Novak Ruskic v Greenwich Contractors Pty Limited
[2013] ACTSC 263
NOVAK RUSKIC v GREENWICH CONTRACTORS PTY LIMITED
[2013] ACTSC 263 (20 December 2013)
PROCEDURE – pleadings – failure by defendant to plead choice of law or identify specific provision of statute relied upon – application by defendant to amend defence – leave granted
WORKERS COMPENSATION – choice of law – Territory or State of connection – where injury occurred in the ACT – employer’s principal place of business NSW – Workers Compensation Act 1951 (ACT) 36B
DAMAGES – personal injury – neck and back injury – assessment under Workers Compensation Act 1987 (NSW)
Civil Law (Wrongs) Act 2003 (ACT) s 45
Workers Compensation Act 1951 (ACT) ss 36B, 182D
Workers Compensation Act 1987 (NSW) s 151
Court Procedure Rules 2006 (ACT) rr 406(1), 407(3), 502
Avon Products Pty Ltd v Falls (2010) 5 ACTLR 34
Coco v Ord Minnett Ltd [2012] QSC 32
Hanns v Greyhound Pioneer Australia Ltd (2006) 196 FLR 361
John Pfeiffer Pty Ltd v Rogerson (2000) 203 CLR 503
Medlin v State Government Insurance Commission (1995) 182 CLR 1
Ritchie v Dallimore [2009] QSC 192
Workers Compensation Nominal Insurer v Luke (2011) 81 NSWLR 435
No. SC 146 of 2011
Judge: Master Mossop
Supreme Court of the ACT
Date: 20 December 2013
IN THE SUPREME COURT OF THE )
) No. SC 146 of 2011
AUSTRALIAN CAPITAL TERRITORY )
BETWEEN:NOVAK RUSKIC
Plaintiff
AND:GREENWICH CONTRACTORS PTY LIMITED
Defendant
ORDER
Judge: Master Mossop
Date: 20 December 2013
Place: Canberra
THE COURT ORDERS THAT:
1. The parties are directed to provide to my associate short minutes, consistent with these reasons, of the orders that the Court should make by 4.00 pm on 31 January 2014.
2. In the event that the parties do not agree on the orders that should be made, the proceedings are listed for any further argument at 9.30 am on 7 February 2014.
In 2009 additional student accommodation was being constructed on the campus of the Australian National University. The building was located on the block at the corner of Dickson Road and Clunies Ross Street. The construction method was somewhat unusual in that the bulk of the building was being constructed from shipping containers which had been fitted out as student accommodation. This meant that the building could be constructed in modular form by stacking the prefabricated container units on top of one another. On top of this structure was to be constructed a roof. That roof was made of metal. The roof was in a single plane and drained from one side to another. The defendant company was involved in the construction of, at least, the structure onto which the roof sheeting was to be attached. That structure involved a series of what, in layperson’s terms, would be called metal beams. In fact, to those building the structure, the metal beams were categorised, in descending order of size as either beams, U-profiles or purlins.
The defendant company was based in Sydney where it had its workshop. The workshop contained its administrative office. The company was run by a Mr Gerhard Grigull. Mr Roland Grigull, his brother, was also involved at a management level. The plaintiff had been employed by the company since February 1999. Although his formal training was as a boilermaker he was working as a general metalworker. During the time that the plaintiff was employed by the defendant, the job at the Australian National University site was the only job undertaken in the Australian Capital Territory. For the purposes of the job, staff of the defendant would travel down to Canberra and work from Wednesday until Saturday before travelling back to Sydney. When in Canberra they would stay at a motel. In addition to the work on the job in Canberra, some additional work was undertaken on the other days of the week at the workshop in Sydney in preparation for the return to Canberra.
The plaintiff commenced on this site on 16 October 2009. The plaintiff continued working there until 17 November 2009. The other person from Greenwich Contractors working on the job was Roland Grigull. He was the plaintiff’s supervisor on that site. The plaintiff was the principal worker on the site, Mr Grigull continuing to perform his managerial role while on the site and, as a consequence, spending some time attending to matters other than the current job. Early on in the job it was necessary for the plaintiff and Mr Grigull to distribute U-profiles across the roof area. Those U-profiles had been lifted by crane to the top of the building and needed to be distributed to where they were to be installed as part of the roof structure. The U-profiles were heavy. While the evidence on this issue was somewhat unclear they were described by the plaintiff as double the weight of the purlins which he estimated at 40 to 48 kilograms. Moving those beams across the site was made more difficult by the fact that, at least in parts, movement of people across the roof was constrained by the height of the roof beams and hence part of the task needed to be achieved while crouched or bent over. The height of the roof beams above the topmost containers was approximately 600 mm on one side of the building and 1400 mm on the other side of the building.
