Osborne, J.C. v Geuna, M

[1988] FCA 797

Re: JASON CHARLES OSBORN and PATRICIA ANNE OSBORN
And: MIRTA GEUNA
No. ACT G15 of 1988
Damages

COURT

IN THE FEDERAL COURT OF AUSTRALIA

AUSTRALIAN CAPITAL TERRITORY DISTRICT REGISTRY
GENERAL DIVISION
Fox(1), Gallop(1) and Spender(1) JJ.

CATCHWORDS

Damages - appeal against quantum - whether damages awarded for general damages, future wage loss and domestic services excessive - no new question of principle

Damages - future wage loss - usual and preferable means of calculation - relevance of residual capacity and vicissitudes of life

Damages - domestic services - appropriate method of calculation

Todorovic v. Waller (1981) 37 ALR 481

Traecey v. Churchill (1980) 1 NSWLR 442

Hodges v. Frost (1984) 53 ALR 373

Griffiths v. Kerkemeyer (1977) 139 CLR 161

HEARING

CANBERRA

#DATE 20:12:1988

Counsel and Solicitors for Applicant: Mr B. Sully QC and Mr S. Wilcox

Instructed by: Messrs Deane Deane & Nutt

Counsel and Solicitors for Respondents: Mr B. Maguire QC and Mr R. Williams

Instructed by: Messrs Minter Ellison

ORDER

The appeal be allowed;

The award of damages in the sum of $265,180.00 be set aside and in substitution therefor the sum of $184,580.00 be awarded to the plaintiff; and

The plaintiff pay the defendants' costs of the appeal.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

JUDGE1

This is an appeal by the unsuccessful defendants against an award of damages in favour of the plaintiff in the Supreme Court of the Australian Capital Territory. The plaintiff's claim was for personal injuries sustained in a motor vehicle accident on 7 October 1984. Liability was in issue and the learned trial judge resolved that issue in favour of the plaintiff. He awarded damages in the sum of $265,180.00 composed of the following heads of damages -

General Damages $50,000.00

Past wage loss $36,000.00

Future wage loss $111,850.00

Domestic services $47,750.00

Loss of superannuation $3,000.00

Pharmaceuticals $1,600.00

Interest $14,980.00

TOTAL $265,180.00

1. The defendants have appealed to this Court against the sums awarded for general damages, future wage loss, and domestic services with consequential adjustment to the amount awarded for interest.
   General Damages

2. The plaintiff was born in Argentina on 27 May 1946. She married in Argentina and there are four children of the marriage, Roxanna born in 1966, Alexander born in 1967, Veronica born in 1971 and Maximilian born in 1978.

3. The trial judge found that the plaintiff's substantial injury was in the cervical spine at discs 4/5 and 5/6. At operation on 10 April 1986 the discs were found to be ruptured and were removed with grafts being inserted. The operation was a technical success with solid fusion at C4-5-6.

4. His Honour found that the plaintiff was suffering and continuing to suffer significant disabling pain following the accident. Generally, he regarded the plaintiff as a witness of truth.

5. The further findings of fact relevant to general damages were that the plaintiff was a very energetic, vital person who did not seek much assistance from her children or her husband in and about the work of the household. This was her choice. She can now do her housework only to a limited degree. She has headaches two, three or four times a week which sometimes last for days. Her sexual relationship with her husband has deteriorated and there are quarrels. The operation scar worries her. She has some difficulties with sleeping perhaps three to four times a week. She suffers and continues to suffer significant disabling pain and is substantially disabled.

6. His Honour found that on examination by a specialist neurologist on 18 November 1986 the plaintiff had moderate restriction of neck movement but no abnormal neurological signs. The same neurologist reviewed the plaintiff on 24 September 1987 and there was not much change in her medical condition. There were still no abnormal neurological signs.

7. His Honour found that it is not unreasonable for her to refuse further surgery. She will continue to have pain for the rest of her life to much the same degree as she presently has.

8. Accepting all those findings of fact the award of $50,000 for general damages was appellably high. In our view, an appropriate range of damages under this head was $25,000 to $40,000. In view of the concession on behalf of the defendants that an award in the order of $40,000 would have been appropriate, we provisionally assess that amount under the head of general damages. We reiterate that the amount of $40,000 is at the top of the range of appropriate damages in the plaintiff's case.
   Future wage loss

9. His Honour's findings of fact relevant to this head of damages are first that the plaintiff is substantially disabled. She impressed him as a woman of vigour and vitality despite her injury and disability and he expected that in due course she will find something to do within her residual capacity. He fixed that residual capacity at 35%. He then went on to assess the loss of future earnings at $111,850. He said that he had no reason to doubt that the plaintiff would have wished to work until she was aged at least 65. He then said -
   

"At the same time, as I have already indicated, contingencies in her case must generally be regarded as unfavourable. I think the proper approach is to treat those contingencies as being fully taken into account if one assumes that she would, but for the accident, have worked until she was 60."

