Mills v Bale
[2010] NSWDC 162
•4 August 2010
CITATION: Mills v Bale & Anor [2010] NSWDC 162 HEARING DATE(S): 8, 9, 10, 11 and 24 September 2009
JUDGMENT DATE:
4 August 2010JURISDICTION: Civil JUDGMENT OF: Levy SC DCJ DECISION: 1. Verdict and judgment for the plaintiff in the sum of $703,149.28;
2. The defendants are to pay the plaintiff’s costs on the ordinary basis, unless otherwise ordered;
3. The exhibits may be returned;
4. Liberty to apply on 7 days notice if further orders are required.CATCHWORDS: TORTS – legal practitioners – negligence – events occurring prior to arbitration hearing leading to plaintiff compromising a claim for damages for personal injury against employer for a workplace injury – credit-based findings – whether plaintiff established alleged misleading representation by his solicitor – whether alleged conduct of solicitor amounted to a breach of the duty of care owed – whether statements by solicitor amounted to misleading and deceptive conduct within the meaning of s 42 of the Fair Trading Act 1987 – whether the alleged representation induced the plaintiff to compromise his claim – relevance of solicitor’s evidence of his “usual practice” – relevance of solicitor’s evidence of the “usual practice” of the barrister – absence of file notes by solicitor who claimed no recollection of events - - DAMAGES – measure of damages where plaintiff would otherwise have had his claim determined by the court in 2003 – considerations for assessment of damages and required adjustments to assessment LEGISLATION CITED: Civil Liability Act 2002
District Court Rules, Pt 9 r 27A
Fair Trading Act 1987, s 42
Legal Profession Act 1987, s 198J
Trade Practices Act, s 52
Workers’ Compensation Act 1987CASES CITED: Adelaide Stevedoring Co Ltd v Forst [1940] HCA 45; (1940) 64 CLR 538
Bennett v Minister of Community Welfare [1992] HCA 27; (1993) 176 CLR 40
Bresatz v Przibilla [1962] HCA 54; (1962) 108 CLR 541
Briginshaw v Briginshaw [1938] HCA 34; (1938) 60 CLR 336
Concrete Constructions (NSW) Pty Ltd v Nelson [1990] HCA; (1990) 169 CLR 594
Container Terminals Australia Ltd v Huseyin [2008] NSWCA 320
Council of the City of Liverpool v Turano [2008] NSWCA 270
Daw v Toyworld (NSW) Pty Ltd [2001] NSWCA 25
D’Orta-Ekenaike v Victoria Legal Aid [2005] HCA12; (2005) 223 CLR 1
Erwin v Iveco Trucks Australia Ltd [2010] NSWCA 113
Golden Eagle International Trading Pty Ltd v Zhang [2007] HCA 15; (2007) 234 ALR 131
Johnson v Perez [1988] HCA 64; (1988) 166 CLR 351
Kars v Kars [1996] HCA 37; (1996) 187 CLR 354
King Pty Ltd v Besser [2002] VSC 354
Ku-ring-gai Co-operative Building Society (No 12) Ltd, Re (1978) 22 ALR 621
Larson v Commissioner for Police [2004] NSWCA 126
Leotta v Public Transport Commission of NSW (1976) 9 ALR 437
Little v Law Institute of Victoria (No 3) [1990] VR 257
Luxton v Vines [1952] HCA 19; (1952) 85 CLR 352
Majkic v Bonnano [2008] NSWCA 253
Makita (Australia) Pty Ltd v Sprowles [2001] NSWCA 30
Malec v Hutton [1990] HCA 20; (1990) 169 CLR 638
March v Stramare (E & MH) Pty Ltd [1991] HCA 12; (1991) 171 CLR 50
Mason v Demasi [2009] NSWCA 227
Modbury Triangle Shopping Centre Pty Ltd v Anzil [2000] HCA 61; 205 CLR 254
Parry v Cleaver [1969] UKHL 2 ; [1970] AC 1
Purkess v Crittenden [1965] HCA 34; (1965) 114 CLR 164
Ramsay v Watson [1961] HCA 65; (1961) 108 CLR 642
Roads and Traffic Authority (NSW) v Refrigerated Roadways Pty Ltd [2009] NSWCA 263
Shaw v Thomas [2010] NSWCA 169
State of Queensland v JL Holdings Pty Ltd [1997] HCA 1; (1996-1997) 189 CLR 146
State of NSW v Moss [2000] NSWCA 133; (2000) 54 NSWLR 536
Stockland (Constructors) Pty Ltd v Retail Design Group (International) Pty Ltd [2003] NSWCA 84
Vairy v Wyong Shire Council [2005] HCA 62; (2005) 223 CLR 442
Watts v Rake [1960] HCA 58; (1960) 108 CLR 158
Wynn v NSW Insurance Ministerial Corporation [1995] HCA 53; (1995) 184 CLR 485
Wyong Shire Council v Shirt [1980] HCA 12; (1980) 146 CLR 40TEXTS CITED: Annual Review, 2002; District Court of New South Wales
Annual Review, Supreme Court of New South Wales, 31 December 1992PARTIES: Howard John Mills (Plaintiff)
Peter Earle Bale & George Paul Boshev trading as Bale Boshev Lawyers (Defendants)FILE NUMBER(S): 1839 of 2009; 2009/334871 COUNSEL: Mr B McClintock SC with Mr M Lawson (Plaintiff)
Mr M Dicker (Defendants)SOLICITORS: Thomas Mitchell (Plaintiff)
Yeldham Price O’Brien Lusk (Defendants)
JUDGMENT
Table of Contents
A. INTRODUCTION Nature of the case [1] – [7] Pivotal issue [8] Background [9] – [21] Procedural history [22] Issues calling for decision [23] – [28] Summary of findings [30] – [33] B. EVIDENCE REVIEW Overview of documentary evidence [35] – [40] Exhibit “A”
[36] – [37] Exhibit “1”
[38] Other exhibits
[39] – [40] Overview of oral evidence [41] – [236] The plaintiff, Mr Howard Mills
[43] – [103] Mr Mathew Tremain
[104] – [107] Mr Simon Tremain
[108] – [110] Mr Gregory Schipp
[111] – [170] Mr Peter Kirby
[171] – [216] Mr Alan Arnold
[217] – [236] C. FINDINGS ON ISSUES CALLING FOR DECISION Consideration of Issue 1 – Credibility of testimony [238] – [338] Consideration of Issue 2 – Claimed representation and its characterisation [339] – [444] Consideration of Issue 3 – Effect of claimed representation [445] – [485] Consideration of Issue 4 – Probable events but for asserted representation [486] – [496] Consideration of Issue 5 – Employer’s duty of care [497] Consideration of Issue 6 – Breach of duty of care by employer [498] – [501] Consideration of Issue 7 – Alleged contributory negligence of plaintiff [502] Consideration of Issue 8 – Plaintiff’s injuries and disabilities [503] – [671] Consideration of Issue 9 – Probable damages award to plaintiff in 2003 [672] – [776] Consideration of Issue 10 – Assessment of damages in present proceedings [777] – [803] Consideration of Issue 11 – Interest adjustment [804] – [805] D. DISPOSITION & ORDERS Disposition [806] Orders [807]
A. INTRODUCTION
Nature of case
1. On 11 April 2001, the plaintiff, Howard Mills retained the defendants, Peter Bale and Paul Boshev, who are the principals of Bale Boshev, solicitors, to act for him in connection with a common law workplace injury claim for damages against his former employer in respect of injuries he sustained on 8 November 2000. The defendants assigned their employed solicitor, Gregory Schipp, of their Hamilton office, to have conduct of the plaintiff’s case. [“the principal proceedings”]. On 1 August 2002 those proceedings resolved by way of a compromise settlement that was effected during settlement negotiations that took place before an arbitration hearing was due to commence on that day.
2. In these proceedings the plaintiff claims damages against his former solicitors for alleged breach of the duty of care owed to him in failing to give proper advice. He also claims breach of the implied terms of the contract of retainer that his solicitors would act in his interests. The plaintiff claims that the defendants, through their employee Mr Schipp, for whose conduct they were vicariously liable, acted in breach of s 42 of the Fair Trading Act 1987. The claim is that Mr Schipp had engaged in conduct that was misleading and deceptive in respect of representations that the plaintiff claims Mr Schipp had made to him.
3. The plaintiff claims that on 1 August 2002, in the course of obtaining instructions from him during the settlement negotiations in the principal proceedings, Mr Schipp made representations to him that were untrue, and which were therefore misleading. The plaintiff claims that in the lead-up to these events, Mr Schipp failed to exercise due skill, care and consideration in the provision of legal services and advice. The alleged representation was that the defendant in the principal proceedings had “damning” video evidence concerning the plaintiff. It was common ground between the parties to these proceedings that there was no such evidence.
4. The plaintiff claims that Mr Schipp had advised him to accept an offer of settlement of $175,000 inclusive of costs but clear of the prior worker’s compensation payments, as this was the final offer made by the defendant in the principal proceedings. The plaintiff claims that in this context, Mr Schipp had told him that he “could get nothing”. These events took place against the background of the plaintiff’s evidence that he had earlier been advised that the monetary value of his damages claim lay in the range $350,000 to $450,000 clear of workers’ compensation payments and costs.
5. The plaintiff claims that he acted in reliance of the representation and upon advice given to him by Mr Schipp. He claims this caused him to accept a compromised sum in settlement of his claim for damages for personal injury in the principal proceedings. In these proceedings, the plaintiff claims as damages, the difference between the sum that he received as a result of the compromise, and a proper sum that he claims he ought to have received, plus accrued interest.
6. Mr Schipp stated that he had no recollection of the plaintiff, the plaintiff’s case or the events of the day in question. He kept no file notes of the relevant events. Mr Schipp stated that in settlement negotiations it was his “usual practice” to identify a final offer made by a defendant to his client, and to then leave it to the client as to whether or not that offer was accepted. Although he said he had no recollection of the events, he stated that he would not have raised the topic of video evidence unless it had been raised with him.
7. The defendants disputed the plaintiff’s claim. They did not give any evidence but relied upon the evidence of Mr Schipp as to what was claimed to be his “usual practice” in such cases. The defendants also relied upon Mr Schipp’s evidence of what he understood to have been the “usual practice” of the barrister whom he had briefed to represent the plaintiff. In submissions, on behalf of the defendants, the evidence of usual practice was characterised as “invariable usual practice”.
Pivotal issue
8. In his submissions, Mr M Dicker, counsel for the defendants, conceded that the plaintiff’s case “all turns on his allegation that Mr Schipp had a conversation with him about video evidence” to the effect that Mr Schipp “had been told by the insurer’s representatives that they had ‘damning video evidence’ against the plaintiff”. The resolution of this pivotal issue is dependent on credit-based findings that arise in a context that also required the resolution of a number of other issues calling for decision. The issues to be decided have to be determined subject to the requirements of the Civil Liability Act 2002 [“CL Act”]. Those other issues are listed and outlined between paragraphs [24]-[28] of my judgment. My credit-based findings are set out between paragraphs [238]-[338] of my judgment.
Background
9. On 1 August 2002, an arbitration hearing of the principal proceedings was scheduled to take place in a running list at Newcastle Courthouse. The principal proceedings were compromised at or shortly after 1.35pm on that day, before the arbitration hearing had commenced. Settlement discussions had apparently commenced at about 10.00am on that day, in the precincts of the courthouse.
10. The plaintiff claims that shortly before a settlement was reached, Mr Schipp had asked him to take a walk with him away from the courthouse, across the road to a place just outside a hotel located opposite the courthouse. The plaintiff claims Mr Schipp had told that him he needed to have a talk with him.
11. The plaintiff claimed he clearly recalled that in the course of these events, Mr Schipp had a conversation with him to the effect that the defendant’s representatives in the principal proceedings had told him they had “damning video evidence” on the plaintiff.