After the moving of the U-profiles and purlins the plaintiff was required to undertake a substantial and repetitive drilling job drilling holes in the purlins. This drilling job was necessary because the pre-drilled holes in those items were drilled in the wrong place and hence needed to be replaced. The plaintiff had to work in a bent posture holding a drill weighing 4 to 5 kilograms. Following that he was required to tighten approximately one hundred 24mm diameter bolts using a Hitachi drill. Once again he worked in a bent position.
By 10 November 2009 the plaintiff was suffering from pain in his back and said to his supervisor, Roland Grigull, that his back was hurting and he wanted to return to the workshop in Sydney. Mr Grigull told him that the job was due to be finished soon and that he should continue working. By 17 November 2009 the plaintiff was in such pain in his neck and lower back and that he was unable to work and left the job site at about two o’clock in the afternoon. He went to his car and drove back to Sydney.
He did not work for the defendant after that. He has claimed damages for personal injury arising out of the injury that he sustained as a consequence of the work that he did at the Canberra site.
Breach of duty
The defendant made no submission in relation to negligence other than that the plaintiff had to prove his case. I am satisfied that in the light of the facts set out above that the defendant unreasonably failed to take measures reasonably open to it in all the circumstances which would have avoided the risk of injury to the plaintiff. That was because the plaintiff was required to carry heavy U-profiles over an extended period of time and lift them in an ergonomically unsafe manner. He was then required to continue working notwithstanding his complaints of pain. The finding breach of duty is consistent with the evidence of Ms Todd, an ergonomic expert, and there was no evidence to the contrary. I am therefore satisfied that the defendant breached its duty of care and that the breach of duty was causally related to the disabilities suffered by the plaintiff.
Causation
I am also satisfied that the back injury suffered by the plaintiff was caused by the breach of duty of the defendant in the sense required by s 45 of the Civil Law (Wrongs) Act 2003.
In his report of 7 December 2010 Dr Drew Dixon, an orthopaedic surgeon, said that there was a causal relationship between the workplace incidents and the injuries sustained by the plaintiff. Those injuries included a lumbosacral disc protrusion impacting on the left S1 nerve root with radicular complaint with an S1 radiculopathy. In his report of 9 February 2012 he elaborated on this opinion somewhat saying that the plaintiff’s neck and back strain injuries arose in the course of his duties as a welder working in a confined space while lifting, carrying and installing heavy objects. Thus he repeated his opinion that there is a causal relationship between the workplace incidents and the injuries sustained.
Dr Matthew Giblin, an orthopaedic surgeon, said in his report of 5 December 2011 that the plaintiff’s injuries were consistent with the accident described and he had an aggravation of underlying degenerative changes in his cervical spine and an aggravation of underlying degenerative changes of his lumbar spine with a disc disruption.
Dr T Mastroianni, a consultant occupational physician, expressed the opinion that as a consequence of the period of lifting heavy beams and working in an awkward posture the plaintiff sustained injury to his neck and back. That injury was an aggravation of pre-existing cervical spondylosis and an aggravation of lumbar disc disease causing sciatica. He expressed the view that the work caused the injury.
In his report dated 23 February 2011, Dr Anthony Smith, an orthopaedic surgeon engaged by the defendant expressed the opinion that there was no post traumatic lesion in the lumbar spine as a result of the working activities between 9 November and 17 November 2009. He said that the plaintiff was manufacturing physical signs and restriction in the back movement. He considered that the symptoms initiated by the activities between 9 and 17 November 2009 had ceased. In his report of 14 March 2011 he said that he did not believe the plaintiff had any impairment as a result of the injury. He maintained that view in his report of 12 May 2011.
On the other hand Dr Mohammed Assem a rehabilitation specialist also engaged by the defendant said in his report of 23 March 2012 that the nature and conditions of the plaintiff’s employment between 10 and 17 November 2009 contributed to an aggravation of the underlying degenerative pathology in his lumbar spine. He said that the work related aggravation had not yet subsided as he still had radicular symptoms in his left leg with atrophy of his left calf, sensory loss and decrease in his left ankle jerk reflex.