1. His Honour then adopted the sum of $217.55 per week net as the wage she would have been earning if she had still been employed at the date of judgment as a permanent housemaid at the Travelodge, and calculated the lump sum necessary to compensate the plaintiff for the loss of that earning capacity to age 60, discounting by 3% in the usual way. He then applied a further discount of 35% for residual capacity and arrived at a figure for future economic loss at $111,850.

2. His Honour's reserved judgment was delivered on 15 April 1988. The case was re-listed before him on 20 April 1988 to correct the amount of the judgment because one of the components had been overlooked. The effect of adding that component was to increase the judgment by a further $3,000. At the same time counsel for the defendants brought to his Honour's notice that his Honour had apparently not applied the usual discount to the amount found for loss of earning capacity to take account of the vicissitudes of life. His Honour then referred to his reserved judgment and said that he had taken that matter into account by calculating her loss to age 60 rather than to age 65. His Honour referred to certain passages in the reserved judgment and confirmed that what he had done was to reduce the extent of the plaintiff's expected working life from 65 to 60 years of age to take account of the vicissitudes.

3. Accepting that as his Honour's intention, we now turn to the actual calculation of that loss based upon the figure of $217.55 per week net, a discount rate of 3% with no allowance for taxation on the investment of the sum awarded and a residual capacity in the plaintiff of 35%. The plaintiff was almost 42 years of age (she was born on 22 May 1946) at the date of judgment, this gave her 18 years to a retirement age of 60. Applying the tables set out in Luntz: Assessment of Damages for Personal Injury and Death the appropriate multiplier is 728. The resulting figure is $158,376.40. However, his Honour calculated a figure of $172,082 which appears to be a miscalculation if it was based upon the above figures. It would not have been appropriate for his Honour to have assumed an expected working life of 19 years because the plaintiff was to have a birthday within a month. Adopting the figure of $158,376 as set out above, which we think his Honour should have arrived at as a basic calculation, and applying a discount of 35% to take account of the plaintiff's residual capacity, the resultant figure is $103,698. This is less, but not significantly less, than the amount of $111,850 which his Honour awarded for future economic loss.

4. The method of allowing for contingencies adopted by his Honour is not the usual method which is applied by courts in assessing damages for loss of earning capacity in recent years. The method used by his Honour gained some support from Brennan J. in Todorovic v. Waller (1981) 37 ALR 481 at 542 where he spoke of the method as the usual and desirable one. The method has however been criticised in Traecey v. Churchill (1980) 1 NSWLR 442 at 456 and in the cases noted in Luntz: Assessment of Damages for Personal Injury and Death at paragraph 6.4.21. The more usual approach, and in our view the sounder approach, is to make a finding as to whether the plaintiff's likely retiring age would have been 60 or 65, calculate at a 3% discount rate the present value of the plaintiff's current earnings if she was still working (in this case $217.55 per week) for the expected working life (in this case 18 years), discount the figure arrived at to allow for any residual capacity (in this case 35%) and discount further to allow for the vicissitudes of life (in this case found to be "unfavourable"). There cannot be any hard and fast rule as to the amount of the discount for the vicissitudes of life, but it has become normal practice and it appears fair and reasonable to allow a discount of 15%. Approached in this way and adopting an assumed working life of 18 years and the figures set out above, the amount yielded is $79,188. If one assumes a working life to age 65 (23 years) the amount yielded is $82,560. Either figure is significantly less than the sum of $111,850 found by the trial judge.

5. The evidence upon which his Honour found that, but for the accident, the plaintiff would have continued to work to the age of about 65 was rather inconclusive. In the course of her evidence the plaintiff said that she intended to keep working as a housemaid, that she enjoyed working, had made friends among other housemaids that she worked with and that she was going to work as a housemaid "until she could". She said that she did not have any particular age in mind and of course enjoyed getting the money every week. On that evidence his Honour found that, but for the accident, the plaintiff would have continued to work "probably until the age of 65 subject to contingencies which I would regard in her case as generally unfavourable". Later in his judgment his Honour said -
   

"I see no reason to doubt that the plaintiff would have wished to work until she was aged at least 65. Many women with her background do and one can well understand that her reasons for doing so would not be just economic. Emotional factors would play a substantial part."

