Nair-Smith v Perisher Blue Pty Ltd (No 2)
[2013] NSWSC 1463
•04 October 2013
Supreme Court
New South Wales
Medium Neutral Citation: Nair-Smith v Perisher Blue Pty Ltd (No 2) [2013] NSWSC 1463 Hearing dates: 9 September 2013 Decision date: 04 October 2013 Jurisdiction: Common Law Before: Beech-Jones J Decision: (1) On or before 18 October 2013 the parties file and serve competing calculations on interest and submissions on costs, such submissions not to exceed seven pages.
(2) The proceedings be listed for mention on 24 October 2013 at 9.30am before Beech-Jones J.
Catchwords: CONSTITUTIONAL LAW - inconsistency between Commonwealth and State laws - State law restricting the recovery of damages for personal injury - State law limiting liability for negligence - Commonwealth law implying warranty into contract that services will be rendered with due care and skill - the Constitution, s 109 - Civil Liability Act 2002, Parts 1a & 2 - Trade Practices Act 1974 (Cth), s 74(1).
CONSTITUTIONAL LAW - inconsistency between Commonwealth and State laws - whether State law purports to operate on contractual term rendered void by Commonwealth law - the Constitution, s 109 - Civil Liability Act 2002, s 5n - Trade Practices Act 1974 (Cth), s 68(1).
DAMAGES - personal injury - whether Civil Liability Act applies to cause of action for breach of term implied by s 74(1) of the Trade Practices Act arising before 13 July 2004 - general damages - economic loss - domestic assistance - out of pocket expenses.Legislation Cited: - Carriage of Goods by Land (Carriers' Liabilities) Act 1967 (Qld)
- Civil Liability Act 2002
- Trade Practices Act 1974 (Cth)Cases Cited: - Arturi v Zupps Motors Pty Ltd [1980] FCA 164; 49 FLR 283
- Insight Vacations Pty Ltd v Young [2010] NSWCA 137; 241 FLR 125
- Momcilovic v R [2011] HCA 34; 245 CLR 1
- Nair-Smith v Perisher Blue Pty Ltd [2013] NSWSC 727
- Victoria v The Commonwealth ("The Kakariki Case") [1937] HCA 82; 58 CLR 618
- Wallis v Downard-Pickford (North Queensland) Pty Ltd [1994] HCA 17; 179 CLR 388Category: Principal judgment Parties: Ghita Nair-Smith (Plaintiff)
Perisher Blue Pty Ltd (Defendant)Representation: Counsel:
G. Smith (Plaintiff)
J.E. Sexton SC, R. Montgomery (Defendant)
Solicitors:
Lough & Wells (Plaintiff)
DibbsBarker (Defendant)
File Number(s): 2006/294818
Judgment
On 7 June 2013 I published my principal judgment in these proceedings (Nair-Smith v Perisher Blue Pty Ltd [2013] NSWSC 727). I upheld Dr Nair-Smith's claim in both negligence and for breach of a term implied into her contract with the defendant, Perisher Blue Pty Ltd ("Perisher"), by former s 74(1) of the Trade Practices Act 1974 (the "TPA").
In the principal judgment (at [356]) I identified a number of issues that the parties needed to address either because they concerned tentative conclusions that had not been fully canvassed during the hearing or because, in light of the findings I hade made, further calculations were required or both. In particular, amongst other matters, I concluded that it was arguable that the damages recoverable by Dr Nair-Smith for breach of the term implied by former s 74(1) of the TPA were not subject to the restrictions found within Part 2 of the Civil Liability Act 2002 (the "CLA") (at [124]). Thus it was necessary for the parties to address that issue and the quantum of her claim if it was not so restricted.
After the principal judgment was published the parties were given the opportunity to provide further submissions in writing and then address the Court. As part of that process Dr Nair-Smith put forward a revised report from her accountant, Mr Katehos (marked "MFI 16"). Mr Katehos addressed the Court orally along with Counsel. In the absence of any formal application to reopen, I did not receive his report as evidence or treat his address as such. Instead I treated that material as submissions on matters of arithmetic directed to quantifying a verdict based on the existing evidence and findings. If further findings are necessary then they are to be based on the evidence led at the trial. Regrettably there were still substantial differences between the parties in their approach to determining economic loss. In the end result this has necessitated the Court having to undertake the various calculations.