12. The plaintiff recounted that this conversation was in the context of a discussion on a “stalled” offer from the defendant’s representatives in the amount of $175,000 inclusive of costs but clear of workers’ compensation payments.
13. The plaintiff claimed he asked Mr Schipp for advice as to what he thought he should do in the circumstances. He claimed that in response, Mr Schipp recommended to him that he take the offer, as if he did not, there was “a real chance” that he could “get nothing” from the litigation.
14. The plaintiff claimed that shortly after this conversation and in reliance on what had been represented to him by Mr Schipp, he gave instructions to compromise his claim for an amount of $175,000 inclusive of costs, but exclusive of workers’ compensation payments.
15. In these proceedings, neither Mr Schipp nor the barrister whom he had briefed, nor the solicitor and the barrister who represented the defendant in the principal proceedings, had any real recollection of these events.
16. The solicitor for the defendant in the principal proceedings had kept detailed notes of the negotiations. Those notes formed the basis of his refreshed recollection given in evidence in these proceedings.
17. Neither the plaintiff, Mr Schipp nor the barrister whom he had retained to appear for the plaintiff, had notes of these events. The identified pivotal issue therefore requires the resolution of some underlying factual matters.
18. The barrister who had been briefed by Mr Schipp had limited notes which formed the basis of the advice he had given the plaintiff in a conference that was convened at about 9.00am on the morning of 1 August 2002. That conference had been convened between himself, the plaintiff and Mr Schipp to prepare for the arbitration hearing. Both he and Mr Schipp had based their evidence in these proceedings on those notes, and also upon their evidence of what would have been their “usual practice” in the assumed circumstances, in the stated absence of any actual recollection of the circumstances.
19. The issues calling for decision in this case arose in four distinct categories. These involved first, issues that concerned the credibility of testimony, secondly, the issues that arose for decision in the principal proceedings, including the likely outcome, and timing of the outcome, of the liability and damages issues that were in contest in the principal proceedings, thirdly, the issues that arose from the plaintiff’s decision to settle the principal proceedings and fourthly, the issues that arose for consideration in an assessment of damages in these proceedings. Related issues arose within these categories.
20. The resolution of these matters required a review of the voluminous evidence gathered by the respective parties to each of the proceedings. The assessment of the credibility of testimony was central to the resolution of the issues in both sets of proceedings.
21. Since the central issue involves making assessments of the credibility of testimony, and given the gravity of the allegations made by the plaintiff, I have reviewed the whole of the evidence in some significant detail before making my findings on the matters calling for decision. A detailed and extensive summary of that evidence review appears between paragraphs [35] - [236] of my judgment.
Procedural history
22. The procedural history of these proceedings has been that on 31 July 2008, the plaintiff filed these proceedings in the Newcastle registry of the court. The proceedings were allocated case number 246 of 2008. On 4 March 2009 the proceedings were set down for a hearing in Newcastle to commence on 28 April 2009. On 20 April 2009 that hearing date was vacated, and the venue for the hearing was changed to Sydney because the trial judge allocated to hear the case was acquainted with several of the witnesses to be called in the proceedings. The proceedings were then allocated the case number 1839 of 2009. On 5 May 2009, the trial date was fixed for 8 September 2009. The trial proceeded on 8, 9, 10, 11 and 24 September 2009.
Issues calling for decision
23. The nature of the case has necessarily given rise to a multiplicity of issues. The central issue to the determination of the pivotal issue is the credibility of the testimony that was given. The remainder of the issues related to matters arising in the principal proceedings, the decision to settle the original proceedings and the determination of quantum in the present proceedings.
Issues concerning the credibility of testimony
24. At the outset, the first issue concerns the credibility of testimony, formulated as follows:
Issue 1 : The credibility of the testimony, and the resolution of areas of conflict in the evidence given by the plaintiff, Mr Schipp, the barrister and the opposing solicitor on the issues to do with the compromise of the principal proceedings, and the credibility of the testimony of the plaintiff and his brothers, Mr Mathew Tremain and Mr Anthony Tremain, on the underlying issues to do with liability and damages in those proceedings. My findings on this issue are set out between paragraphs [238] to [338] of these reasons;
25. In order to resolve these matters it is necessary to first consider the detail of the entire fabric of the evidence, including the issues arising in the plaintiff’s damages claim in the principal proceedings, as the defendants have argued that this had a relevant impact on the credibility of the testimony of the plaintiff generally.
Issues arising from the plaintiff’s decision to settle the principal proceedings
26. In connection with the plaintiff’s decision to settle the principal proceedings, the issues that arise for determination are:
Issue 2 : Whether in fact Mr Schipp made the asserted representation to the plaintiff as claimed. My findings on this issue are set out between paragraphs [339] to [444] of these reasons; Issue 3 : Whether the claimed representation caused the plaintiff to compromise the principal proceedings. My findings on this issue are set out between paragraphs [445] to [485] of these reasons;
Issue 4 : Identification of the probable course of the principal proceedings if the claimed representation had not been made to the plaintiff. My findings on this issue are set out between paragraphs [486] to [496] of these reasons;
Issues concerning the principal proceedings
27. In connection with the principal proceedings, the issues that arise for determination are:
Issue 5 : Whether the plaintiff’s employer owed him a duty of care. My findings on this issue are set out at paragraph [497]of these reasons;
Issue 6 : Whether the plaintiff’s employer had relevantly breached the duty of care that was owed to the plaintiff. My findings on this issue are set out between paragraphs [498] to [501] of these reasons;
Issue 7 : Whether there was contributory negligence on the plaintiff’s part, and if so, to what extent. My findings on this issue are set out at paragraph [502] of these reasons;
Issue 9 : The likely components, in 2003, of a judgment assessing the plaintiff’s entitlement to damages, 2003 being the probable time of a notional trial of the principal proceedings. My findings on this issue are set out between paragraphs [672] to [776] of these reasons;Issue 8 : The nature, extent and effect of the injuries sustained by the plaintiff. My findings on this issue are set out between paragraphs [503] to [671] of these reasons;
Issues concerning the assessment of damages in these proceedings
28. In connection with these proceedings, the issues that arise for determination are:
Issue 11 : The adjustment of the claim to allow for interest. My findings on this issue are set out between paragraphs [804] to [805] of these reasons.Issue 10 : The appropriate analytical steps and adjustments required to be considered and accounted for in an assessment of damages in these proceedings, on the assumption that the plaintiff’s claim was successful in the principal proceedings, and in these proceedings. My findings on this issue are set out between paragraphs [777] to [803] of these reasons;
29. In the paragraphs that follow, I set out a summary of my findings.
Summary of findings
30. On issue of credibility of testimony, taking into account the credit challenges and having considered the evidence as a whole, I have found the plaintiff’s evidence to be plausible, credible and persuasive. For the reasons I have given, I have preferred and accepted the specific factual evidence given by the plaintiff to the “usual practice” evidence given by Mr Schipp on the key matters that were in issue between the parties.
31. I have found that the representation that the plaintiff claimed had been made to him by Mr Schipp was in fact made to him. This was to the effect that he had told the plaintiff that the defendant’s legal representatives in the principal proceedings had damning video evidence of the plaintiff’s activities, which could cause the plaintiff to lose the principal proceedings and get nothing, when in fact there was no such video evidence. I have found that the representation made by Mr Schipp was a significant and material contributing cause to the plaintiff’s decision to compromise the principal proceedings in a sum that was far less than he believed he had been advised his claim was worth, and for an amount that was far less than had hitherto been the plaintiff’s monetary expectation from that litigation. I have found that the representation in question was untrue, and therefore amounted to misleading and deceptive conduct within the meaning of s 42 of the Fair Trading Act 1987. I have found that in the circumstances, there was a relevant breach of duty of care on the part of the defendants, who were vicariously liable for the conduct of Mr Schipp.
32. I have found that if the representation in question had not been made, the principal proceedings would most likely have gone to a trial, and would have been resolved in the plaintiff’s favour without discount for alleged contributory negligence. I have found that the probable date for finalisation of the principal proceedings would have been by the end of November 2003, at which time a final judgment would most probably have been entered in the plaintiff’s favour in an amount of $649,887.40, after offsetting the amount comprising the statutory defence for payments of workers’ compensation payments. I have found that after adjusting this amount to reflect the amount the plaintiff had already received from the actual proceeds of the settlement on 1 August 2002, namely, $140,000 and after making a further adjustment for a discount of 15 per cent in accordance with principle, the plaintiff probably would have had a verdict entered in his favour in the sum of $412,404.29.
33. I have found that post-judgment interest variously calculated pursuant to s 100 of the Civil Procedure Act 2005, Schedule 5 of the Uniform Civil Procedure Rules 2005 and Practice Note DC (Civil) 15 assessed in the amount of $290,744.99 should apply to the verdict and should form part of the judgment in these proceedings as pre-judgment interest. That interest calculation is set out in the Appendix to this judgment. As a result, I have found that the plaintiff is entitled to a judgment in his favour in the sum of $703,149.28.
B. EVIDENCE REVIEW
34. A total of 6 witnesses gave oral evidence. Voluminous documentary exhibits were also tendered.
Overview of documentary evidence
35. The parties each tendered folders of records comprising claim forms, medical reports, damages documentation, and relevant portions of the file of the defendant solicitors. I will refer to the relevant parts of these documents where it becomes necessary to do so.
Exhibit “A” – Plaintiff’s exhibit
36. The plaintiff tendered 2 folders of materials comprising 680 pages, but paginated in the series 1-392 with some internal sub-pagination. This material was marked Exhibit “A”, Volumes 1 and 2 in the proceedings. The materials comprised correspondence passing between the plaintiff’s present solicitors and the defendants; a copy of the defendants’ file in the principal proceedings, correspondence with the plaintiff’s employer who was the defendant in the principal proceedings; exchanges of correspondence between solicitors for the respective parties in the principal proceedings; documents produced by the workers’ compensation insurer, QBE; documents produced by Centrelink; copies of the plaintiff’s bank statements and copies of the plaintiff’s income tax returns.
37. Some, but not all of these documents were also included in the materials tendered on behalf of the defendants. The portions of the solicitors’ former file and counsel’s brief were not copied in a well-organised way. There was no evidence introduced to explain how those documents came to be in the order in which they were tendered.
Exhibit “1” – Defendants’ exhibit
38. The defendants in these proceedings tendered 2 folders of materials comprising 626 pages, but paginated in the series 1-461 with some internal sub-pagination. This material was marked Exhibit “1”, Volumes 1 and 2 in the proceedings. The materials comprised:
(a) A medical report dated 28 February 2009 from Dr JPH Stephen, a consultant paediatric orthopaedic spinal surgeon who examined the plaintiff on 28 January 2009 at the request of the solicitors for the present defendants. This report and the initiating letter of request are in the page range 1-14 of Exhibit “1”;
(b) The pleadings and particulars in the present proceedings. These papers are in the page range 15-23 of Exhibit “1”;
(c) The pleadings, particulars and terms of settlement in the principal proceedings. These papers are in the page range 24-37 of Exhibit “1”;
(d) A collection of medical reports gathered from treating doctors and insurance files, totalling some 84 pages. These papers are in the page range 38-122 of Exhibit “1”;
(e) The plaintiff’s treating general practitioner’s clinical records covering the period from 29 November 1999 to 21 January 2009. These papers are in the page range 123-144 of Exhibit “1”;
(f) The plaintiff’s income tax returns for the years ended 30 June 1999 to 30 June 2001. These papers are in the page range 145-161 of Exhibit “1”;
(g) Centrelink records under cover of a letter dated 15 June 2009 from that organisation. These papers are in the page range 162-223 of Exhibit “1”;
(h) The plaintiff’s banking statements between the period 12 September 2005 to 20 April 2009. These papers are in the page range 234-236 of Exhibit “1”;
(i) A list of workers’ compensation payments. These papers are in the page range 237-246 of Exhibit “1”;
(j) A workplace agreement dated 28 October 2000 between the plaintiff and Mathew Tremain and related correspondence with the workers’ compensation insurer. These papers are in the page range 247-253 of Exhibit “1”;
(k) Records from the workers’ compensation insurer of Mr Tremain comprising claim forms, medical certificates and declarations. These papers are in the page range 254-301 of Exhibit “1”;
(l) Copies of income tax returns of Mr Mathew Tremain for the years ended 30 June 1998 - 2006. These papers are in the page range 301A-301FI of Exhibit “1”;
(n) Copies of advices from Mr Arnold, the solicitor for the defendant in the principal proceedings, to QBE covering the period 25 July 2001 to 1 August 2002. These papers are in the page range 410-461 of Exhibit “1”.(m) The correspondence file of the defendants in these proceedings relating to the plaintiff’s claim in the principal proceedings. These documents were in the page range 302-409 of Exhibit “1”;
Other exhibits
39. The plaintiff also tendered as Exhibit “B”, a factual statement setting out the circumstances of his injury. That statement was by his employer, who was his older brother. The plaintiff also tendered as Exhibit “C”, the conference notes kept by his barrister in the principal proceedings.