1. Upon that evidence we think a more realistic prognostication would have been that the plaintiff would have ceased work as a housemaid by the time she was aged 60. On that assumption and using the above figures as a guide, we think that the sum of $111,850 awarded for loss of future earnings was excessive. We provisionally assess the sum of $80,000 under this head.
   Domestic Services

2. In allowing the sum of $47,750 appropriately discounted and rounded very slightly under this head of damages, his Honour allowed four months at 15 hours per week in respect of the plaintiff's period of total incapacity for housework after surgery and thereafter 4 hours per week.

3. It was submitted on behalf of the defendants that it is impossible to calculate how the trial judge arrived at the figure of $47,750. His Honour's findings of fact on the subject were as follows:
   

"The plaintiff's husband and elder daughter gave evidence which generally supported her. They told of the amount of time they spent in assisting her with housework now when they had done little or none before. I found their estimates of time in doing this work unsatisfactory. Initially they seemed to be much too high and subsequently much too low. I think a finding that from about August 1986 onwards the plaintiff has received about 4 hours domestic assistance from her family which she did not need before the accident and which is now necessary because of her incapacity as a result of the accident would do justice to both parties."

1. We turn to the evidence on the subject of domestic services. The plaintiff said in evidence that prior to the subject accident she had done all the cooking in the home and the housework. She also looked after the garden because her husband did not like to do it. She mowed the lawn and watered the garden. After the accident she could not do any of those things around the house for 4 or 5 months but she slowly got back to that work. She was doing some housework up until the time when she went into hospital for the operation in April 1986. She needed help with the cooking and she did not do the gardening, vacuuming, cleaning floors or the bathroom. Her daughter did that work.

2. After her operation there was another period of 3 or 4 months when she could not do any housework. She said that she now does some housework including washing, cleaning floors, some gardening and shopping. She estimated that she had been doing about a quarter of the housework required. The other proportion had been done by her husband and her children.

3. In cross-examination she said that before the accident she had done everything, but her children would help if she asked them firmly. Her husband sometimes mowed the lawn if he felt like it. She agreed that since July 1986 she had been doing some housework, hanging washing on the line, driving a car, and carrying plastic shopping bags in each hand containing groceries.

4. Later in cross-examination she was asked with greater particularity about the washing and she agreed that she had been able to carry wet heavy sheets, towels etc. over her arm to the clothes line and hang them on the line with some assistance from her children. She also agreed that she ironed her own clothes but the children ironed their own clothes because they are old enough to do so. She said that her daughter assisted her to make the beds and generally helped her on Saturdays. With regard to the cooking, she said that she does the cooking but sometimes the family helps. The children clear the table.

5. The daughter Roxanna gave evidence that prior to the accident her mother had done a little bit of gardening, had done all the cooking and most of the housework but she herself helped sometimes. Her mother did the shopping. Since the accident she said that her mother had done the work around the house but not to the extent that she had done before the accident. Her mother does the cooking, at times she puts the washing out and she does the shopping. She and her sister do the heavier cleaning work and vacuuming. She described her own housework as involving "a bit more work" than she used to do. When she gets home from work most of the work has been done already by her mother or her sister. There may be an hour's work involved for her during the week and an hour or an hour and a half at weekends.

6. In cross-examination she agreed that she regards it as part of her job to help out in the home. She was asked whether she would have helped out in the house even if her mother had not been injured. She said:
   

"Well, I do help but I mean I might go and do something and she will just go right behind me and fix it up anyway, so I find it no use doing the housework because she just goes and redoes everything again. She is just never satisfied.

She was then asked the following questions:

Like the bathroom and the toilet that you cleaned?--- Yes. If I clean the bathroom she will go behind and say, you have done it wrong and she will go and wipe it or something.

And the same with the toilet?---Not so much the toilet, but maybe the bathroom. Yes. So do you find that you do not like helping around the house too much because whatever you do she is going to come behind you and do the same job over again?---No, not so much doing the same job over again but she will just say, 'Look, you've done it wrong' and just complain about the work you have done so you feel like just not doing kind of thing. But, then, if you have done something wrong, cleaning wrong, she goes and cleans it?---Sometimes she might go and just - you know, if I have done the toilet wrong she will go up behind me and just wipe it down again and say, 'Look, this is the way you do it. What about floors? Do you use a mop for floors?---Mum does the kitchen floor, mops it."