First issue: Section 68 of the TPA and s 5N(1) of the CLA
In the principal judgment at [117] to [119] I queried whether s 5N(1) of the CLA purported to operate on a term of contract that was rendered void by former s 68(1) of the TPA. If it did then the operation of s 5N(1) would be invalidated by s 109 of the Constitution because it would then purport to alter, modify or restrict the operation of a law of the Commonwealth (ie s 68(1)) (see Insight Vacations Pty Ltd v Young [2010] NSWCA 137; 241 FLR 125 at [104] to [106] per Basten JA). My preferred view, which I expressed at [119] of the principal judgment, was that s 5N(1) did not purport to do so, and thus s 68(1) operated according to its terms with the consequence that no question of s 109 inconsistency arises. However this issue is of theoretical interest only because on either view the outcome is the same for the parties. I adhere to the tentative view I expressed in the principal judgment at [119].
Second issue: Do Parts 1A and 2 of the CLA apply to Dr Nair-Smith's claim for a breach of the term implied by s 74(1) of the former TPA?
The next issue is of great importance to the parties' rights. In the principal judgment at [120] to [125] I noted that Dr Nair-Smith's cause of action for the breach of the term implied by former s 74(1) of the TPA arose prior to the introduction into the TPA of s 74(2A). I noted that the legislation introducing s 74(2A) did not purport to have retrospective effect (at [121]) and, in any event, by its terms it only applies to a contract made after the provision commenced. Subsection 74(2A) picked up and applied the limitations on damages found in Part 2 of the CLA (Insight at [155] per Sackville AJA).
Thus the question arises as to whether the restrictions on damages found within Part 2 of the CLA applied to Dr Nair-Smith's claim for a breach of the term implied by s 74(1)? Similarly, does Part 1A of the CLA limit or regulate the means of establishing a breach of the implied term? Dr Nair-Smith submitted that the answer to both questions was "no". Perisher submitted that the answer to both questions was "yes".
Critical to answering these questions is the High Court's judgment in Wallis v Downard-Pickford (North Queensland) Pty Ltd [1994] HCA 17; 179 CLR 388. In Wallis a carrier sought to rely on s 6(1) of the Carriage of Goods by Land (Carriers' Liabilities) Act 1967 (Qld) (the "Carriers' Liabilities Act"), which limited the monetary amount for which a carrier could be liable, in answer to claim for a breach of a term implied into the contract of carriage by s 74(1) of the TPA. Further, s 9(1) of Carriers' Liabilities Act deemed to be incorporated in every contract of carriage a clause to the effect of s 6(1). The appellant contended that his cause of action for a breach of the term implied by s 74(1) of the TPA was not governed or otherwise restricted by either of ss 6(1) or 9(1) of the Carriers' Liabilities Act.
Toohey and Gaudron JJ upheld the appellant's argument, stating as follows (at 396 to 397):
"... The essence of the [appellant's] submission was that the statutory creation of a contractual obligation is inherently accompanied by a full contractual remedy. Section 74, it was submitted, implies into relevant contracts a term which contains the primary obligation to take due care and skill and a secondary obligation to provide compensation for breach.
In support of this submission, the appellant pointed to s 68(1)(c) which renders void any term of a contract that purports to modify a warranty imposed by, among other provisions, s 74. This provision was said to demonstrate the Trade Practices Act's concern with liability as well as the creation of rights. Such a provision was not necessary to override State legislation 'because section 109 does that work'. The appellant pointed also to ss 73 and 74B which deem a contractual liability to exist for breach of an implied warranty in the case of certain persons with whom the consumer does not have a direct contractual relationship. These submissions have force. It would indeed be extraordinary if non-contractual parties had greater rights to recovery than did a consumer who is party to a contract in relation to which s 74 operates.
It follows that the warranty created by s 74 carries with it full contractual liability for breach. Section 6(1) of the Queensland Act purports to limit that liability. The consequence is that there is a conflict between the two statutes, a conflict which amounts to a direct inconsistency in the sense that the Queensland Act detracts from the full operation of a right granted by the Trade Practices Act (Clyde Engineering Co. Ltd. v. Cowburn [1926] HCA 6; (1926) 37 CLR 466 at 478 per Knox CJ and Gavan Duffy J; Victoria v. The Commonwealth [1937] HCA 82; (1937) 58 CLR 618 at 630 per Dixon J; Ansett Transport Industries (Operations) Pty. Ltd. v. Wardley [1980] HCA 8; (1980) 142 CLR 237 at 259-260 per Mason J). The limitation is therefore, to that extent, invalid by reason of s 109 of the Constitution." (emphasis added)
Their Honours also addressed s 9 of the Carriers' Liabilities Act (at 398):
"... Because s 6 is a term of relevant contracts of carriage, that term is rendered void in each case by the operation of s 68(1)(c). Further, s 9 itself is impugned in that it purports to imply into contracts exactly those terms that s 68 forbids. It can therefore be seen as inconsistent with s 68 for the purposes of s 109 of the Constitution. It is also the case that s 5 of the Queensland Act, which provides that the liability of a carrier shall be upon 'the bases prescribed by this Act and not otherwise', is invalid under s 109 of the Constitution to the extent that it purports to preclude the operation of ss 68 and 74 of the Trade Practices Act."