Notwithstanding Dr Smith’s view as to causation, the evidence of the other doctors is that there is a causal link between the work undertaken by the plaintiff between 10 and 17 November and his existing back and neck conditions. I prefer the majority evidence of Drs Dixon, Giblin, Mastroianni and Assem over that of Dr Smith. As a consequence, I am satisfied that the breach of duty of the defendant caused the present disabilities suffered by the plaintiff in the sense required by s 45 of the Civil Law (Wrongs) Act 2003.
Operation of Workers Compensation Act 1951 s 182D
After the plaintiff’s opening, counsel for the defendant raised the issue that, as he put it, there was a “fundamental disjunct” between how the plaintiff and the defendant would seek to have damages assessed. Counsel for the defendant submitted that the effect of s182D of the Workers Compensation Act 1951 (ACT) (“ACT Act”) meant that the claim for damages must be assessed under the Workers Compensation Act 1987 (NSW) (“NSW Act”). Counsel for the plaintiff objected to the defendant adopting this position because it was not a matter which had been pleaded in the defence.
In the absence of a statutory choice of law rule varying the position, the common law position would be that the lex loci delicti applied to the tort: John Pfeiffer Pty Ltd v Rogerson (2000) 203 CLR 503. In the present case that would mean that the law of the Territory applied. However, the Workers Compensation Act1951 (ACT) provides that “the substantive law of the Territory or State of connection” governs whether or not a damages claim can be made in relation to a work-related injury to a worker and, if a damages claim can be made, the determination of the damages claim: s 182D. Thus it is only if the ACT is the Territory or State of connection that ACT law will govern the determination of damages.
Section 182B of the Workers Compensation Act 1951 provides the definition of substantive law:
182BMeaning of substantive law
(1)For this part, substantive law includes each of the following, whether or not it would otherwise be regarded as procedural in nature:
...
(d)a law that limits the kinds of injury, loss or damage for which damages or workers compensation may be recovered;
(e)a law that prevents the recovery of damages or compensation or limits the amount of damages or compensation that can be recovered;
....
Section 36A(1)(a) of the Act provides that the meaning of the term “Territory or State of connection” is “the Territory or State with which the employment of the worker is connected, as determined under this part.”
Section 36B sets out the test to be applied when determining whether a person’s employment is connected to the ACT and thus whether damages are payable in accordance with ACT law. It provides:
36BEmployment connection test
(1) Compensation under this Act is only payable if the ACT is the Territory or State of connection.
(2)The fact that a worker is outside the ACT when injured does not prevent compensation being payable under this Act if the ACT is the Territory or State of connection.
(3)A worker’s employment is connected with—
(a) the Territory or State where the worker usually works in the employment; or
(b) if no Territory or State, or no single Territory or State, is identified by paragraph (a)—the Territory or State where the worker is usually based for the purposes of the employment; or
(c) if no Territory or State, or no single Territory or State, is identified by paragraph (a) or (b)—the Territory or State where the employer’s principal place of business in Australia is located.
...
Both parties made submissions as to whether or not a defendant, in an employment injury case such as this, could raise the issue of choice of law if that issue was not specifically pleaded. Prior to the Court making any ruling upon whether or not it was a matter that could be raised if it had not been specifically pleaded, counsel for the plaintiff suggested delaying the issue until the conclusion of the evidence. Counsel for the plaintiff said (T14):
I suppose one method of resolving it, your Honour, would be to hear the evidence, such that neither party can be constrained in the calling of evidence, and then, at the conclusion of the proceedings, if your Honour reserves - as one would anticipate your Honour would in a case like this - your Honour then is in the position where you’re not proceeding in a vacuum, you know what the evidence is, you can apply it and give a decision at that stage on the basis of the full facts, without either party being limited, in the process of the trial, by objection saying, “That doesn’t apply because of this‑ ‑ ‑
This course, suggested by the plaintiff, was the one that I ultimately adopted. Each party called the evidence that it wished to without objection. That had the effect that the plaintiff had the opportunity of calling evidence relevant to heads of damages that would not be available if New South Wales law applied and the defendant had the opportunity to call evidence going to its contention that New South Wales was the State of connection for the purposes of s 182D.
Before closing submissions, counsel for the defendant, although maintaining that the choice of law issue was not a matter which needed to be pleaded, made an oral application to amend the defence to include an additional paragraph stating: “The substantive law of the New South Wales applies to the plaintiff’s claim (Section 182D Workers Compensation Act 1951 (ACT))”.