40. The defendants in these proceedings tendered the plaintiff’s employer’s income tax returns for the period 1999-2006 as Exhibit “2”.
Overview of oral evidence
41. In the plaintiff’s case, the following witnesses gave oral evidence:
(a) The Plaintiff, Howard John Mills;
(c) Mr Anthony Simon Tremain, the plaintiff’s younger brother, a spinologist who had taught the plaintiff in order that he become qualified as a spinologist.(b) Mr Mathew Robert Tremain, a grain grower and grazier, the plaintiff’s older brother who employed the plaintiff at the time of the injury in question;
42. In the case of the defendants, the following witnesses gave oral evidence:
(a) Mr Gregory Schipp, a solicitor employed by the defendants. Mr Schipp had carriage of the principal proceedings on behalf of the plaintiff;
(c) Mr Alan John Arnold, a solicitor who was the principal of the firm Arnolds, the solicitors who were retained to act for the insurer of the defendant in the principal proceedings.(b) Mr Peter Kirby of counsel. He was the barrister briefed by the defendants to represent the plaintiff in the principal proceedings. Given my former practise as a barrister, and lest there be any doubt about the matter, I should state that before Mr Kirby gave evidence in these proceedings, I had not met him or known of his existence, as a barrister or otherwise;
Evidence of the plaintiff
43. The plaintiff gave evidence of the circumstances surrounding the settlement of the principal proceedings, as well as evidence concerning the events that led to the institution of those proceedings.
44. On behalf of the interests of the present defendants, noting that they were in the special position of being the solicitors who had previously been retained to act in the plaintiff’s interests, the plaintiff was extensively cross-examined concerning matters that related to the merits of the principal proceedings.
45. That cross-examination extended to raising negative arguments suggesting the unlikely prospects for success of the principal proceedings, as well as perceived problems concerning historical matters and matters arising from the medical evidence gathered in those proceedings. This aspect of the cross-examination was somewhat ironic, because it was advanced on behalf of the solicitors who had previously been retained to not only act for the plaintiff in order to advance the merits of the former case now under critical attack in these proceedings, but also because in the principal proceedings, those solicitors had an obligation to assess the merits of those proceedings pursuant to s 198J of the Legal Profession Act 1987, as it applied to those proceedings on 1 August 2002. This included the obligation not to act in proceedings that they believed lacked reasonable prospects of success.
Plaintiff’s brief personal history
46. The plaintiff was born in 1957. He completed the Higher School Certificate before leaving school aged 18 years in 1975. He then commenced an apprenticeship in carpentry in conjunction with a related TAFE course.
47. The evidence disclosed that the plaintiff had unfortunately suffered a number of injuries that had preceded the injury in question. I summarise those injuries in the following paragraphs as the defendants sought to impugn the credit of the plaintiff based on the history of those injuries.
48. The first such injury involved a lacerated scrotum sustained in a motor vehicle accident some 20 to 30 years before the trial and which apparently occurred as a result of the plaintiff swerving to avoid a collision with horses appearing on a road. The plaintiff said this resulted in him driving off the road and into collision with a roadside cattle ramp, and then into a ditch.
49. The second such injury involved a collision between the plaintiff’s car and a motorcycle. The plaintiff stated that he did not receive any lasting injuries in that collision.
50. The third such injury was when the plaintiff was in a vehicle that left the road and collided with a power pole. The plaintiff stated that he did not receive any injuries in that collision, apart from being upset and shaken.
51. The fourth such injury was a head injury and skull fracture the plaintiff sustained in 1977, when a roof he had been standing on collapsed. The plaintiff stated that this resulted in him having about a year off work. As a result he said that he had significant migraine headaches from which he had ultimately recovered. This injury also left him with a degree of memory impairment that he described later in his evidence. This injury occurred during the plaintiff’s carpentry apprenticeship.
52. The fifth such injury was a left shoulder injury sustained by the plaintiff in 1993, which resolved after cortisone injections. The plaintiff said this was a minor injury from which he had recovered.
53. The sixth such injury was stated to be an injury in which the plaintiff was said to have injured his head, neck and his lower back in 1995. He said he could not recall the incident nor could he recall for how long he had experienced pain from that injury. This was not a matter the plaintiff had concealed. It was a matter that he had included in his letter to his solicitors dated 17 February 2002 : Exhibit “1” pp 367-368.
54. The plaintiff stated that after he had recovered from his 1977 head injury, he went back to work on his parents’ farm. Over a number of years that ensued, he married and occasionally left the farm for other small jobs, and moved with his wife’s work as a schoolteacher. He worked on the farm again for about 10 years until about approximately 1987, when he obtained a position with an insurance agency in Moree, for approximately 2 or 3 years from 1987. That position was obtained through the plaintiff’s then brother-in-law, who was the state manager of an insurance company.
55. The plaintiff stated that he left the insurance agency work in order to set up his own business operating a pizza restaurant. He had been stimulated to do so from his contact with an insurance client who also operated such a business, and who convinced him that such an enterprise was a good business venture worthy of pursuit. The plaintiff stated that he did so with the result that the business proved to be successful. He said that he later sold that business in order to move on, and to try and improve his situation.
56. The plaintiff stated that he moved to Roma in Queensland, and to Inverell, where he also operated pizza businesses. He stated that he was earning “good money” in these endeavours. He said that for a time he also ran a family owned hotel in Roma in order to prepare it for sale. He said that by 1995 he obtained employment as a manager in a Pizza Hut restaurant for about a year. He said he did this in order to improve his management skills or training, to assist him in furthering his ambitions in the pizza industry.
57. The plaintiff described that at about that time, he had something of a personal crisis in his life and he decided to seek to re-educate himself at university to become a psychologist, as there were changes afoot in the pizza industry, and these caused him to re-evaluate his options. In this regard, the plaintiff said he had undertaken the basic preliminary training, and was accepted into university for what looked to him to be 10 years of part-time study. The plaintiff stated it was at that stage that his younger brother Anthony Tremain offered for him to take up training in the field of spinology, an offshoot of the practise of chiropractic. He said he took up this offer, as he had been impressed by the success of his brother in that endeavour. He said he had applied himself and obtained his certification in 1 year.
58. The plaintiff stated that after he had completed his training in spinology, he moved to the Newcastle area at some stage in 1999. He said that in doing so, he decided not to take up an offer of a teaching position with his brother at the spinology college, as he preferred to set up his own spinology practice. He said that he now could not recall whether he started his practice immediately, or whether “that came down the track a little bit”. He said that he thought he had started his spinology practice very early on after his move to Newcastle.
59. The plaintiff stated that he was just getting started in his “little home practice” in late 1999 and into 2000, when in the middle of 2000 he moved to an address in Lake Fair. He said that by the time he went to work for his older brother Mr Mathew Tremain, he had already started his spinology practice in the middle of 2000, and had been working in that practice for some months. At the hearing, the plaintiff said he could no longer recall how many hours per week he had been working in his spinology practice. He said that by June or July of 2000, word had got about, and his spinology practice had started to grow. He said he could not exactly recall what income he had been earning by September/October 2000.
60. The plaintiff said that in about October 2000, he had responded to a call to help his brother Mathew on the farm to provide him with assistance in gathering the wheat harvest. It was in the course of providing that assistance that he sustained the injuries in question in these proceedings. The plaintiff said that at this time, he had separated from his wife and he saw an opportunity for employment in the form of an offer by his brother Mathew, who had a very big wheat growing operation. He said he was uncertain as to whether, at that time, his spinology practice was going to work out for him. He said he saw a real opportunity to stay with his brother Mathew, and he “saw that as an opportunity of being able to look through the door of opportunity”. He said he had grown up on a farm working long hours, and it appeared that the prospect of doing so again was no disincentive for him.
61. As to the opportunity itself, the plaintiff noted that on the farm, there were 2 harvests per year. He said his brother needed someone reliable as part of the team running that operation. As evidence in support of such a job opportunity, the plaintiff described a number of farming tasks that required year round attention, with varying degrees of intensity.
Circumstances of injury
62. The plaintiff described how, in order to help his brother Mathew Tremain to manage a wheat harvest, on 28 October 2000, he signed an agreement with his brother to govern the employment relationship that arose pursuant to that arrangement. It was clear from the evidence that what was envisaged was that for the term of his employment in that situation the plaintiff would work very long hours, by day and by night, to assist with the exigencies of ensuring the wheat harvest would be efficiently managed, to quickly get it to the grain storage silos, which were receiving deliveries 24 hours per day during harvest time.
63. The evidence given by Mr Mathew Tremain in this regard was supported by the statements and materials he provided to his workers’ compensation insurer after the plaintiff was injured: Exhibit “1” pp 274-252; Exhibit “B”.
64. The plaintiff stated that at some time between about 9.00am and 10.00am on 8 November 2000, which was a Wednesday, he went to a paddock on his brother’s property in order to get a large rectangular metal field bin and empty it in readiness for it being moved to another paddock where wheat headers were operating. The bin was described as being about 4 metres high and about 12 metres long. The width was not described, but it was clear that it was a large and tall wheat storage container.
65. The plaintiff described having worked inside the bin to scrape and clear out the remaining contents at the bottom. Having done this, he had to climb up a ladder on the inside of the bin and then climb down to the ground by using a “loose” and “rickety” makeshift ladder that had been constructed from plumbing pipes that had been welded to the exterior of the bin. The ladder was fixed but also “sort of a bit loose”. The ladder did not reach all the way to the ground and the plaintiff described how he had to jump backwards to traverse the final distance from the bottom of the ladder to the ground.
66. In the course of these events, a bin scraping or rake-like device had been left on the ground below by the plaintiff’s brother. The plaintiff recalled that he “went backwards onto the rake” whereupon he twisted his right leg, landed on the point of his left shoulder, and in doing so, he hit and cut the left side of his head on a rock located on the ground, hurt his neck and experienced excruciating pain in his knee. The plaintiff said he felt the sensation of hearing his “knee snap”. He explained that the neck pain he felt, was in the region of C6 to around T10.
67. The plaintiff stated that after the injury in question, within a matter of days he realised it “was pretty pointless staying on the farm” and he then returned to Newcastle.
Treatment described in the oral evidence of the plaintiff
68. The plaintiff’s oral evidence was not definitive as to the detail of the treatment he had obtained for his injuries. That treatment was described in some of the medical reports tendered. I will therefore refer to that treatment in some more detail where appropriate, when reviewing the reports from the treating doctors and the assessing doctors, in connection with analysing the plaintiff’s claim for damages.
Initiation of the principal proceedings
69. The plaintiff described having seen an advertisement on television in the Hunter region for a company called Voices One, offering to obtain “the best legal advice available” for people with personal injury claims. He said he had responded to that advertisement by telephoning the Voices One organisation. As a result of that call, he said he was invited to attend the office of the organisation, where some paperwork was attended to, and whereupon he was referred to the defendants’ firm of solicitors, Bale Boshev. He went to see the defendants’ firm at their Hamilton office, and on doing so, he said he was then allocated a solicitor to act for him, namely, Mr Gregory Schipp.