Deane and Dawson JJ (at 393) and McHugh J (at 401) agreed with these aspects of Toohey and Gaudron JJ's judgment, although they expressed different reasons for concluding that former s 74(3) of the TPA had no application. That matter is irrelevant to these proceedings.
Senior Counsel for Perisher, Mr Sexton SC, noted that the operation of former s 74(1) of the TPA was different to that of a number of other provisions in former Part V of the TPA (eg s 52) in that s 74(1) did not create a cause of action the remedies for which were to be found in the TPA. Instead the only cause of action is for breach of the term implied into the contract by s 74(1) (Arturi v Zupps Motors Pty Ltd [1980] FCA 164; 49 FLR 283, cited in Wallis at 398). Mr Sexton SC submitted that the regulation of the means of proving a breach of contract and the remedies for such a breach was generally a matter of state law subject to any express provision made to the contrary by Commonwealth law. Thus he contended that the source of law for a demonstrated breach of the term implied by s 74(1) was State law, which in this case included the restrictions on damages found within Part 2 of the CLA.
Unconstrained by authority there is force in this argument. However it is directly inconsistent with the judgment of Toohey and Gaudron JJ in Wallis and, in particular, the reference by their Honours to "full contractual liability for breach" in the passage extracted above. Their Honours accepted the submission that the implication by federal law of the term provided for in s 74(1) necessarily carried with it a remedy of damages assessed at common law and that any attempt to limit that remedy created a "direct inconsistency" for the purposes of s 109 of the Constitution. I was not referred to any subsequent discussion of Wallis that affects this analysis. In the Court of Appeal in Insight Basten JA and Sackville JA discussed Wallis in these terms at [98] and [143] respectively. Spigelman CJ cited the supplementary explanatory memorandum to the legislation that introduced s 74(2A) which recorded an understanding on the part of the Commonwealth that Wallis had this effect.
Even if it was thought that the approach to s 109 of the Constitution in the above passage from Wallis was reconsidered or superseded by that adopted in Momcilovic v R [2011] HCA 34; 245 CLR 1, and I doubt that it was, it would not affect the outcome of Wallis. In any event, this Court is still bound by Wallis. I am unable to discern any relevant distinction between s 6(1) of the Carriers' Liabilities Act and the restrictions found within Part 2 of the CLA. I am bound by the decision in Wallis to find that the damages that Dr Nair-Smith can recover for breach of the term implied by s 74(1) of the TPA are not subject to the limitations found within Part 2 of the CLA.
I note three further points.
First, Mr Sexton SC pointed to other aspects of State law that regulate the enforcement of contractual remedies such as limitation periods and submitted that Wallis is not authority for the proposition that they do not apply to actions for breach of a term implied into a contract by s 74(1) of the TPA. I accept that, as a consequence of Wallis, there maybe some uncertainty as to whether some aspect of State law is inconsistent with the "full contractual liability" that s 74(1) implies, but it need not be resolved in this case.
Second, Mr Sexton SC also submitted that the reference to "full contractual liability" in the extract from Wallis at [7] needs to be considered with that part of the judgment that addressed the operation of s 9(1) of the Carriers' Liabilities Act (extracted at [9]). He submitted that s 9(1) was directly inconsistent with former ss 68(1) and 74(1) in that the former operated to imply a limitation on liability into the contract in the form provided for by s 6(1), whereas the latter operated to ensure that no such term of the contract could, inter alia, restrict or modify any liability for a breach of the term implied by s 74(1). While I accept that the passage extracted in [9] is to that effect, Toohey and Gaudron JJ's analysis of s 9 of the Carriers' Liabilities Act was additional to their finding that s 6(1) of that Act impaired the "full contractual liability" said to be conferred by s 74(1).