Counsel for the plaintiff submitted that it was “far too late” to permit the defendant to amend its pleadings at this stage and that significant prejudice would flow to the plaintiff. I heard submissions from both parties and consequently granted leave to the defendant to amend its defence in accordance with the oral application and reserved any issue of costs arising out of the amendment. I indicated that I would give my reasons at the same time as the final decision and I now do so.
Counsel for the plaintiff made three submissions in opposition to the amendment:
(a) He pointed to r 406(1)(e) of the Court Procedure Rules 2006 (ACT) which requires that a pleading, “if a claim or defence under a statute is relied upon – identify the specific provision of the statute” and relied on authorities which considered the equivalent Queensland provision on which r 406(1)(e) was based: Ritchie v Dallimore [2009] QSC 192; Coco v Ord Minnett Ltd [2012] QSC 32.
(b) He submitted that the plaintiff would suffer prejudice by reason of the amendment because under NSW law, damages would only be recoverable if a 15% whole person impairment was established and this would raise different evidentiary issues from those of which the plaintiff was on notice.
(c) He also submitted that if New South Wales law applied then a different insurer might be involved and hence any amendment might be a source of prejudice.
The statement of claim in the present case follows, at least in part, the form for employment personal injury claims. Rule 53 identifies the matters that need to be set out in that form. The policy of specifying a different form for personal injury matters appears to be that because they are of a commonly occurring nature it is not necessary to fully plead all the material facts in the usual way. As a consequence, r 53 expressly limits the pleading obligations of a plaintiff stating that statement of claim “is sufficient if it includes” the items set out in the rule. In the present case the pleading covered some but not all of the matters that are required by r 53 to be covered in such a statement of claim. It was not required to include and did not include any of the material facts that would be required to establish that ACT law was to be applied as a consequence of the operation of s 182D. As a consequence choice of law was not an issue specifically raised in the statement of claim. Further, it included no claim for general damages, damages for future economic loss beyond the date when the plaintiff turned 65 and no reference to disabilities consistent with a Griffiths v Kerkemeyer claim. Hence it was not, on its face, inconsistent with a claim that could be made if New South Wales law applied. Thus, the statement of claim neither expressly nor impliedly asserted that ACT law was the appropriate law to be applied to the claim. Therefore the terms of the statement of claim itself did not expressly or impliedly require the defendant to address the choice of law issue.
The defence that was filed addressed the claim that had been made and did not specifically raise any issue as to choice of law or any material facts relevant to the choice of law issue.
Rule 406(1)(e) requires that the “if a claim or defence under a statute is relied on” then the pleading must “identify the specific provision of the statute”. I do not consider that the choice of law issue was required to be pleaded pursuant to this rule. If the plaintiff had pleaded facts or made claims which necessarily assumed that damages were to be assessed by applying ACT law then insofar as the section provided a defence to a part of the claim then it would be required to be pleaded as a “defence under a statute”. However in the present case no claim was made expressly or impliedly that indicated that ACT law was to apply to the assessment of damages.
Similarly the specific rule dealing with defences to employment personal injury claims, r 443 requires the defendant to plead “every ground of defence to be relied on, together with the facts necessary to establish each ground.” Once again, where the plaintiff’s claim had expressly or impliedly made a claim based on the application of ACT law in the assessment of damages then this rule would require the defendant to plead the application of New South Wales law and the factual matters relevant to establishing that as the Territory or State of connection. However, in the present case there was no such pleading on the plaintiff’s part to trigger this obligation.
Rule 406(1)(c) requires a pleading to state specifically any matter that if not stated specifically may take the other party by surprise. There is room for debate about the application of this general rule in a case such as the present. Having regard to the ubiquity of the s 182D issue in employment personal injury matters and the fact that in the present case, had the issue been considered, all of the evidence would have pointed towards New South Wales being the Territory or State of connection, it is not clear to me that the failure to plead s 182D or the material facts relevant to making New South Wales the Territory or State of connection in the present case should have taken the plaintiff by surprise. However, in situations where the facts are not as clear as the present case, the surprise rule would be applicable. There will be cases where there may be a significant evidentiary contest over the Territory or State of connection. Where this is the case it is important that parties be on notice not only so that they can marshal the evidence relevant to that issue but also so that they can obtain medical evidence addressing issues such as thresholds for the award of damages required by legislation of other States or territories.
Finally I note the operation of r 407(3) which requires a defence to specifically plead any matter that makes “a claim or defence of the opposite party not maintainable” or “raises an issue of fact not arising out of a previous pleading”. While the first of these obligations is probably not engaged in the present case because no claim was made by the plaintiff consistent only with the application of ACT law, the second obligation was engaged because the assertion that New South Wales was the state of connection necessarily involve issues of fact which were not raised by the plaintiff’s claim.