1. His Honour asked Roxanna how much more time she spends doing housework now than she used to before the accident each week. She said "About an hour all told".

2. In re-examination she repeated that before the accident her mother used to do most of the housework and repeated the substance of her earlier evidence that if the children did any housework the plaintiff would complain and do it herself anyway because she liked to do most of the housework herself. She repeated that since the accident the housework that she and her sister do is about one to one and a half hours, meaning that she did about an hour's more work each week than she used to do.

3. The plaintiff's husband also gave evidence on the subject of domestic services. He said that the plaintiff did all the housework before the accident and that he himself did not do any housework before inside the house. In addition, she mowed the lawns sometimes. Since the accident he says she does all sorts of work in the house such as cooking meals and housecleaning. Since the accident he has done some cleaning of the house and taking out the washing, vacuum cleaning, mopping floors, setting the table and washing dishes. He said that Roxanna does the normal house cleaning and helps with the ironing and washing. He went on to say that his wife can mop floors and carry wet washing to the clothes line and peg it out. He said that he gets the children to do as much as possible inside the house, especially Roxanna.

4. Having regard to the evidence we should respect the trial judge's finding of fact that the plaintiff now receives about 4 hours domestic assistance from her family over that which she received before the accident. Bearing in mind the ages of the children and the general family circumstances, only some of this is attributable to the incapacity flowing from the accident.

5. This loss suffered by the plaintiff is properly to be taken into account as part of general damages. The evidence does not show that there is any present intention that the future domestic assistance, however or by whomsoever provided is to be paid for. However, the loss of capacity has been incurred, and the need created. It seems to us that some part of what has happened so far, since recovery from the operation, is no more than a sensible re-arrangement of domestic chores (Hodges v. Frost (1984) 53 ALR 373) but the fact remains that the plaintiff has not the capacity to do what she did, and apparently, the necessity existing, wanted to do before the accident. In the natural course of events some expenditure, or financial loss, may result. She should be compensated by the defendant for this loss - Griffiths v. Kerkemeyer (1977) 139 CLR 161. The estimation of what amount should be allowed is very much a matter for the judge of first instance, but we are of the view that the estimate in this case is excessive and should be reviewed. His Honour was correct to award damages for gratuitous provision of domestic services for 15 hours per week for about 4 months after surgery and for some further period thereafter for 4 hours per week. On the evidence his Honour could also have awarded compensation for provision of domestic services for 15 hours per week for 3-4 months after the accident but he appears to have taken no account of the evidence in this respect.

1. Four months at 15 hours per week at $8.50 per hour, which accords with the evidence of charges made by the Red Cross Emergency Home Help Service at the relevant time for say 4 months after the accident and 4 months after surgery, amounts to about $4,000. To this amount is to be added an amount to cover the further indeterminate period. The rate increased to $10.88 per hour at the date of trial. In our view a generous assessment of the amount necessary to compensate the plaintiff for the gratuitous provision of domestic services by members of her family during the two periods after the accident and after surgery respectively and the further period referred to, would be $9,000 and we provisionally assess that sum.
   Interest

2. For interest the trial judge allowed the sum of $14,980 being the amount calculated at 7 percent for 3 hours on past loss of earnings, at 7 percent for 3 years on the sum of $20,000 for pain and suffering to the date of trial, and at 7 percent for 3 years on $6,000 in respect of the Griffiths v. Kerkemeyer component to the date of judgment. Having regard to the fact that the claim for past loss of earnings was not disputed on the hearing of the appeal, even on the reduction of the general damages to $40,000 it would not be unreasonable to apportion the sum of $20,000 for pain and suffering to date. With this in mind, together with our further conclusion that the sum of $9,000 is appropriate for provision of domestic services to date and in the future, and the fact that we are substituting a different amount for the total damages found by the trial judge, it is inexpedient to interfere with the amount allowed for interest.

3. Accordingly, we think that an appropriate award of damages and the components thereof would be as follows:
   

General damages $40,000.00 Past wage loss 36,000.00 Future wage loss 80,000.00 Domestic services 9,000.00 Loss of superannuation 3,000.00 Pharmaceuticals 1,600.00 Interest 14,980.00 Total $184,580.00

1. We have considered this figure as a global sum and confirm our provisional assessments.

2. We allow the appeal, set aside the award of damages in the sum of $265,180 and substitute an award in favour of the plaintiff in the sum of $184,580.00.

3. We further order that the plaintiff pay the defendants' costs of the appeal.