Third, to this point the relevant limitations that have been considered are those provisions in Part 2 of the CLA that restrict the recovery of damages. As stated, I do not consider that there is any relevant distinction between those provisions and s 6(1) of the Carriers' Liabilities Act considered in Wallis. However, prima facie the regime of establishing liability for negligence found in Part 1A of the CLA is also applicable to a claim that there was a failure to comply with the term implied by s 74(1) (principal judgment at [82]). The regime in Part 1A includes numerous exceptions and exclusions, so that there may be circumstances in which the services will not be rendered with due care and skill, yet no liability attaches. For example, s 5L precludes liability for harm suffered from obvious risks of dangerous recreational activities (as defined). Clearly there can be a breach of the term implied by s 74(1) when services are supplied to a person who engages in such an activity.
If Part 1A applies to claims for a breach of the term implied by s 74(1) then it would effectively rewrite the term. It would give rise to a direct inconsistency in that Part 1A would "alter, impair or detract from" s 74(1) (Victoria v The Commonwealth [1937] HCA 82; 58 CLR 618, "The Kakariki Case", at 630 per Dixon J). Consistent with Wallis, the regime of liability found in Part 1A of the CLA is also rendered inapplicable to actions for breach of the term implied by s 74(1) by the operation of s 109 of the Constitution.
Accordingly the answer to both of the questions posed in [6] is "no".
General damages - common law
At [312] of the principal judgment I assessed Dr Nair-Smith's level of non-economic loss, calculated pursuant to s 16 of the CLA, as being 25% of a most extreme case. This corresponds with 6.5% of the maximum amount of damages that can be awarded ($535,000), ie $34,775.00. At [313] I left open the question of the appropriate figure for general damages in the event that, as I have found, Dr Nair-Smith's breach of contract claim is not governed by Part 2 of the CLA. The parties addressed on the appropriate figure.
Mr Sexton SC's submissions emphasised the contribution to Dr Nair-Smith's difficulties and inhibited function from her pre-existing lumbo-sacral difficulties. This was addressed in the principal judgment at [311] as follows:
"In the end result, I am satisfied that Dr Nair-Smith suffered a significant soft tissue injury to her lumbar spine as a result of the accident as stated by Dr Giblin. Over time she has developed a pain disorder as referred to by Drs Clarke and McClure. The effect of the soft tissue injury was to aggravate a pre-existing level of discomfort in the lower lumbo-sacral region. Her further deterioration over the last few years is a result of the combination of the effect of the accident and degenerative changes in the lumbosacral region, however the accident remains an operative cause of that deterioration."
The principal judgment also addressed the position of Dr Nair-Smith prior to the accident (at [215] to [218]) and her level of functioning and enjoyment of life after the accident (at [266] to [268], [277] to [279] and [283]). I will not repeat those findings here. Having regard to those findings, I consider the appropriate award for general damages is $135,000.00. Dr Nair-Smith is now aged 54. Bearing in mind the extreme discomfort and pain she experienced at the time of the accident and in its immediate aftermath, and my findings as to the contribution to her discomfort from her pre-existing lumbo-sacral difficulties, I attribute $55,000.00 of that figure to the past and $80,000.00 to the future. In attributing that amount to the future I bear in mind the matters addressed at [42] to [44] below.
The difference in the amounts assessed for general damages under the CLA compared with the common law reflects the effect of the tapering that occurs in respect of assessments under s 16(3) of the CLA where the severity of the non-economic loss is less than 34% of a most extreme case.
Economic loss
In the principal judgment I found that Dr Nair Smith was unable to work due to the accident from the date it occurred until 8 August 2003. From that date until December 2008 I found that she reduced her working hours by half a day a week (at [266]). I found that there was a further reduction in her hours of work from 1 December 2008 of one day a week ([331]).
The consequence of these findings was that it was necessary to re-calculate her lost income including the amount of wages that was paid to her mother, Ulita, on the basis that her wages were an extra work expense incurred as a result of the accident ([332]). However I rejected the suggestion that, in calculating her hypothetical past earnings, there should be any add-back of the wages paid to her children ([332]), as it was not demonstrated that the need to employ them arose from Dr Nair-Smith's accident.
I also addressed other aspects of the income and expenditure incurred by Dr Nair-Smith. At [340] I noted that in applying the CLA provisions, and in particular the cap on hypothetical earnings found in s 12(2), it is necessary to determine whether certain items of income would have formed part of the claimant's earnings but for the accident and should be included in the earnings since the accident. For the reasons set out at [342] I concluded that rent received by Dr Nair-Smith, referred to in her accounts, should be included in her hypothetical and past earnings. I also concluded that losses and receipts from the entity "Kirrawee Management Services" should not be included in the calculation of Dr Nair-Smith's hypothetical or actual earnings (at [343]).
Past economic loss - the CLA and common law
Notwithstanding these findings, I was presented with two very different approaches to determining past economic loss under both the CLA and at common law.