I proceeded for the purposes of dealing with the application to amend on the basis most favourable to the plaintiff, namely, that there was an obligation on the defendant to plead that New South Wales was the State of connection. While the application was clearly made late, as a result of counsel for the plaintiff’s suggestion about how the case should be run there was no prejudice in the running of the case as a consequence of the failure to plead the issue earlier. At no stage did the plaintiff indicate that he was prejudiced in his ability to properly and completely respond to the evidence called by the defendant relating to its assertion that New South Wales was the State of connection. Further, in my view, on the facts of this case the evidence all pointed in one direction, namely, that New South Wales was the State of connection. As a consequence, while assuming that the matter was one which should be pleaded earlier, it was an issue in relation to which the plaintiff was not procedurally prejudiced and which on the evidence there was a very clear answer. That the plaintiff might receive a lesser sum for damages as a consequence of the proper application of s 182D is not relevant prejudice for the purposes of an application of this sort.
I accept that if, indeed, the plaintiff through some oversight on the part of his advisers, was not aware that New South Wales was or should be the relevant law for the purposes of assessing damages, then he may have suffered some prejudice in relation to costs and in particular if he failed to accept reasonable offers of settlement because he was under a misapprehension by reason of the pleadings as to which law was to be applied. However, these are matters which are appropriately addressed in dealing with costs and it is for that reason that I reserved the question of costs arising out of the amendment.
In relation to the possible prejudice arising out of the existence of a 15% threshold under s 151H of the NSW Act, that is a matter which could give rise to real prejudice to the plaintiff if he had prepared his case without regard to the need to satisfy that threshold. However, counsel for the defendant said that in the present case, the defendant accepted that the 15% threshold was passed and hence there was no prejudice arising. Thus that did not provide a basis for refusing leave to amend. In any event, the expert medical reports tendered by the plaintiff specifically addressed whether or not the 15% threshold had been met and concluding that it had: see Exhibit 3 (report of Dr Dixon dated 9 February 2012, report of Dr Giblin dated 5 December 2011, report of Dr Mastroianni dated 23 March 2012).
I do not accept the plaintiff’s submission that there might be prejudice to the plaintiff by reason that a different insurer might be involved if New South Wales law was applicable. There was no evidence that different insurers would be involved. In any event, the defendant which sought the amendment would be bound by the judgment that would be entered. Therefore this submission, as I understood it, did not provide a basis for refusing leave to amend.
The two Queensland authorities referred to by the plaintiff both relate to the application of rule 149(1)(3) of the Uniform Civil Procedure Rules 1999 (Qld). They simply provide examples of the application of that rule. In Ritchie, the rule was applied in relation to a provision providing a statutory presumption of contributory negligence in cases where the driver was intoxicated. In Coco, it was applied in relation to a claim of misleading and deceptive conduct where the relevant statutory provisions required certain material facts to exist for them to be applicable. The cases do not provide any support for the contention that leave should not be granted to make the amendments sought by the defendant. Indeed, Ritchie illustrates an exercise of discretion to permit an amendment where the aim of the amendment was to “meet clearly the pleading obligations of the defendants by reference to the material that has been in the plaintiff’s possession at all relevant times”. It does illustrate that amendments such as that sought to be made by the defendant should be considered pragmatically having regard to whether or not there is any real prejudice arising from the proposed amendment.
The Court has a broad power under r 502 to give a party leave to amend a pleading in the way it considers appropriate. While amendments should generally be made as early as possible, the Court can make amendment at a late stage although there needs to be good grounds for allowing very late amendments.
In the present case:
(a) The evidence, in my view, was all one way. It was very clear that New South Wales was the Territory or State of connection in accordance with the statutory test set out in s 36B of the ACT Act. The work in Canberra was only one of two occasions when the plaintiff had worked outside New South Wales. The other occasion was in 2008 or 2009, when the plaintiff worked for two weeks on a job in Darwin.
(b) Even if the plaintiff had not been clear about the defendant’s intention to submit that New South Wales law was applicable, that contention was made clear at the beginning of the hearing and, at the plaintiff’s suggestion, any ruling on the pleading issue deferred. There was no application by the plaintiff at any stage for an adjournment so that he would be in a better position to deal with the factual allegations as to the Territory or State of connection. There was therefore no procedural prejudice arising out of the evidentiary issues that arose in relation to the operation of s 182D.