70. On 11 April 2001, the plaintiff signed an election form prepared for him by Bale Boshev. The effect of that form was to indicate that he wished to proceed with a common law claim against his employer to claim damages for personal injury sustained in the workplace in respect of the injury in question. He said he gave those instructions in the context of having been given advice from Mr Schipp, to the effect that his claim had reasonable prospects of success. The plaintiff stated that Mr Schipp “was pretty adamant that we had a strong claim for common law” damages. It was in these circumstances that the principal proceedings were filed on 17 May 2001. This was about 6 months after the plaintiff had sustained his injury, and about 5 weeks after the time when the plaintiff had first consulted Bale Boshev. The evidence did not contain any analytical advice as to the merits of the plaintiff’s claim or an analysis of the evidence available to support the claim.
Course of preparation of the principal proceedings
71. The plaintiff stated that during the entire time that he was represented by Bale Boshev, he could not recall receiving advice from the firm concerning the effects of bringing a claim for common law damages on his workers’ compensation rights.
72. In cross-examination, the plaintiff was taken to correspondence from Mr Schipp in November 2001, and in particular, to an offer from the defendants in the principal proceedings, offering to settle the plaintiff’s claim in the following terms:
"We are instructed to make a first and final offer of $50,000 to finalise all the applicant's claims against the respondent on a commutation settlement basis."
73. The plaintiff had rejected that offer of $50,000 on the advice of Mr Schipp. He said that this was because Mr Schipp “didn’t believe that that was enough” money. The plaintiff said he could not recall having any conversations with Mr Schipp concerning any impact that a settlement in those terms would have on the common law claim that he had made.
74. In cross-examination, the relationship between the plaintiff and his former solicitors was, to a degree, explored with regard to discussions and correspondence that passed between them. That correspondence was not voluminous. The plaintiff’s letter dated 1 October 2001, which formed part of that correspondence, included information that, amongst other things, served to alert his solicitors to the fact that he was trained as a spinologist, and could no longer work in that field. The particulars of claim in those proceedings did not make a claim for loss of earning capacity as a spinologist.
Historical events between time of injury and settlement as recounted by plaintiff
75. The plaintiff stated that he had ongoing right knee problems including the knee giving way and collapsing a number of times when he walked. This necessitated him seeking out medical assistance and ultimately surgical treatment of his right knee by Dr Ostinga, an orthopaedic surgeon who ultimately performed surgery on the knee. On 18 October 2001 the plaintiff suffered a significant fall in which he aggravated his neck and left shoulder condition. This was because his injured right knee had given way. The defendants missed this item of history despite being informed of it by the plaintiff, in writing.
76. The plaintiff described receiving cortisone injections into his injured left shoulder. He had ongoing problems in the neck region. He said these affected him to the point that he could not work. He described these injections, as being the only measure that allowed him to bear the pain from these affected areas. He also described taking Panadeine Forte tablets on a regular basis. It was these circumstances that led the plaintiff to seek out legal assistance to claim compensation for the effects of his injuries.
77. After receiving legal advice from the employee of the defendants, Mr Schipp, the plaintiff elected to pursue proceedings to claim common law damages. The analysis which based that advice was not recorded by the defendants.
78. There was little reference in the evidence to the course of the communications between the plaintiff and the defendants for the purposes of preparing his claim for hearing. Counsel for the defendants developed some aspects of those communications during his cross-examination of the plaintiff. Those matters have to be read in conjunction with the exhibits, which largely comprised the solicitor’s file and counsel’s brief. Where necessary, I shall refer to those matters when analysing the documentary exhibits after reviewing the matters that were raised in the cross-examination of the plaintiff on behalf of the defendants in these proceedings.
Circumstances of settlement of the principal proceedings
79. The plaintiff stated that at about 9.00am on 1 August 2002 he attended the chambers of Mr Peter Kirby for a conference with Mr Kirby and Mr Schipp, knowing that Mr Kirby was the barrister who had been retained by his solicitors to represent him in the principal proceedings. He had not met Mr Kirby before that day.
80. The plaintiff described the course of the conference, stating that Mr Kirby asked him questions and he had answered them. He stated that the gist of the conference was that Mr Kirby was going through a range of damages figures and was writing notes as well as talking about a range of damages and pointing various figures out to him. The plaintiff’s recollection was that the range of damages given to him at that conference was approximately $350,000 to $450,000 “not including costs”. In this regard, the plaintiff’s evidence was:
“ …
A. Your Honour, I don't recall every word that was said that morning in the office but I clearly know that the words, he took me through the figures that were on that page and I walked out of that office believing that I was getting a figure between 350,000 and $450,000.”
81. The plaintiff was shown page 110 of Exhibit “A”. He identified that page as comprising the notes from which Mr Kirby was speaking to him about a range of damages. The plaintiff reiterated that the range of damages of $350,000 to $450,000 had been put in his mind at the conference. The plaintiff said that after the conference, he did not see Mr Kirby again on that day.
82. In his evidence in chief, the plaintiff then described the events that transpired from the time the conference had concluded, until the time the proceedings were settled. His evidence in this regard was as follows:
“Q. Just pausing there. I'll come back to that, there was another issue which would be a bit out of sequence so I'll come to that a bit later on. After the meeting in Mr Kirby's chambers, what occurred then, Mr Mills, on 1 August 2002?
A. Mr Schipp, Mr Schipp and I left Mr Kirby's office. We walked across to the court, I can't remember exactly the time but we walked across to the court and Mr Schipp asked me to wait in the waiting room there and wait for him to return.Q. Right, and what happened, did you wait in the waiting room?
A. I did wait in the waiting room. He disappeared and over the course, the next course of reasonably short time, he came back to me with, with an offer, I can't remember now what those offers were, those initial ones were. One came to mind I think of, of about $90,000 and he said oh that's ridiculous, we'll go back and talk to them further and he was only there with me for 30 seconds or so and then just turned around and walked straight back.Q. Right.
A. He made a couple of trips out to me, I don't think it was any more than that.Q. Now do you recall, there was a conversation that took place between you and him in the course of the morning away from the actual courthouse, do you recall that?
A. Yes, I do.Q. How did that come about? How did it come about that you had a conversation with him away from the court?
A. Mr Schipp came to me and said, "Better come for a walk with me." He took me out of the waiting area. We crossed over the street. At the Newcastle court there's a little hotel on the opposite corner. We crossed over the street on the corner outside the hotel, away, there was no other people there. We were by ourselves and he then had a conversation with me there.Q. What did he say to you?
A. He said, "Right, they've stalled on" words to this effect, they've stalled on an offer, it's $175,000 and then clearly in my mind he said to me, "They have damming video evidence." Used those words exactly and it's a concern and went on then to say words to the effect that and I said, well and I recall my words to him then, I said, "That can't be, I can't believe that there's any video evidence at all that would be damming for me." He said, well, they've said that they have got damming video evidence, and I said, "Look, I've had hte surgery on the knee, I've got legitimate injuries, I am only able to suffer the pain because of the cortisone injections and the painkillers." I said I don't believe there's anything that would be detrimental to me on and I was pretty well slayed. He then I said, well, what do you think we should do here? He said, "It would be advisable" and words to the effect that we should accept this offer because there is a very real chance that you would get nothing.Q. What did you say in response to that?
A. I just recall being pretty devastated. I really can't recall anything else but maybe an hour or an hour and a half before I was told that I was getting 400,000 roughly and I was and that was none inclusive of costs and all of a sudden I'm getting $175,000 inclusive of costs and I just didn't know what that meant. Really the impact hadn't hit me but that was a long way short of where I believed it was and I didn't believe that there was any evidence that should slay me like that.Q. Ultimately you gave instructions to Mr Schipp to accept the $175,000 offer which had been made inclusive of costs, didn't you?
A. I gave on the basis of the factQ. Please answer my question?
A. Yes.Q. What I want to ask you there is what your reasons were for giving him the instructions to accept the offer of 175,000 inclusive of costs, why did you do that?
A. He told me that I could get nothing.Q. And did he express the reason why you could get nothing?
A. Because of the damning video evidence.Q. Yes. Now at that point could I ask you I will just you signed at that point an authority to settle the proceedings, didn't you?Q. And you are indicating that that had an effect on your decision to accept the 175,000?
A. Absolutely.
A. Yes, I did.”
83. The plaintiff’s evidence was that he thought, by what Mr Schipp had said to him, he was left with no choice and was bound to “proceed”, by which he explained that to proceed meant to accept the offer made by the defendant in the principal proceedings.
Matters raised during cross-examination of the plaintiff
84. The cross-examination of the plaintiff involved some credit issues. I shall examine those matters in my evaluation of the credibility of testimony concerning Issue 1 of the issues calling for decision. For present purposes, it is sufficient to simply identify the topics and the context in which the defendants probed these topics.
85. The plaintiff was questioned about the detail and sequence of his employment history, his previous injury history, the nature, severity and extent of the injuries and disabilities that flowed from the incident in question, and concerns over apparent discrepancies or mismatching of information emerging on a comparison of the available medical reports.
86. The plaintiff’s income tax returns were examined in the context of his history of receipt of Centrelink benefits. He explained the fact that he had not declared income from the practice of spinology by reference to the fact that he had not been in practice for long when the injury occurred, his practice was just starting to grow, and that he had changed practice locations. The plaintiff’s post-injury financial situation was also explored. The plaintiff could not remember details of income from the 2000 tax return. It appeared that in the 2001 year his income of $32,466 was from workers’ compensation payments. At the trial, which was nearly 9 years after the events in question, he could not recall how much he earned from spinology. At the trial he could not remember taking income from his spinology practice, which was conducted in conjunction with other practitioners.
87. The plaintiff’s family finances were touched upon. It was revealed that the plaintiff’s parents had loaned him and his wife some monies to set up a rental business that was intended to be operated by his wife but this business proved to be unsuccessful.
88. The plaintiff agreed that in 2005/2007, a considerable amount of money passed through his bank account. He explained that his brother Mathew had won a considerable amount of money “from a football pick the margins bet” and that money had passed through the plaintiff’s hands, or more correctly through his bank account. The plaintiff denied that he was running a business of gambling. He explained that he had helped his brother out with bets on picking the margins. He identified one such bet as producing a win of $199,000 for his brother. One of the other bets involved an amount of $64,000. He explained the system by which this occurred as follows:
“WITNESS: Every weekend on the rugby league you have the opportunity to place from $1 to whatever you want on a bet called either pick the score, pick the dividend, pick the margins, pick the winners. There's a number of betting options with rugby league and pick the margins is where there's a number of possible combinations and it's difficult to pick it and the pools are large and if you buy the gamble out of it you can actually have the opportunity to win an amount of money which my brother did.”
89. When the plaintiff was questioned about the dealings he had with Bale Boshev, he stated that he had full confidence in Mr Schipp and trusted that he was doing the right thing by him. He said he would have believed anything Mr Schipp had said to him.
90. The plaintiff said that he had been told the 1977 head injury might have affected his memory. This was a matter that I considered to be relevant to any assessment of the credibility of his testimony. In this regard his evidence was as follows:
Q. Which part of your head was injured in that?“ …
A. In 1977 when I had the head injury, it did - I was told that it may affect my memory but I don't say that that's any blame to remembering things or not remembering things but I don't intentionally ever want to say that I do or don't remember things. If I remember something today I'll say it and if I don't remember - if I remember it tomorrow, I'll tell you tomorrow. It's no a selective memory, it's as I remember things.
A. The back part of my brain was injured and it was - a bolt went through the back of my skull. A recent X-ray does show that there's still severe damage on the back part of that.”