Perisher's approach involved calculating Dr Nair Smith's actual "earnings" by taking the net profit for Ghita Nair Smith Pty Ltd ("GNS") as recorded in Mr Katehos' reports as "a reasonable proxy for the plaintiff's actual net earning capacity before tax". Perisher then added the amount in the company's accounts recorded for her wages, her superannuation and family superannuation. It also added the rent received by her to her earnings in conformity with the finding at [342] of the principal judgment. In effect this was a net adjustment downward of the rental expense that led to the net profit of GNS.
In addition Perisher has also added back her mother's wages as well as her children's wages. This aspect needs to be considered further. In the principal judgment at [332] I accepted that in calculating Dr Nair-Smith's hypothetical past earnings it would be appropriate to add back her mother's wages from 1 December 2008 on the basis that that expense would not have been incurred had the accident not happened. This would also require the deduction of an amount for the revenue she would not have earned. I also did not accept that there should be any add-back for wages paid to her children on the basis that there was no evidence that their engagement had anything to do with the accident. However, at this point I am calculating actual earnings in which case neither of these add-backs is appropriate.
Although it is far from obvious, if one digs deep into the two sets of rival calculations then there are only four matters of dispute about past actual earnings. The first is the treatment of her family's wages which I have just addressed. The second is the payment of superannuation to them which follows from the first issue. The third concerns an amount of $18,929 received by Dr Nair-Smith in the financial year 2009/2010 from the trust that owns the building. There is no reason not to treat that as anything other rent as per the finding I made in the principal judgment at [342]. The fourth concerns certain workplace deductions that were claimed in Dr Nair-Smith's tax returns for the relevant year for motor vehicle, travel and uniform expenses. There is no reason to treat those items as anything other than legitimate expenses.
The result is that the figures for actual earnings for the financial years 2003/2004 are as follows:
Year:
03/04
04/05
05/06
06/07
07/08
GNS profit
4,354
--
(22,580)
(13,027)
(11,670)
Wages
87,060
108,622
123,314
127,490
126,000
Plaintiff super
8,385
13,200
13,200
17,400
13,200
Rent received
17,185
15,433
16,729
17,813
17,347
Less deductions
4,099
4,152
5,089
8,030
8,224
TOTAL
112,885
133,103
125,574
141,646
136,653
Year:
08/09
09/10
10/11
11/12
12/13
GNS profit
1,021
31,522
Wages
151,453
121,000
Plaintiff super
13,200
13,200
Rent received
20,931
18,929
Less deductions
4,666
4,351
TOTAL
181,939
180,300
180,300
180,300
180,300
Dr Nair-Smith has not produced material for the financial years 2010/2011 onwards so that the amount for the year 2009/2010 will be taken as a proxy for those years.
The next step is to determine Dr Nair-Smith's hypothetical past earnings for these years. Perisher suggested a method that involved grossing up its calculation of Dr Nair-Smith's income, as described in [28] to [29] above, to account for the findings as to her lost days of work. The difficulty with that method is that it is the gross income of GNS that should be grossed up and not the net income before tax received by Dr Nair-Smith.
Dr Nair-Smith via Mr Katehos utilised a method that involved grossing up the fees of GNS to account for the days that Dr Nair-Smith would have worked but for the accident but did not (as per the findings in the principal judgment), deducting a proportion of the fees earned by her mother on the notional days she filled in her for daughter, making an allowance for the extra costs involved in Dr Nair Smith's mother working those extra days, and then adjusting the net profit of GNS by adding back a proportion of the wages paid to her mother as indicated in the principal judgment at [332].
This is the correct approach. The findings in the principal judgment reflect that the relevant loss occasioned to Dr Nair-Smith was the lost opportunity to earn fees on the days that she did not work as a result of the accident. The proper approach is to attempt to reconstruct GNS' accounts on the basis that fees were earned on those days and her mother was not employed in part to replace her.