(c) There was no consequential evidentiary prejudice that might arise by reason of the application of s 182D since the plaintiff had obtained medical evidence dealing with the 15% threshold issue that arises under the NSW Act and, in any event, the defendant conceded that the threshold had been met.
Therefore I was satisfied that there was no ground upon which leave should be refused to make the amendment and positively satisfied that it was in the interests of justice that the amendment be made. I therefore granted leave for the amendment to be made and an amended defence was subsequently filed.
Law
Following my ruling that the defendant was permitted to amend its pleadings so as to raise explicitly the operation of section 182D of the NSW Act, the plaintiff accepted that the evidence established the State of connection was New South Wales. While counsel for the plaintiff made some submissions based on the decision of this Court in Hanns v Greyhound Pioneer Australia Ltd (2006) 196 FLR 361 and the Court of Appeal in Avon Products Pty Ltd v Falls (2010) 5 ACTLR 34 as to the operation of paragraphs (a) and (b) of s 36B, he accepted that in any event, paragraph (c) would catch the plaintiff and make New South Wales the Territory or State of connection. Counsel for the plaintiff’s submission was that the effect of Hanns and Avon was that once a person has worked in more than one jurisdiction then you do not have a place where the person usually works. He submitted that “it can be one day in 365, there is no usual [place of employment] and you cascade to the next level”. He submitted that while this may be an outcome which “offends common sense”, that was the effect of the authorities.
It was not at all obvious to me how the decisions in Hanns and Avon supported that submission. However, in circumstances where the plaintiff has conceded that one way or another New South Wales has become the Territory or State of connection for the purposes of s 182D, I do not think it is necessary for me to go into the issue further. I proceed on the basis, contended for by the defendant and accepted by the plaintiff, that New South Wales law applies and as a consequence I must assess the plaintiff’s damages in accordance with the provisions of the NSW Act.
Under the NSW Act, an injured worker’s claim for common law damages is significantly modified by the Act: s 151E. The NSW Act restricts claims for damages to workers that have at least a 15% permanent impairment: s 151H. General damages are not available under the NSW Act as the Act confines the worker’s damages claim to economic loss, namely, to the recovery of past lost earnings and future loss due to the deprivation or impairment of the worker’s employment capacity: see 151G. Damages for future economic loss are calculated based upon a 5% discount rate: s 151J and interest on damages is not payable unless certain conditions are satisfied: s 151M. Relevantly, the NSW Act provides that the Court is to disregard any earning capacity of the worker after pension age as defined in the Social Security Act 1991 (Cth): s 151IA. In the case of the plaintiff, that was accepted by the parties to be 65 years.
As a consequence, because New South Wales law applies, the damages to which the plaintiff is entitled are:
(a) past and future loss of earnings;
(b) past and future loss of superannuation;
(c) Fox v Wood damages.
In relation to these heads of damage the issues that need to be resolved are limited and I will deal with them one by one.
What was the plaintiff’s past loss of earnings?
The plaintiff submitted that I should assess the plaintiff’s income earning capacity on the basis that he was paid $40 per hour and worked at least 48 hours per week. That was based upon the evidence of the plaintiff that he was paid $40 per hour, his work hours of at least 50 hours per week and the actual payments made to him in the 12 months up to October 2009 (Exhibit 3, p 200). However there were significant expenses incurred by the plaintiff in earning this income not taken into account in the Statement of Particulars. The level of expenses was disclosed in the plaintiff’s tax returns. In final submissions the plaintiff accepted that the expenses incurred in earning his income should be deducted from those earnings.
The defendant on the other hand submitted that a more reliable indicator of the plaintiff’s loss was his actual net income identified in his tax returns for the financial years ending 30 June 2008 and 2009.
My approach to this aspect of damages is as follows. The actual payments in the twelve months prior to the accident do reflect an hourly rate and number of working hours consistent with the claim. However they are also consistent with the evidence of the plaintiff that he would take several months off each year during which he travelled to Europe. They also fail to reflect the fact that as part of his terms of employment he was responsible for meeting some significant work related costs, which were reflected in the deductions made in his tax returns.