91. In cross-examination it was positively suggested to the plaintiff that he had been told that very high figures were being put to the opposing side for the purpose of settlement negotiations but that he would only receive a portion at a hearing. It was also positively asserted that the plaintiff had been told he could take his case to a rehearing following a determination by the arbitrator. Absent any actual recollection of these matters by Mr Schipp and Mr Kirby, these questions were obviously based on “usual practice” assumptions. The plaintiff did not agree with those propositions.
92. The plaintiff’s evidence was challenged concerning his monetary expectation from the principal proceedings. When the plaintiff was tested on his evidence concerning his belief that when he was going to the arbitration hearing “over the road” from counsel’s chambers he was going to get something in the vicinity of $400,000. In his evidence he denied he could have been mistaken about this and that the figures he had in mind were to be used for negotiations rather than the expression of an opinion as to the worth of his case. His evidence was as follows:
“Q. Do you recall having a desire in your head at the time of how much you wanted to get clear in your hand out of your settlement?
A. I was pretty excited about the fact that Mr Kirby told me I was going to get between 330 and $450,000, sorry, 350 and $450,000.Q. Did you convey to Mr Schipp any amount of money that you wanted to get clear in your hand from the settlement?Q. So is this the case that you had an idea in your mind that what you wanted to get clear in your hand was 350 to $400,000, is that your evidence to his Honour?
A. I was told that by the people that were representing me. I was told nothing else. I may have been naive, but I had full faith in my legal team at that stage that were working to me and I believed everything they said to me.
A. I can't recall if we spoke about an amount of money except for the amount of money that we've spoken to in Mr Kirby's office. If something was said I can't recall it.”
93. On the subject of the consultations the plaintiff had with Mr Schipp concerning the various offers made by the defendants on 1 August 2002, the plaintiff stated that he could not precisely recall the number of times that Mr Schipp went back and forth with offers of settlement, but acknowledged this could have occurred on some 3, 4 or 5 occasions. When the plaintiff was asked questions about Mr Arnold’s record of the sequence of settlement negotiations, the plaintiff gave the following evidence:
“Q. Do you remember Mr Schipp coming in backwards and forwards with different offers, going to and fro with different figures?
A. I do remember that, your Honour, but I don't remember how many times it was, and I really can't remember whether that was a number of times, three or four or five, I can't remember the number of times.Q. The record of those negotiations shows that the defendant's offer was creeping up to a point, and your expectations were coming down to a point, do you remember what your thought processes were during that procedure?
A. I had no idea where Mr Schipp's amounts that he was negotiating at were, because he never told me that. The only figures that I was being told was the figures that they were offering, that was the only figures I was being told, and I don't remember how many times that it was that he came in to see me. I can't recall that. He was only telling me the figures that they were offering. He did not ever tell me where they started or what his starting point was. I assumed that if my legal team was doing the right thing by me that the figure of where they would've started would've been somewhere in the 350 to 450,000 mark, that's what I was told. And I certainly would've thought that if I was going to have a chance of getting the upper end of what Mr Kirby had told me, I would have thought that that's where they would've started, at 450,000.Q. Putting those matters aside for a moment, do you recall ever being told that the representative of the insurer had made an offer accompanied by the words "that's it", or words to that effect?
A. No, the only time it got to the point of finalisation was when Mr Kirby said, "I want you to come for a walk with me", and that's when we crossed the road. He didn't give me any indication of why we were going for that walk until we got over the road, and that's when he told me about the video evidence and about the offer that had been made, that was the only time that - I didn't get that figure while I was in that waiting room.Q. Yes?Q. If you had not been told about the video, I realise it's a difficult question, but if you'd been told the offer was 175,000 and that's it, what would you have done with that offer?
A. If I hadn't been told about the damning video evidence?
A. Your Honour, I wouldn't have accepted that offer. I was happy to run the case. We'd spoken about the fact that we were going - I was there that day to go to Court. I was there to go to the arbitration or to the court or - we had every intention to proceed and to go. And only some time earlier than that, Mr Kirby had given me a range of figures that he was very confident that I was going to get. And so - and Mr Kirby's figures were always a range of figures plus costs. This was 175,000 inclusive of costs. That was a long way out of that realm.”
94. The plaintiff was also challenged as to what he stated had been said to him regarding the video evidence. His evidence in this regard was in the following terms:
“Q. Now, let's go back to the conversation that you allege happened in relation to the video evidence. Doing the best you can, accepting it's a long time ago, can you give the substance of what was said by Mr Schipp to you and you to Mr Schipp on that occasion? What did Mr Schipp say to you?
A. The one thing's that very clear to me is that Mr Schipp said they've got damning video evidence and the reason I'm so sure about that as where I'm not necessarily so sure about anything else is that that was about the single most important piece of information that I'd just been slayed within virtually my whole life, so I'm pretty positive that I was going to remember that pretty clearly.HIS HONOUR
Q. Was there a critical or significant word in Mr Schipp's discussion that sticks in your mind that described this video?
A. They've indicated or told me that they've got damning video evidence, they were the three words that were clear.Q. So not detrimental, it was damning?
A. Damning video evidence was the three words that he used.DICKER
Q. Well I'd like to suggest to you that didn't happen?
A. That's exactly how it happened.Q. Now, you gave some evidence this morning to his Honour that you told Mr Schipp "I thought there wasn't any. I don't believe they've got any. That's impossible". Do you remember giving that evidence?
A. Words to that effect, yes.Q. Well why were you worried about this, assuming it was said, if you knew there couldn't be any such evidence?
A. As I've said for - I believed everything my solicitor said and when I turned to him as my trusted solicitor after he'd just told me that and I said to him that I don't believe that there is any, I'm looking for him to support me and he didn't.Q. Well did he tell you he'd seen it?
A. No, he didn't tell me that all. He told me that they - and I can't remember whether he said that they said or whether he said that they - that they indicated, I don't remember that part. But I definitely said that - I definitely recall that he said damning video evidence.Q. So did you take that to mean that Mr Schipp was conveying to you something that he had been told?
A. Absolutely.Q. Well did you say where is it, I'd like to see it because I think it's impossible?
A. I did say it was - I did say words to the effect that I - I was pretty slayed right then and there, I was pretty slayed and I just had my legs chopped out from underneath me and I just remember saying to him - I turned around in disbelief and said "That just can't possibly be" and thinking out loud and trying to recall the words that I said were "That that just can't be" and I'm looking for my solicitor to support me and say well let's go back in there and have a look at it and he never said that to me.Q. Well did you ask to have a look at it?
A. I certainly said to my solicitor "What do you think about it?" and my solicitor said to me in words to this effect that I suggest that you take this offer because you may get nothing.Q. Is that all he said on that point?
A. I can't remember exactly the words that went in and around that, but the two most clear things in my mind were that Mr Schipp was quite adamant that they - from his belief they had damning video evidence and I was left with the feeling that if I didn't settle this I was going to get nothing.Q. Your evidence to his Honour is that you believe you had serious injuries arising from the 8 November 2000 accident?
A. Absolutely.Q. And so your evidence to his Honour is, had affected you considerably?
A. Absolutely.Q. Had a damaging effect on your life, is that your evidence?
A. Yes.Q. You must have been very confident, Mr Mills, on the basis of what you've said that there could be no damning evidence against you on video?
A. Yep. Well I was confident of that.Q. Well can you explain to his Honour why did it have any effect on you whatsoever then, assuming it was said?
A. I'm just a layperson, you know I've always believed that my solicitors are the people that are going to represent me the best and when Mr Schipp told me that they had damning video evidence and you may get nothing, I just was in shellshock. I don't - all I know is that I felt that at that point in time - I believed my solicitor and I trusted my solicitor to - to go in there and fight for my case. To go in there and fight for my rights.Q. Is this the case you told his Honour that Mr Schipp said you may get nothing, is that right?
A. "You may get nothing".Q. I see, so just to be certain. Is it your evidence that he said to you "If they have damning video evidence that may be" - I'm doing my best here "contrary to your interests that you may get nothing"?Q. Words to that effect?
A. Yep. He indicated to me that the damning video evidence could mean that if they'd got damning video evidence which was counter productive to everything that we'd said or everything we had done that I could get nothing.
A. No.”
95. The plaintiff was cross-examined about his understanding of his procedural options at the arbitration hearing, including the option of taking the case to a rehearing before a judge of the District Court. In this regard, his evidence was as follows:
“Q. Now, at that time after he conveyed what he did to you, you knew that you could take the matter on for hearing didn't you?
A. No. No that's not - I didn't know that at all.Q. Are you telling his Honour that you didn't know that you could run the arbitration?
A. I didn't know that. I firmly believed that my solicitor was doing the best for me.Q. Are you saying to his Honour that when that offer from the insurer came and was given to you by Mr Schipp that you were of the view that you could not run the arbitration listed for that day?
A. I was of the view that if I didn't accept that 175,000 then, from the advice that Mr Schipp gave me, that I ran the risk of getting nothing if we went any further.…
Q. Mr Mills, can you answer this question, did you think you could still run the hearing in the arbitration that day, even though the offer was made?
A. No.Q. So did you think that the offer from the insurer, what, ceased the opportunity of running the case?
A. No, I didn't think - what I knew ceased the end of everything was that Mr Schipp advised me and I was listening to Mr Schipp.Q. But you knew you were the plaintiff didn't you?
A. I didn't know anything except what Mr Schipp was telling me.Q. You knew that you were the plaintiff in the case?
A. I knew I was the plaintiff in the case.Q. You knew it was your case?
A. Yes.Q. You knew that you made the decisions as to what happened to your case, didn't you?
A. I knew that I was paying Mr Schipp an amount of money, some $35,000 to represent me and give me the advice of what I should do.HIS HONOUR
Q. Well, that's not quite right is it, you hadn't actually paid that money had you?
A. That money was deducted out of the 175,000.Q. Yes, but you hadn't paid it in advance?
A. No I hadn't paid it in advance, your Honour, no.DICKER
Q. But you knew you could make the decision whether to take the offer from the insurer or not?
A. No.Q. Well, what did you think you were obliged to take the offer?
A. I was in a situation where I was totally trusting of what my solicitor was telling me.Q. Did you think you were legally obliged to take the offer?
A. Yes.HIS HONOUR
Q. Why is that?Q. What did you see, if anything, as your alternatives when Mr Schipp presented you with the information that the defendant's final offer was 175,000 inclusive of costs?
A. I didn't believe I had any alternatives, your Honour.
A. Because Mr Schipp had indicated to me that if I proceeded from there, because of the damning video evidence, I could get nothing.”
96. The plaintiff denied that he was told that the insurer would only pay him $175,000 clear of workers’ compensation payments and inclusive of costs, and that was their final offer and he could either take the offer or run his case. The emphasis of the denial was that the plaintiff took issue with the suggestion that he had been told he could run his case as an alternative to accepting the offer.
97. I was informed that both parties agreed there was no evidence in the principal proceedings that the defendant in those proceedings had any video evidence of the plaintiff. I was also informed that both parties accepted that Mr Simon Harben SC, who, as junior counsel briefed for the defendant in the principal proceedings, did not say any words to the effect that the defendant in those proceedings had any video evidence concerning the plaintiff.
98. The plaintiff disagreed with the suggestion that on the occasion of each of the offers that the defendant had made in the settlement negotiations in the principal proceedings, Mr Schipp obtained the plaintiff’s instructions before putting a counter-offer. In this regard, the plaintiff stated that with the exception of the final figure of $175,000 listed in Mr Arnold’s record of negotiations, none of the offers attributed to the plaintiff’s side, were made with his knowledge.
99. Neither Mr Schipp nor Mr Kirby had any notes that contradicted this evidence from the plaintiff. Nevertheless, the absence of such notes still leaves for determination the credibility of the plaintiff’s evidence in this regard.