Mr Katehos determined the lost profit by grossing up the income and using a gross profit margin that was derived from the gross fees less the cost of medical supplies. By reference to the profit and loss statement for GNS he made an estimate of the proportion of the costs that were variable. Mr Sexton SC took issue with the items that were said to be variable, such as waiting room expenses. However, this overlooked the fact that this was a variation in his client's favour. If all of the costs were fixed costs then all of the lost revenue from Dr Nair-Smith not working due to the accident would represent lost earnings. I consider Mr Katehos' estimate of variable costs is too low because it overlooks the likelihood of the cost of medical supplies varying according to the number of patients, as well as possibly electricity. The figures suggested by Dr Nair-Smith via Mr Katehos yield a proportion of variable costs to gross business income of somewhere between 2.65% and 3.81% over the period 2003/2004 to 2009/2010. I will adopt a uniform figure of 4.5%, but otherwise will utilise the figures put forward by Dr Nair-Smith via Mr Katehos:
Year:
03/04
04/05
05/06
06/07
07/08
(a) Loss in gross business income (including deduction of mother's income)
21,753
24,054
25,409
27,039
27,858
(b) Loss in gross profit
20,942
23,126
24,304
25,960
26,872
(c) Loss in net business income (deduct for variable costs calculated at 4.5% of gross income; i.e. (b) x 0.955)
19,996
22,085
23,210
24,791
25,662
(d) Add-back portion of mother's wages and super
--
--
--
--
--
LOSS (c + d)
19,996
22,085
23,210
24,791
25,662
Year:
08/09
09/10
10/11
11/12
12/13
(a) Loss in gross business income (including deduction of mother's income)
70,406
89,218
(b) Loss in gross profit
68,111
86,095
(c) Loss in net business income (deduct for variable costs calculated at 4.5% of gross income; i.e. (b) x 0.955)
65,046
82,220
(d) Add-back portion of mother's wages and super
7,656
12,252
LOSS (c + d)
72,702
94,472
94,472
94,472
94,472
Based on these figures, the relevant figures for past economic loss calculated both under the CLA and at common law can be ascertained:
Year:
03/04
04/05
05/06
06/07
07/08
(a) Actual earnings
112,885.00
133,103.00
125,574.00
141,646.00
136,653.00
(a1) Actual earnings (net of tax)
71,329.54
82,836.04
81,120.61
95,013.31
92,842.40
(b) Lost earnings
19,996.00
22,085.00
23,210.00
24,791.00
25,662.00
(d) Hypothetical earnings but for accident (a + b)
132,881.00
155,188.00
148,784.00
166,437.00
162,315.00
(d1) Hypothetical earnings but for the accident (net of tax)
81,627.18
94,209.82
93,073.76
108,694.24
107,238.52
(e) CLA - adjusted hypothetical earnings (s 12(2)) (= lesser of (d) and $173,415)
132,881.00
155,188.00
148,784.00
166,437.00
162,315.00
(e1) CLA adjusted after tax earnings
81,627.18
94,209.82
93,073.76
108,694.24
107,238.52
CLA past economic loss = (e1) minus (a1)
10,297.64
11,373.78
11,953.15
13,680.93
14,396.12
Common law past economic loss = (d1) minus (a1)
10,297.64
11,373.78
11,953.15
13,680.93
14,396.12
Year:
08/09
09/10
10/11
11/12
12/13
(a) Actual earnings
181,939.00
180,300.00
180,300.00
180,300.00
180,300.00
(a1) Actual earnings (net of tax)
120,337.36
121,610.50
122,910.50
121,857.50
122,913.50
(b) Lost earnings
72,702.00
94,472.00
94,472.00
94,472.00
94,472.00
(d) Hypothetical earnings but for accident (a + b)
254,641.00
274,772.00
274,772.00
274,772.00
274,772.00
(d1) Hypothetical earnings but for the accident (net of tax)
159,232.93
172,153.02
173,453.02
171,455.30
173,456.02
(e) CLA - adjusted hypothetical earnings (s 12(2)) (= lesser of (d) and $173,415)
173,415.00
173,415.00
173,415.00
173,415.00
173,415.00
(e1) CLA adjusted after tax earnings
115,448.17
117,466.45
118,700.22
117,716.07
118,703.22
CLA past economic loss = (e1) minus (a1)
nil
nil
nil
nil
nil
Common law past economic loss = (d1) minus (a1)
38,895.57
50,542.52
50,542.52
49,597.80
50,542.52
As stated, Dr Nair-Smith did not bring forward evidence of her earnings in the period after 2009/2010 so that the approach of both parties was to use the figure for that year as a proxy for the subsequent years that followed, being three and a quarter years. Thus, under the CLA no further past economic loss has been suffered from 30 June 2010 to date. In relation to the assessment at common law, there was a movement in tax thresholds which altered some of the net figures for the subsequent years.
For the assessment at common law, the figure for 2012/2013 of $50,542.51 should be projected for another quarter, being $12,635.63. Thus, leaving aside interest and rounding, the amount of past economic loss Dr Nair-Smith has suffered calculated under the CLA is $61,701.62 and calculated at common law is $314,458.18.
