff clarified his position and explained that he could not increase his income as he could not work in two places at once. He confirmed that he was not physically capable of doing more work and he was considering selling the business as it was not financially viable.
143 I accept that the plaintiff is presently working to his full capacity within his physical restrictions. Clearly he is unable to return to shearing – a position conceded by the defendant and supported by all doctors in this case.
144 I accept that the plaintiff is also unable to engage in penning or wool classing duties on a full time basis. Medical opinion supports the view that the plaintiff is unfit to engage in physical work or work involving contact with animals.
145 The plaintiff has tried to continue in the role of a shearing contractor, effectively giving all the labouring and heavy tasks to others and paying their wages, thus leaving himself with an income far less than he was earning even at the time of the incident.
146 Whilst the income of the company may consistently be in excess of $200,000, the wages paid by the company to its workers, which include the small amounts the plaintiff himself has been paid, have ranged from almost $150,000 to $190,000 per annum in the three years the company has been operating.
147 Due to his inability to engage in manual work I do not accept that there is suitable employment in which the plaintiff could engage in which he could earn in excess of $30,000 per annum.
148 There is no retraining or rehabilitation that would alter the situation that the plaintiff has a permanent loss of earning capacity of 40 per cent or more. Shearing has been the plaintiff’s life since the age of fifteen. He was only educated to Year 10. His unsuccessful attempts at a computer course and workplace training confirm this view.
149 Accordingly, I accept that the plaintiff has established a loss of earning capacity of 40 per cent or more that is permanent.
150 On the basis of the foregoing reasons, findings and conclusions, pain and suffering having been conceded, I grant the plaintiff leave to bring proceedings at common law pursuant to s.134AB(16)(b) of the Act to recover damages for bodily injuries for loss of earning capacity arising out of his employment with the defendant in the incident.
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