100. The plaintiff conceded that he had not kept notes of the negotiations.
101. The plaintiff was asked questions as to when he first felt aggrieved by the events of 1 August 2002. In this regard his evidence was as follows:
“Q. And I'd ask you to assume that your proceedings were commenced on 31 July 2008, one day short of six years after 1 August 2002. I'd just ask you to make that assumption for the next series of questions I'm going to ask. Did you feel you'd been hardly done by, by Mr Schipp in relation to the arbitration?
A. Yes, I did.Q. When did you first feel that?
A. When did I first feel that?Q. Yes.
A. That I felt hardly done by Mr Schipp?Q. Yes, Mr Schipp?
A. Probably from the moment I'm standing outside that hotel.Q. By that you're referring to 1 August 2002?
A. Yes.HIS HONOUR
Q. You differentiate between the expression you used the other day in which you said you "felt slayed" and what you're now answering, that is "being hard done by"?
A. When I said I felt slayed, at that moment over the road outside the hotel I just felt slayed. It was - your Honour, if it's the wrong terminology then I
just - it was an expression of how I felt at that moment to realise - to think in my mind that I was getting a range of figures and then to be told that it was something quite different for circumstances that I didn't think was there.DICKER
Q. So is this the case that from the day of the settlement you felt that Mr Schipp hadn't looked after you?
A. I was concerned - I had some concerns that Mr Schipp hadn't looked after me from right through the case?Q. But is this the case that from the end of the date of settlement being 1 August 2002 you felt that Mr Schipp really hadn't looked after you and your case, is that correct?
A. I really felt that there was something wrong.Q. Something seriously wrong?
A. Well is there a difference between seriously wrong and wrong?Q. And you ended up getting $175,000?Q. On your evidence you thought you were going to get 350 to $450,000?
A. That's correct.
A. 350 to $450,000 plus costs, $275 inclusive of costs. There was a fair bit of difference.”
102. Given the question was based on the figure of $175,000, I infer that the reference in the answer to $275 was in fact a reference to $175,000. The plaintiff’s evidence continued as follows:
“Q. You regarded that as a huge difference, didn't you?
A. Yes.Q. You regarded the result that had been achieved for you by Mr Schipp as being a very poor one for you, is that the case?
A. Possibly, but at the same time I - at that stage I - not having the time to even think about it, I'm standing there and Mr Schipp who's my solicitor and my - the person working for me has presented me with a number of facts and a scenario and I didn't have a chance to make a decision and I can't
remember - I can't remember - all I remember feeling was that the whole thing was pretty disappointing, but I can't - I think I felt disappointed.Q. Well can you tell his Honour why you waited four-and-a-half years to approach - could you tell his Honour why you waited five-and-a-half years after that before you approached your solicitors about the matter?
A. Because I didn't know I had any rights.Q. Well why did you approach your solicitors?
A. Why did I approach the solicitors?Q. Yes.
A. Because I decided to try and go and do something about it, I'd thought about it, we'd talked - in private I'd thought about it and I decided that I was going to just check whether I had any rights.Q. But presumably the same feelings you had when you first approached your instructing solicitor about the matter were the same feelings you'd had for
five-and-a-half years, is that right?
A. I didn't believe - I didn't know that I had any rights to go back and change anything. I didn't believe I had any rights. I believed that something had been done wrong by me. I believed that - but I didn't understand exactly the same processes as I trusted my solicitor, I believed that that was basically the end of it, but - but as time went on I decided that I would approach a solicitor and the timeframe that you're giving of six years, I didn't know that that was the timeframe that existed. I didn't understand what my rights were, it could've been 20 years, I don't know whether it was six years, one year. I could've turned up there and I could've been told I'm sorry, you're out of time. So I don't understand - that was a coincidental time if that - and are you asking me that I took it to one day, is that your question there”
103. The plaintiff denied that he had accepted the offer of $175,000 made by the defendant in the principal proceedings because he knew it was a final offer made in circumstances where the insurer was investigating his past, and where it was asserted he had not been frank with the doctors when discussing his previous injuries, and because he was worried that if he proceeded with the case he “may well lose the case and get less than that offer”. He denied he wanted to close off the risk of these eventualities occurring as being the motivation for settling the case.
Evidence of Mr Mathew Tremain
104. The plaintiff’s older brother, Mr Mathew Tremain gave very brief evidence in chief. He was unwell at the time of the hearing. He confirmed that in 2000 he operated a wheat growing business under the company name of M R Tremain Pty Ltd. In October 2000 he employed the plaintiff as a farm hand. The work involved the plaintiff driving trucks, operating tractors and grain headers as well as emptying grain bins. The hourly rate for such work varied between $14 and $30 per hour and the harvesting work proceeded for between 13 and 19, sometimes 24 hours per day, depending on the weather and other exigencies.
105. In answers to cross-examination, Mathew Tremain said he ceased trading under the name of M R Tremain Pty Ltd on 31 May 2002 and the properties involved in his business were sold to another company he controlled, namely Bradlock Pty Ltd. He was still a grazier and grain grower. In answering questions on farm losses, accounting issues and his financial returns, he deferred these questions to his accountant who managed those issues for him. He was questioned as to the declaration of wages he provided to his workers’ compensation insurer for the period 21 June 2000 to 21 June 2001 in the amount of $5320. He confirmed this could have represented the amount of about 4 weeks wages he had paid to the plaintiff.
106. The plaintiff’s injury occurred on 8 November 2000 and Mr Tremain’s wheat harvest was completed by about 12 November 2000. He confirmed that the paperwork concerning the employment of the plaintiff was filled in on 28 October 2000 : Exhibit “A” pp 343, 345. He explained that the harvest of his 3000 acres only went for about a week and a half. He said “anyone with their act together does it in ten days”.
107. Mr Mathew Tremain explained that the plaintiff came to help him on the farm at short notice due to a labour shortage. He said that to accommodate this request, the plaintiff had left his family and his spinology practice behind at Newcastle to do so. This was in the context of evidence that the brothers had a close relationship and would help if called upon to do so. He gave a detailed factual statement to his workers’ compensation insurer : Exhibit “B”.
Evidence of Mr Anthony Tremain
108. The plaintiff’s younger brother, Mr Anthony Tremain gave evidence. He was trained as a chiropractor and had practised in that profession. He said that since 1996 he has been a practitioner and teacher of spinology. He said that since 1998 he has been the chairman of the professional development board of that profession. He explained the essential difference between the disciplines of spinology and chiropractic as being that spinologists do not manipulate the spinal column, and there is a different approach taken to the analysis and prevention of pain.
109. Anthony Tremain stated that he had trained the plaintiff as a spinologist and from that perspective offered the view that the plaintiff was highly competent in that field. Anthony Tremain stated that in 2000/2001 he was probably earning $250,000 per annum from the practise of spinology. He stated that a competent spinologist could expect to derive income of that order by treating about 200 people per annum at the rate of $100 per person per month, which would involve a total of about 600 person visits per annum, with the income rising to somewhere between $300,000 and $500,000 per annum with relatively small overheads.
725. At the time of the scheduled arbitration hearing, and for a significant period beforehand, the defendants were aware of the plaintiff’s profession of spinology : Exhibit “1” p 431. Notwithstanding this fact, a claim for loss of earning capacity based on the earnings the plaintiff could have derived from the practise of spinology had not been particularised on the plaintiff’s behalf by the defendants. I accept that before the scheduled arbitration hearing, the plaintiff told the defendants about his spinology practise, and I find that the defendants ought to have explored this with the plaintiff, and should have particularised the plaintiff’s inability to pursue that line of work in the principal proceedings.
726. In my view, assuming that an arbitration hearing would not have satisfied the monetary expectations of the plaintiff, and that a rehearing would have occurred before the court, which I have found would have been the case, a duly diligent preparation for a trial by counsel and solicitors, with due time being spent in conference preparing the plaintiff to give evidence, would have revealed the potential claim for loss of income from the practise of spinology. In my view, assuming a standard of reasonable practice on the part of the plaintiff’s solicitor, which I must do for these purposes, this would have led the present defendants to marshal the evidence of Mr Anthony Tremain, and other supporting evidence that would have demonstrated a claim along the lines of the evidence given by Mr Anthony Tremain in these proceedings, revealing a substantial potential claim for loss of earning capacity.
727. A difficulty with assessing the plaintiff’s damages on the basis of loss of earnings from the practise of spinology, was not only that he had been in practise for a relatively short time, but significantly, such a claim had not been particularised in the particulars of claim filed in court, and had not been notified to the defendant in the principal proceedings by correspondence, as it should have been.
728. In my view, such difficulty would and should not stand in the way of an assessment in these proceedings. I consider this to be so because at the very least, in the principal proceedings, this claim would have been revealed during the necessary preparatory conferences the plaintiff would have had with his solicitors and with his counsel.
729. Once such a claim had been revealed, the obligation of the plaintiff’s solicitor was to seek a timely amendment to the particulars to reflect such a claim. A timely amendment to the particulars would not have required leave. It would simply have required correspondence to the defendant enclosing an amended document to incorporate and raise such a claim.
730. I do not ignore the reality that even if an application for amendment had been left to the last moment, the court would not have shut out such a claim on an application of the principles that applied in 2003 concerning applications to amend the particulars of claim : Leotta v Public Transport Commission of NSW (1976) 9 ALR 437; State of Queensland v JL Holdings Pty Ltd [1997] HCA 1; (1996-1997) 189 CLR 146. In my view, as the law was applied in 2003, assuming the worst, and that an application to amend was left to be made at the eleventh hour, the court would nevertheless have granted such a request, in order to ensure the plaintiff’s claim was justly determined.
731. In my view, the contrary position should not prevail in these proceedings, as to do so would have the effect of enabling the tortfeasors to benefit by their wrongdoing, a result that would be contrary to accepted notions of justice and fairness between the parties. This in my view counterbalances and cancels out any potential to the defendants which I earlier identified to be a qualification to the plaintiff’s entitlement to rely on the earnings he might have derived in the practice of spinology.
732. On the foregoing analysis, in determining the necessary approach to the assessment of damages, it is necessary to apply the principles identified in Malec v JC Hutton Pty Ltd [1990] HCA 20; (1990) 169 CLR 638 using a forward looking approach in retrospectively determining what the probable circumstances would have been, as was explained by Hayne J in Vairy v Wyong Shire Council [2005] HCA 62; (2005) 223 CLR 442 at [105].
733. On that approach, I consider that but for the plaintiff’s injury, there was a very high probability that the plaintiff would have helped out his brother Mr Mathew Tremain on the farm for a short period of about a month, and would then have gone back to developing his spinology practice with a justified measure of confidence that in the first year, he stood to gain considerable income. In this regard, I accept the evidence of the plaintiff and Mr Anthony Tremain.
734. The argument made by the defendants against this proposition is that an examination of the plaintiff’s financial returns do not reveal significant income for several years before his injury. In my view this is not an impediment to an award of damages for past loss of earnings where the plaintiff was in well-paid employment at the time he was injured and had a capacity to pursue significant earnings if he had remained in an uninjured state.
735. The argument made by the defendants pays no regard to the fact that the plaintiff spent a year out of the workforce to study and obtain certification as a spinologist. This occurred at around a time of crisis in his life which led him to change career paths. In those circumstances I do not regard the plaintiff’s pre-injury income-tax returns to be a reliable guide to the assessment of either past or future loss of earning capacity.
736. The defendants raised a further argument that in the months before his injury, at a time when he was working as a spinologist, the plaintiff had not declared earnings as a spinologist. At the trial of these proceedings the plaintiff could not recall the amount that he earned in that period as a spinologist. This is not at all surprising. The solicitors appear not to have pursued the usual enquiries that would have been likely to have unearthed the details of such earnings whilst the information was available. A lot has happened to the plaintiff in the meantime. He has moved several times. He has had a relationship breakdown. He has been preoccupied with grievances associated with his compensation claim that gave rise to these proceedings, as has been documented by Dr Smith, his general practitioner. I do not consider his ability to recall his spinology earnings 9 years ago to be a legitimate matter for criticism by the defendants in these proceedings, particularly where the evidence in question could have been sought and preserved at an early and relevant stage had the defendants properly discharge their retainer to act for the plaintiff.