Future economic loss - CLA
One of the reports from Mr Katehos served prior to the further hearing purported to calculate an amount for further economic loss in the event that I found that Dr Nair-Smith's claim for damages in contract was governed by the CLA. However, in the principal judgment at [347] I rejected such a claim mostly based on a concession made by her Counsel (noted at [345]). No application to reopen was made.
Future economic loss - common law
The analysis above has yielded an annual net figure of $50,542 as the quantification of the ongoing loss suffered by Dr Nair-Smith, ie the fees lost on account of Dr Nair-Smith not working for one and half days a week. This equates to around $975 per week. The parties provided competing calculations projecting that figure going forward to an expected retirement age for Dr Nair-Smith. Perisher's submissions yielded a figure of around $325,000 working from a loss of earnings of $814 a week going forward to age 65 and deducting 15% for vicissitudes. Dr Nair-Smith via Mr Katehos put forward a figure of approximately $663,000 based on a weekly loss of around $1,021.96 projected to age 70 and before any deduction for vicissitudes. If a 15% deduction was applied that amount would become approximately $564,000.
Two related issues arise in relation to this. The first is the likely age at which Dr Nair-Smith will retire. Her Counsel submitted that absent the accident she, like her mother, was likely to continue to work to an advanced age. Mr Sexton SC submitted that there was an absence of satisfactory evidence about this. The second was the deduction for vicissitudes. Although the figures put forward by Perisher at the resumed hearing only reflected a deduction of 15% for vicissitudes, in its written submissions Perisher contended:
"30. The Judgment found a soft tissue injury aggravation of an underlying progressive degenerative state in the Plaintiff's lumbosacral skeletal structure and a degenerative knee. The progressive degenerative condition was not caused by the injury but has been found to expose the Plaintiff permanently to vulnerability, including exacerbation of pain and disability consequent on the bumps and strains of life.
31. The combination of the progression of the degenerative lumbosacral condition with the forecast improvement in adjustment to live with her disability consequent of psychological therapy for pain disorder indicates a discount for vicissitudes for future loss of 60%."
This submission is not confined to future economic loss but extends to all forms of future loss, a matter I will address. In oral submissions Mr Sexton SC reminded the Court that the plaintiff's initial submission was that Dr Nair-Smith should recover some of the "buffer". In this context the adoption and determination of a "buffer" (otherwise known as a "cushion") is not limited by the need to comply with s 13 of the CLA (see the principal judgment at [336]).
These submissions highlight the various contingencies surrounding the exercise of determining her level of future economic loss. Amongst other matters, the commencing figure of a loss of approximately $50,000 per annum has been arrived at by a process burdened by considerable uncertainty, not the least of which is the absence of evidence about the three years immediately prior to judgment. Further, while it is difficult to envisage Dr Nair-Smith ceasing all work at 65 or even 67, the more likely scenario is that, even absent further medical deterioration, she would have progressively reduced her working hours over time. Most importantly there remains the considerable uncertainty around the effect of the degenerative changes in her lumbo-sacral region (see principal judgment at [311] extracted above at [21]). Consistent with the submissions made by Perisher, there is a very real possibility that over time those degenerative changes will effectively overtake the effect of the accident.
In my view, the adoption of a buffer that seeks to accommodate these uncertainties is the appropriate method for awarding an amount for future economic loss. I consider that a figure of $325,000 is appropriate.
Paid domestic assistance - past and future
At [354] of the principal judgment I allowed a claim for $50 per week that Dr Nair-Smith paid to her cleaner, Ms Effie Callas, both for the past and the future. The parties agreed that the past figure totalled $26,312.50, being $50 a week for 526.25 weeks.
The agreed weekly multiplier for the future under the CLA in relation to this amount was 865.90, yielding a total figure of $43,295.00. The agreed weekly multiplier for the future at common law (ie based on 3% tables) was 1119.2, yielding a total figure of $55,960.00.
Ordinarily there is no occasion to deduct an amount for vicissitudes from these type of expenses as these are accommodated by the life expectancy tables that yield the relevant multiplier. However the point made by Perisher in its submissions is apposite. It warrants a percentage reduction of the future amounts that reflects the point made at [42] to [44] above. The amount deducted will be 20%.
Gratuitous assistance
In the principal judgment at [349] I found that 40 hours a week of gratuitous domestic assistance was provided to Dr Nair-Smith by her family for three weeks immediately after the accident, with 7 hours per week thereafter.