The fact that the plaintiff took several months per year off work reflected a failure to fully exploit his earning capacity. If damages were assessed in accordance with the common law then the fact that he chose not to fully exploit his earning capacity would not reduce the damages to which he was entitled because damages are awarded for loss of earning capacity not loss of earnings: see McHugh J in Medlin v State Government Insurance Commission (1995) 182 CLR 1 at 16. However under the NSW Act s 151G(1) “draws a clear distinction” between the regime for damages for past and future economic loss: Workers Compensation Nominal Insurer v Luke (2011) 81 NSWLR 435 at [3]. Damages for past loss are limited to “damages for past economic loss due to loss of earnings”: s 151G(1)(a). That contrasts with future economic loss where what may be awarded is “damages for future economic loss due to the deprivation or impairment of earning capacity”: s 151G(1)(b). Therefore in relation to the past what must be assessed is what the plaintiff’s earnings would have been rather than the value of his lost earning capacity.
The plaintiff’s loss of earnings are most appropriately assessed by reference to his actual net earnings in 2008-2009. The 2008 and 2009 tax returns indicate income as follows:
2008 2009
Gross income $74,520 $88,180
Net taxable income $30,936 $37,260
Net after tax income $27,056 $32,082
It is important to note that the gross income figures were generally consistent with the gross income received in the 12 months prior to the accident which was $64,873 but which included what was probably a longer than usual period of four months when the plaintiff appears not to have worked from June to September 2009 where the income received was nil. If the same rate of income had been earned over ten rather than eight months (i.e. assuming a holiday of two rather than four months) the gross earnings would have been approximately $80,000 which is consistent with what occurred in previous years.
Given that the plaintiff accepted that expenses indicated by the tax returns were appropriate deductions to be made, when properly adjusted for those expenses and the amount of holidays taken, then whether one relies on the actual gross payments in the twelve months prior to the accident or the previous tax returns, the likely loss of earnings will be much the same.
In my view, but for the accident, the plaintiff would have continued to earn income from the defendant similar to that which he earned in the two previous financial years. I therefore adopt the calculations prepared by the defendant for assessing past loss of earnings. Adopting the 2009 income as a starting point, applying an increase of 2.7% (which is favourable to the plaintiff having regard to the evidence of Mr Grigull that any increase in hourly rates was negligible), and assessing loss of earnings only to age 65 as required by s 151IA of the NSW Act the calculations are as follows:
FY
Age
Weekly net income
Period of loss
Calculation
Amount
2009
62
$617
2010
63
$634
17.11.09-30.6.10
33 wks x $634
$20,922
2011
64
$651
1.7.10-30.6.11
52 wks x $651
$33,852
2012
65
$669
1.7.12-29.5.13
48 wks x $669
$32,112
$86,886
Should any deduction be made for a residual earning capacity?
The defendant submitted that it was appropriate to discount the plaintiff’s damages for past loss of earnings by 20% to take into account an earning capacity which was unrealised in the period to May 2012 because the plaintiff was not looking for work. The defendant relied on the fact that other than for a single period in 2011 when he was compelled to do so by his rehabilitation providers, the plaintiff has not looked for work anywhere else in that time.
The plaintiff submitted that any unrealised earning capacity was more theoretical than real because of the plaintiff’s age, his limited range of skills and his back injury.
Having regard to the fact that in relation to the past what is assessed is loss of earnings rather than earning capacity, any failure to realise an earning capacity must be treated as a failure to mitigate his loss rather than as a debate about a scope of the plaintiff’s earning capacity. Failure to mitigate loss is a matter of defence upon which the defendant would bear the onus of proof. In the absence of any statutory provision affecting the position, given that failure to mitigate has not been pleaded it would not be open to the defendant to rely upon it in relation to past loss. However s 151L of the NSW Act in combination with s 151F appear to make consideration of mitigation mandatory whether pleaded or not.
I do not need to resolve these issues because in any event I would have I accepted the plaintiff’s submission in relation to the plaintiff’s capacity to find work. While the plaintiff has not made significant efforts to obtain employment, in my view he does not have any unrealised earning capacity in a practical rather than theoretical sense. While he has significant experience as a metalworker, his age, his limited command of English and the ongoing limitations and risks associated with his back injury meant that he was effectively unemployable. Having regard to the aggregation of factors which would tell against his employability, I am not satisfied that his damages should be reduced on account of some real-world potential which he has declined to explore or exploit.
In making this finding I have not overlooked the evidence elicited from the plaintiff that he was offered a supervisory job with the defendant after the accident but declined to take it up. While this was raised by the evidence of the plaintiff, no evidence was given by Mr Grigull about it and it was not relied upon by the defendant in submissions. Therefore I did not consider that it was appropriate to place any weight on that point, notwithstanding that the plaintiff’s explanation as to why he had not taken up the job was not obviously reasonable.