737. With regard to any past earnings as a spinologist, I must also have regard to the possibility that in the start of a new business, conducted in conjunction with other practitioners, where there were set up expenses and running costs, the plaintiff may not have taken drawings from the business at that early stage. In any event, this is not an issue on which I need to make a conclusive finding. I find that a more appropriate yardstick by which to assess the potential earnings of a spinologist, is the unchallenged evidence of Mr Anthony Tremain.
738. In coming to that view, that is not to say that I should accept without discount the potential earnings outlined by Mr Anthony Tremain as being applicable to the plaintiff. As with any new business venture which involves the establishment of a client base, there are risks of failure for multiple reasons that may be unconnected with skill ability. In this regard, a reasonable and alternative yardstick for an assessment of loss of earning capacity would at the least have been that of average weekly earnings.
739. Whichever yardstick is used, in my view, an assessment must be made for the plaintiff’s loss of earnings between the time of his injury on 8 November 2000 and the time of commencement of the notional trial of 31 March 2003. In respect of that period, I find that the plaintiff has not worked because he has been unable to do so, and this has been as a result of the subject injury. There is no question of any failure to mitigate, as is evident from the medical evidence, the plaintiff’s attendance at rehabilitation, and the continued payments of workers’ compensation until the time of settlement.
740. Having considered the foregoing matters I am persuaded that I should accept as fair and reasonable the first part of the plaintiff’s submission on past economic loss, namely for the first 12 months. This results in a calculation of gross loss of income of $4840 for the first month and eleven-twelfths of $100,000 for the ensuing 11 months, namely $91,666 gross.
741. In my view, this would represent a fair measure of the plaintiff’s claim for past loss of earning capacity between the time of his injury on 8 November 2000 until 8 November 2001. However, I consider that the component for the 11 months of loss of earnings at the rate of $100,000 per annum in the first year following the injury should be discounted by 25 per cent to reflect vicissitudes that would have applied at that time. Accordingly, the sum of $91,666, when reduced by 20 per cent, reveals an amount of $73,332. When the sum of $4840 is added to this figure, this reveals a total loss of earnings in the amount of $78,172 gross, which is the equivalent of an average of $1503 per week gross over this 12 month period.
742. After allowing for the applicable rates of income-tax and the Medicare levy, these amounts are the equivalent of $1016.73 per week net or $52,870.34 for the first 12 months.
743. The remaining period between 9 November 2001 and the commencement of a notional trial on 31 March 2003 is a period of 72.57 weeks.
744. Over the ensuing period until the commencement of the notional trial, I consider that it was highly likely that the plaintiff would have been successful as a spinologist in private practice because he was one of the better ones according to his brother who trained him, and whose evidence I accept. I find therefore that the plaintiff was well placed to develop a good spinology practice and to position himself to earn income of up to $250,000 per annum.
745. It would probably be unrealistic to assume that the plaintiff would immediately, after a year of income of the order of $100,000 gross, move up to an income of $250,000 gross. However I consider it would have been reasonable, on the evidence, for the court assessing damages in the principal proceedings in 2003, on the evidence of Mr Anthony Tremain, to find that an income of $100,000 per annum gross would have continued in the following year. On that approach a discount would be required to allow for uncertainties. One such uncertainty would have been whether the plaintiff would have found practice as a spinologist to be congenial, as he did have some doubts at the time he went to work for his brother Mr Mathew Tremain.
746. A discount would also be required to reflect the possibility that despite predictions, the plaintiff may not have been as successful in a relatively new spinology practice, and to also account for the imponderables that would have applied to the situation the plaintiff would have been in at that time. Although the calculation is not a perfect one, partly because of the actions or inactions of the defendants, and partly because of the inherent uncertainties of the plaintiff’s probable earnings in the years immediately following his injury, I consider that a 25 per cent discount should be applied to reflect these matters. I consider that in 2003, this would have been the appropriate approach that would have been taken by the court in assessing the plaintiff’s damages for that second part of the claimed period of past of loss of earning capacity.
747. Accordingly, I have assessed the second period of loss at the rate of $75,000 per annum gross, which is the equivalent of $1442 per week gross over 72.57 weeks. The net weekly rate for this period, after applicable tax and Medicare levy offsets, is $985.48 per week. Accordingly, the loss for the second period is $71,516.28 net.
748. It is useful to make a comparison with the rate for average weekly earnings. In February 2003 the AWE rate for total male earnings in Australia was $1009 per week gross. This is the equivalent of $752.71 per week net. I consider that the plaintiff was well placed to earn well in excess of the average rates, as is evident from what he could earn doing farm work, and the potential earnings of spinologists.
749. The combined assessed loss for the two periods, namely $52,870.34 and $71,516.28 yields a total of $124,386.62. I therefore notionally assess the plaintiff’s past loss of earning capacity to 31 March 2003 in the principal proceedings in the amount of $124,386.
750. In the context of an assessment of past economic loss, the weekly payments received by the plaintiff from his employer’s workers’ compensation insurer, namely $38,200, would have operated as part of the defendant’s defence to the principal proceedings, and therefore a judgment in the plaintiff’s favour would have necessarily excluded this amount.
751. After the offset allowance is made for the amount of weekly compensation payments received by the plaintiff, the difference reveals an amount of $86,186. In my view this amount fairly represents the probable amount the plaintiff would have most likely have received as a component of an award of damages in his favour for past loss of earnings in the principal proceedings after the offset of payments of workers’ compensation payments.
Fox v Wood
752. The amount the plaintiff had paid by way of tax on his workers’ compensation payments was identified in the amount of $7,043.40. I find that the plaintiff would have been entitled to have had this sum included in a damages award in his favour in the principal proceedings.
Future loss of earning capacity
753. The plaintiff submitted that at a notional trial in 2003 he would have been likely to have succeeded in obtaining an award of damages in his favour for future loss of earning capacity in the range $198,254 to $283,200, after applying the required discount of 15 per cent on account of potential adverse vicissitudes.
754. That submission was based upon the proposition that he is entitled to claim a loss of at least $350 per week net, or more likely, the sum of $500 per week net for the remainder of his working life.
755. In contrast, the defendant submitted that it was unlikely that the plaintiff would have received any damages for loss of earning capacity, or alternatively, any such award ought to be assessed at a sum in the order of $20,000.
756. Whilst the submissions made by the respective parties are understandable in the context in which they were made, I consider that there are difficulties inherent in both approaches.
757. I consider the defendant’s general approach to be overly simplistic and not reflective of the medical evidence I have accepted, particularly the opinion of Professor Ghabrial that I have already summarised and accepted.
758. I consider the plaintiff’s submitted approach to be too arbitrary in the case of a person who I consider should be assessed as being unable to perform significant work over the remainder of his working life, including an inability to work in the profession of spinology for which he was trained, by reason of impairment of his left shoulder.
759. Several approaches are available as options for the assessment of future loss of earning capacity. These are the award of a buffer, or the projection of a selected weekly sum over the remainder of the plaintiff’s probable working life if he had remained uninjured. On the latter approach, this would be either with or without a discount to allow for a residual earning capacity. In the paragraphs that follow, I will consider these options.
760. In some cases it is appropriate to identify a fair buffer along the lines discussed and approved in State of NSW v Moss [2000] NSWCA 133; (2000) 54 NSWLR 536, per Heydon JA at [66] – [87]; pp 552-559, and the cases that have followed and approved that course. In my view, a buffer would be too simplistic an approach in this case given the specific evidence of the plaintiff that he is unable to work as a spinologist because he is unable to carry out the physical tasks due to his impaired left shoulder. A buffer is also inappropriate in a case where there is a proven inability to perform a range of commonplace activities such as those identified by Professor Ghabrial where those activities are involved in the workplace. I consider that a buffer is also inappropriate where there is an available method for estimating the loss. In my view a buffer applies more to cases where there is a paucity of evidence of probable income or where the pattern of loss of earnings is necessarily imprecise. Accordingly, I do not propose to award a buffer for future loss of earning capacity.
761. Although the evidence as to the plaintiff’s earnings and his future potential earnings was in an imprecise state, the fact remains that but for his injury which is the subject of this claim, he was fit for a wide range of physical and non-physical work categories and tasks which he could have sought out and probably obtained on the open labour market.
762. In my view, it is clear that as a result of the injury in question, the plaintiff has been left with significant impairment for unrestricted competition on the open labour market. For example, his shoulder impairment precludes him from pursuing employment within this chosen vocation as a spinologist. The evidence of his brother Mr Anthony Tremain indicated that the practise of spinology is a potentially lucrative endeavour. The plaintiff can no longer pursue this because of his shoulder impairment. Similarly, he can no longer pursue farm work of the kind he was carrying out at the time of his injury, which gave rise to the principal proceedings. These are just two examples of the plaintiff’s impaired earning capacity.
763. At the trial, the plaintiff was aged 45 years, and therefore had a theoretical working life of a remaining 20 years. There was no evidence that suggested a foreshortening of the plaintiff’s remaining working life. The evidence disclosed that he had in the past applied himself in a variety of occupations. It was probable that uninjured, he would have retained that unrestricted capacity. In these circumstances, I consider that in the principal proceedings, the probable approach of the court would have been to award the plaintiff a weekly sum over the remainder of his working life of 20 years to reflect the significant impairment to his earning capacity whilst at the same time, in fairness to the defendant, allow some offset for a possibly emergent residual capacity.
764. Given that efforts at rehabilitation have been unsuccessful, and given the nature of the plaintiff’s pain which wakes him at night, I consider that the offset should be relatively modest.
765. I consider that income goals for the plaintiff in the vicinity of $250,000 per annum or more are too high for the purposes of assessment of damages where these were uncertainties as to whether such income levels could be achieved by the plaintiff. However, I consider that the weekly sum awarded in respect of the second period of the claim for past loss of earnings, namely $948 per week net, is a reasonable yardstick to consider, before allowing for an offset for an assumed, but as yet unidentified, residual earning capacity that is yet to emerge. Doing the best I can to be fair to the plaintiff and at the same time not unfair to the defendants, I assess the plaintiff’s loss of earning capacity at $950 per week net less $250 per week for an assumed residual earning capacity, noting that these figures are averages over the remaining working life.
766. The result is a loss of $700 per week net for projection over 20 years (x 666.4) which yields a projected sum of $466,480. After applying a 15 per cent discount for potential adverse vicissitudes, this results in a projected calculation of $396,508.
767. I have tested the sum of $700 per week against the yardstick of average weekly earnings of $752 per week net. Given that I consider the plaintiff to have had the potential for higher than average weekly earnings, I consider this comparison validates the appropriateness of the figure I have selected for projection.
768. Accordingly, I consider that the plaintiff would most likely have been the recipient of an award of damages in his favour for future loss of earning capacity in the sum of $396,508.
Past loss of superannuation
769. The convention is for the loss of past employer funded superannuation to be assessed at 11 per cent of the amount assessed to represent past loss of earning capacity. Accordingly, applying that approach, 11 per cent of $124,386 is $13,682. I find that the plaintiff would have been entitled for this sum to be included in a damages award in his favour in the principal proceedings in respect of this head of damage.
Future loss of superannuation
770. Consistent with the approach taken with respect to the assessment of past loss of employer funded superannuation, applying the same convention to the calculation of future superannuation losses, 11 per cent of $396,508 yields an amount of $43,615. I find that the plaintiff would have been entitled for this sum to be included in a damages award in his favour in the principal proceedings on account of this head of damage.
Future out-of-pocket expenses
771. In the principal proceedings, the plaintiff made a particularised claim for future-out of-pocket expenses in the amount of $11,150. In these proceedings, the plaintiff submitted that sum would probably have been allowed and included on an assessment of his future entitlement to damages.