The figures produced by the parties differed in relation to the appropriate rate to be utilised. In relation to the CLA the relevant hourly rate is capped at one-fortieth of an amount calculated in accordance with s 15(4) of the CLA. For the period up to judgment this cap was agreed as being $23.04 per hour, and for the period after judgment it was agreed at $26.36 per hour. Dr Nair-Smith sought to invoke the cap as the relevant rate, whereas Perisher sought to take advantage of Ms Callas' rate of $14.58 per hour.
I do not derive much assistance from Ms Callas' rate. Generally it seems to be low. It was not suggested that she would be willing to undertake the further work contemplated by my finding. I would not utilise it is a suitable rate for the value of the work that has been or will be provided by Dr Nair-Smith's family. Dr Nair-Smith's relies on a reference in a report from an occupational therapist, Ms Walters, who referred to "current Home care rates" of $35.00 per week for various forms of domestic assistance. Mr Sexton SC submitted that this reflected a rate applicable to nursing care. The description of the type of activities for which the rate was applicable generally corresponds to the type of activities contemplated by my finding. However, given the rate Ms Callas is prepared to work for and the level of average earnings, the rate of $35 seems high. I will allow the rate of $30 per hour.
The result is that for the CLA I will adopt the maximum rate allowed. For the claim at common law I will utilise the rate of $30 per hour. Under the CLA this yields figures of $87,638.30 and $159,775.86 for the past and future respectively. At common law this yields figures of $114,112.50 and $235,032.00 for the past and future respectively. The future amounts will be reduced in accordance with the approach noted at [48].
Past out of pocket expenses, other than paid domestic services
The parties eventually agreed on a figure for past out of pocket expenses of $8,000.00.
Future out of pocket expenses
The parties also agreed on the figure of $24,437.82 for future out of pocket expenses calculated in accordance with the CLA, and $29,180.21 calculated according to common law. Again, the future amounts will be reduced in accordance with the approach noted at [48].
Equipment needs
At the hearing of these proceedings in September 2012, a report from an occupational therapist, Ms Walters, was tendered. It was not the subject of any written or oral submissions save for a bare figure included in a schedule of damages that was derived from her reports. That figure cross referred to the total included at the end of a schedule in her report listing a series of equipment requirements totalling $63,083. The items listed included a kitchen renovation, a new toilet, dryer, ironing press, etc. There was no evidence from Dr Nair-Smith directed to her need for any of these items. If there was, and if it was considered that they would have improved her level of functioning, it may have warranted a reconsideration of the level of general damages awarded.
The only item that is conceded by Perisher is the cost of a mattress and the replacement costs of that mattress in the future. There is evidence that some work was done to modify her workplace, but there is no evidence as to the cost of that work or who incurred it. Given the paucity of evidence concerning this head of damages, I am only prepared to allow the mattress costs as calculated by Perisher. The CLA figure is $11,522.45 and the figure at common law is $13,576.71.
Summary
The following table summarises the figures that I have determined, excluding interest. In light of the finding at [19] the verdict entered in favour of Dr Nair-Smith will be for an amount represented by the figures under the heading "common law". At the appropriate time the total will need to be rounded.
Civil Liability Act
Common Law
General damages
34,775.00
135,000.00 (80,000 for the future and 55,000 for the past period
Past economic loss
61,701.62
314,458.18
Future economic loss
nil
325,000.00
Domestic assistance - past
87,638.30
114,112.50
Domestic assistance - future
127,820.68
(159,775.86 x 0.8)
188,025.60
(235,032.00 x 0.8)
Past paid assistance - cleaner
26,312.50
26,312.50
Future paid assistance - cleaner
34,636.00
(43,295.00 x 0.8)
44,768.00
(55,960.00 x 0.8)
Past out of pocket expenses (other than paid care)
8,000.00
8,000.00
Future out of pocket expenses (other than paid care)
19,550.26
(24,437.82 x 0.8)
23,344.17
(29,180.21 x 0.8)
Equipment needs
11,522.45
13,576.71
(Provisional) Total
$411,956.81
$1,192,597.50
Future disposition
The Court is still not in a position to enter a verdict in the plaintiff's favour because interest calculations on the various components of her damages claim need to be undertaken. The parties will need to prepare competing calculations. The Court retains the (unrealistic) hope that those figures can be agreed. The parties will also need to address costs.
I will direct the parties to file and exchange competing interest calculations and submissions on costs within a fortnight and list the matter for mention shortly thereafter.
Accordingly the Court orders that:
(1) on or before 18 October 2013 the parties file and serve competing calculations on interest and submissions on costs, such submissions not to exceed seven pages;
(2) the proceedings be listed for mention on 24 October 2013 at 9.30am before Beech-Jones J.
**********
Decision last updated: 04 October 2013
2
6
3