Summary and conclusion
Therefore in summary the damages to which the plaintiff is entitled are as follows:
(a) Past loss of earnings $86,886
(b) Superannuation at 11% $9,557
(c) Fox v Wood (agreed figure) $14,472
If it is open to do so I would also award the plaintiff interest on such amount of the above as he did not receive by way of workers compensation. I will hear the parties as to whether the plaintiff may also recover interest in the circumstances of this case having regard to the terms of s 182B of the ACT Act and s 151M of the NSW Act.
My preliminary view is that subject to any arguments that the parties wish to advance or evidence they wish to tender, the defendant should pay the plaintiff’s costs of the proceedings including reserved costs.
Contingent assessment based on unmodified common law
In case I was in error in permitting the defendant to amend its defence or otherwise permitting reliance on the operation of s 182D of the ACT Act then I will briefly indicate what my assessment of damages would have been.
I would have assessed general damages at $70,000 and awarded interest on $35,000 for the past. In assessing general damages in this way I recognise that the plaintiff has suffered a serious injury that continues to affect him. However my impression of the plaintiff is that even without the accident he would be, at this stage, settling into old age. That is consistent with Mr Grigull’s observation over the ten years of employment with the defendant to the effect that he was losing some of his vigour.
I would have awarded the plaintiff $22,559 for past out of pocket expenses all of which have been paid by Medicare or the workers compensation insurer. I would have allowed an amount equivalent to approximately $1000 per year to cover increased medical expenses arising from the plaintiff’s ongoing condition. This reflects both parties buffer approach to future medical expenses. This translates to $14,402 ($19/wk, 20 years 3% discount (multiplier 758)).
I would have increased the award for past economic loss by making an award up to the date of the judgment because the restriction on compensation only to age 65 would not apply. In making an award that extends beyond the retirement age, I have accepted that it is more likely than not that he would have continued working beyond retirement age up until the date of judgment. That would add 4 weeks at $669 per week, 52 weeks at $687 per week and 25 weeks at $706 per week. This amounts to an increase of $56,050. I would then increase the loss of earnings by one twelfth to take account of the fact that the plaintiff’s earning capacity was greater than he actually exercised because he took at least one month extra holiday beyond the recreational leave that would normally be taken. That would lead to total award for past loss of earning capacity of $154,847 ($86,886 + $56,050 + $11,911).
That would lead to an award of superannuation calculated at 11% of this net figure of $17,033.
I would award interest on the past economic loss in accordance with the Court Procedures Rules but adjusted the amount to take into account the receipt of workers compensation payments.
In relation to the future loss of earning capacity, I have already allowed for an amount in past loss for a period of employment after retirement age. Notwithstanding the plaintiff’s evidence that he would have worked until age 70, I consider it to be most likely that he would have retired no later than two years after his 65th birthday. I accept the evidence of Mr Grigull that in his business it is rare to have an employee continuing beyond retirement age and my impression of the plaintiff having seen him, admittedly in his injured state, in the witness box. So far as that period is in the future, he is entitled to compensation for the loss of chance that he would continue working. I consider it appropriate to award $18,356 which reflects an approximately 50% chance of him working an additional year. Superannuation on this net amount at 11% would be $2,019.
I would have awarded Griffiths v Kerkemeyer damages based on three hours per week for the past and for the future. Notwithstanding that his life expectancy is 20 years, I would only have allowed it for a period of ten years since I am not satisfied that beyond that period any need for household assistance would not have arisen in any event. That would lead to an award for the past of $15,924 (4.083 x 52 x $75) on which I would have allowed interest pursuant to the Court Procedures Rules. In relation to the future it would lead to an award of $33,825 ($75/wk, 10 years, 3% discount (multiplier of 451)).
Orders
In the light of the outstanding issues referred to at [58]–[59] the orders of the Court are:
(a) The parties are directed to provide to my associate short minutes, consistent with these reasons, of the orders that the Court should make by 4.00 pm on 31 January 2014.
(b) In the event that the parties do not agree on the orders that should be made, the proceedings are listed for any further argument at 9.30 am on 7 February 2014.
I certify that the preceding sixty-eight (68) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Master.
Associate:
Date: 20 December 2013
Counsel for the plaintiff: G Stretton SC, J T Moffett
Solicitors for the plaintiff: NSW Compensation Lawyers
Counsel for the defendant: J Catsanos
Solicitors for the defendant: Stephen Lee Legal
Date of hearing: 24 October, 18 November 2013
Date of judgment: 20 December 2013
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