772. In these proceedings, the defendants have conceded a buffer of $10,000 on account of future out-of-pocket expenses. The difference in these two positions is relatively small and neither of them seems on the face of the evidence to be excessive. The sum claimed by the plaintiff is the equivalent of $12.36 per week over his projected life span of 38 years. I consider that on the evidence, the sum of $11,150 was reasonably claimed by the plaintiff and given it was particularised precisely by the defendants, I infer that the defendants, who were acting for the plaintiff, could most probably have proven this item of claim. I consider that a lump sum of $11,500 to be a fair allowance to cover the lifetime cost of medical consultations and treatment, physiotherapy and pain killing medications.
773. Accordingly, I consider that the sum of $11,150 would most probably have been included in an award of damages in favour of the plaintiff in the principal proceedings.
Past out-of-pocket expenses
774. The plaintiff’s out-of-pocket expenses were in the amount of $14,800 and were paid by the workers’ compensation insurer. I do not propose to include this sum in the notional damages assessment because it is, in effect, a book entry. That is, from a practical point of view, this amount would have been part of the defendant’s defence and an ultimate judgment in the plaintiff’s favour in the principal proceedings would have necessarily excluded this amount.
Summary of probable damages assessment
775. After allowing for the offsets that would have been claimed by way of defence as payments made to or on behalf of the plaintiff, my adjusted assessment of the plaintiff’s probable entitlement to an award of damages in the principal proceedings is summarised as follows:
(a) Non-economic loss (b) Past loss of earnings (c) Fox v Wood (d) Future loss of earning capacity (e) Past superannuation losses (f) Future superannuation losses (g) Future out-of-pocket expenses (h) Past out-of-pocket expenses Total
776. Having identified the probable amount of the plaintiff’s net entitlement from an award of damages in his favour in the amount of $649,887 if the principal proceedings had been taken to a trial, it becomes necessary to address the manner in which quantum ought to be assessed in the present proceedings, as some adjustments are required.
Issue 10 – Quantum of damages in these proceedings
777. A consideration of Issue 10 involves an evaluation of the analytical steps that must be taken into account in the adjustment of the notional award in an assessment of damages in these proceedings.
778. The starting point for the assessment is the notional award I have identified in the amount of $649,887.40 as at 30 November 2003.
779. In my view, there are 4 sequential steps of analysis that must be observed before arriving at a final assessment of damages in the present proceedings.
780. Before addressing those steps, it is necessary to deal with a specific submission made by the defendants on the adjustment of any award in favour of the plaintiff.
781. The defendants have submitted that in the event that the plaintiff succeeds in this case, there must nevertheless be a discount of at least 30 per cent for the loss of chance in accordance with general principle : Johnson v Perez [1988] HCA 64; (1988) 166 CLR 351. There is no question that there should be some discounting of the plaintiff’s entitlement to damages in accordance with this principle. The issue is the extent of an appropriate percentage of such a discount.
782. It was submitted that there were doubts about the plaintiff’s case meeting the required thresholds, as well as there been a real chance that he would have been willing to settle the matter anyway for a lesser amount than the potential value of the case. It was submitted that the plaintiff may have failed to establish his case under ss 151G and 151H of the WC Act, or may have failed to establish a substantial loss of past or future earning capacity, or may have accepted a lower offer of settlement in net terms with full knowledge of the correct position. It was submitted that a deduction of at least 30 per cent should be made on account of these factors. Accordingly, the elements of the submission need to be considered.
783. Recognizing that authority requires the making of a deduction for chance, the defendants’ submission requires consideration.
784. I have found it would have been unlikely that the plaintiff would have failed to meet the required thresholds. I have also found the plaintiff has suffered a substantial loss of earning capacity which has been demonstrated to have been productive of a financial loss. I have also found that the plaintiff had his sights set on a much higher figure for settlement of the principal proceedings than the amount for which the principal proceedings were in fact settled. I consider it would have been unlikely he would have settled for a lesser sum. Those circumstances therefore do not justify a discount as high as 30 per cent, as has been submitted.
785. In my view the factors relied upon by the defendants for a discounting of the plaintiff’s entitlement to damages are driven by the underlying ”minimalist” standard of preparation that had been undertaken by the defendants in the principal proceedings. In such circumstances, I consider that it would be unjust to make a deduction of the order of 30 per cent as submitted on behalf of the defendants because the potential value of the plaintiff’s claim, as was inadequately documented by the defendants, was necessarily diminished by the effect of that poor preparation. This would have had an obvious negative influence on quantum. This should not have been the case.
786. In my view, the plaintiff ought not be penalised on that account in these proceedings for the poor standard of professional performance of his solicitors in the preparation and documentation of his case in the principal proceedings. In my view, in this case, a reduction to the extent submitted by the defendants, would, by broad analogy, to borrow a phrase from respected authority concerning the non-set-off of collateral benefits, where this would unfairly and anomalously provide a tortfeasor with a benefit by reducing the liability to pay damages, “be revolting to the ordinary man’s sense of justice, and therefore contrary to public policy” : Parry v Cleaver [1969] UKHL 2 ; [1970] AC 1 per Reid LJ at p 13.
787. That statement of principle was recognized in cases where damages for gratuitous services were held not to require reduction because the services were provided by the tortfeasor, for example : Kars v Kars [1996] HCA 37; (1996) 187 CLR 354, per Dawson J at p 364.
788. I shall address what I consider to be the appropriate percentage discount in relation to the third of the 4 steps that I consider need to be followed in this case in adjusting the notional damages assessment in the principal proceedings.
789. I now turn to consider those 4 steps as follows.
790. First, the potential impact of any deduction required to be made from the assessment on account of assumed unrecoverable solicitor and client costs, has to be considered, as has been submitted by the defendants.
791. I consider that the evidence in this case indicates that no such deduction is warranted, for the reasons that follow.
792. Lump sum costing in personal injury cases is apparently employed in some quarters of the legal profession. In the context of an assumed assessment of solicitor/client costs, such lump sum costs are not readily amenable to analysis of the professional time spent on legal work.
793. In the principal proceedings, the plaintiff’s maximum agreed costs of $35,000 to the point of, and including a trial, plus an additional $5000 per day plus GST for each additional day of trial, which I have assumed would cover counsel’s fees, solicitor’s fees, witnesses expenses, all disbursements and professional costs, seem to me to be reasonable. The costs agreement between the plaintiff and Bale Boshev clearly has the effect of relieving the defendants of the burden of having to itemise the work performed to justify their costs on a solicitor and own client basis. In these circumstances, I find it difficult if not impossible to identify a relevant unrecoverable solicitor/client component. This is a matter that requires proof, not guesswork.
794. The costs regime under the Legal Profession Act 1987 provides that only reasonable costs can be charged and recovered by legal practitioners. As I have determined that the likely costs of the plaintiff pursuing the litigation to a fully contested hearing were reasonable, in my view it follows that those costs could not be described as being unreasonable. Therefore, I consider that there would be no costs gap for the plaintiff to have to bear in respect of his own solicitor and client costs.
795. Accordingly, I do not propose to discount the plaintiff’s entitlement to damages on account of an argued gap between the plaintiff’s solicitor and client costs and the part/party costs that would have been likely to have been incurred in taking the principal proceedings to a judgment following a contested hearing.
796. Secondly, it is necessary for an award of damages in these proceedings to reflect what I shall describe as the “accidents of litigation”. Underlying this broad general description there are a number of imponderable and at times indefinable factors that can and often do operate in litigation to necessarily make prediction of the result uncertain. Examples are the unavailability of witnesses, witnesses not coming up to proof, witnesses not being accepted, and other factors of a like nature.
797. Also included in this description is the fact that the process of litigation is dynamic and not static. As such, many variables can and do arise that can affect the outcome. The greatest variable of all is the element of persuasion and the adversarial steps the respective parties employ to either aid or hinder persuasion. Within that category are activities, such as the uncertainties in the resolution of conflicts within in the lay and expert evidence. Included in this category is the effects of observation and filming of the activities of a plaintiff, noting that the relevance of film evidence is dependent upon its context, and can at times dramatically influence the result of a personal injury case. It is not unprecedented that a defendant may seek film evidence after an unsuccessful attempt at arbitration, mediation or informal settlement attempts.
798. Thirdly, it has to be recognised that in litigation, there is always the possibility of an appeal on liability, causation and quantum issues, or a combination of such issues. The prospect of an appeal brings into play a further range of discounting factors, some of which are self-evident and others, which are more difficult to define. Although the decision of a trial judge is presumed to be correct unless shown to be otherwise on appeal, I consider these factors to be matters that must also be given some recognition in the context of a damages award in a case such as this.
799. In weighing this factor, it is relevant to observe that ultimately, in these proceedings, the liability issues in the principal proceedings were virtually conceded. In my view this circumstance justifies only a modest discount on this account, to recognise the possibility that at the notional trial, the defendant in the principal proceedings may not have taken such a pragmatic course as the one now taken in these proceedings on these issues. That s aid, Mr Arnold’s correspondence to his insurer client tends to suggest a pragmatic approach would have been taken, as to defend the principal proceedings, the plaintiff’s brother would have had to change the tenor and effect of his evidence, something I consider to be an unlikely event.
800. Fourthly, the plaintiff has to acknowledge the need for an offset of $140,000, being the net amount the plaintiff has in fact received from the settlement of $175,000 less the amount of $35,000 for costs.
801. As a result of the foregoing analysis, it seems to me that the appropriate adjustment to be applied as a discount to my assessment of the likely damages I have found the plaintiff would have been awarded in the principal proceedings, to take into account the vagaries, uncertainties and accidents of litigation, noting such factors can impact either for or against the financial interests of either of the parties to the litigation, is a discount of 15 per cent.
802. I consider 15 per cent to be a fair and sufficient discount on account of these factors because, in view of the ultimate concessions the defendants fairly made in these proceedings concerning the issues of duty of care, breach and contributory negligence in the principal proceedings, those issues would have been unlikely to have been determined against the plaintiff, thus lessening the extent of a required discount in these proceedings.
803. On this approach, when the sum of $649,887.40 is adjusted by a discount of 15 per cent as outlined above, this yields the discounted sum of $552.404.29. After applying the required set-off of the received amount of $140,000, this reveals the damages assessment in these proceedings to be $412,404.29, subject to the question of interest, as the plaintiff is entitled to an award of pre-judgment interest on these damages.
Issue 11 – Adjustment for interest
804. A consideration of Issue 11 requires an adjustment for interest. A net assessment of $412,404.29 as at 30 November 2002 would have been payable as a judgment debt within 28 days, namely, 28 December 2002. In my view the plaintiff is entitled to post-judgment interest on this discounted and offset amount from that date. The Appendix to this judgment identifies that post-judgment interest calculations between 29 December 2002 and the date of judgment to be in the total sum of $290,744.99 pursuant to s 100 of the Civil Procedure Act 2005 and Schedule 5 of the Uniform Civil Procedure Rules 2005.
805. When interest in the sum of $290, 744.99, is added to the notional assessment of $412,404.29, this reveals the amount of a damages award and a judgment the plaintiff is entitled to receive in the current proceedings, in the sum of $703,149.28 after all required offset adjustments and discounts have been applied.
E. DISPOSITION & ORDERS
Disposition
806. The proceedings are resolved in favour of the plaintiff on all issues in dispute between the parties with an assessment of damages and interest in the amount of $703,149.28. In these circumstances the defendants pay the plaintiff’s costs on the ordinary basis unless otherwise ordered.
Orders
807. I make the following orders:
(a) Verdict and judgment for the plaintiff against the defendants in the sum of $703,149.28;
(b) The defendants are to pay the plaintiff’s costs on the ordinary basis unless otherwise ordered;
(d) Liberty to apply on 7 days notice if further orders are required.(c) The exhibits may be returned;
APPENDIX
Interest Calculations on $412,404.29
1. 2. 3. 4. 5. Total
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