Parkinson, Rachael Rebecca v Kuehnast, Ute
[1996] FCA 1145
•20 DECEMBER 1996
CATCHWORDS
DAMAGES - appeal against assessment of general damages, past economic loss and future economic loss - arithmetical assessment as opposed to intuitive assessment - no new question of principle.
Oliver Davey Glass Pty Limited v Hollands (unreported, Federal Court of Australia, delivered 5 July 1990)
Davies v Powell Duffryn Associated Collieries Limited [1942] AC 601
Miller v Jennings (1954) 92 CLR 190
Gamser v The Nominal Defendant (1976-77) 136 CLR 145
Paul & Anor v Rendell (1981) 34 ALR 569
Kalnins v Marshall (1970) 44 ALJR 152
Hebditch v Sheppeard (unreported, Gallop ACJ, Higgins and Ryan JJ, delivered 12 July 1996
Malec v J C Hutton Pty Limited (1990) 169 CLR 638
Miller & Anor v Hillsley (Gallop, Davies and Finn JJ, unreported decision delivered 16 May 1996)
ON APPEAL FROM THE SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
RACHAEL REBECCA PARKINSON v UTE KUEHNAST
No. ACT G 38 of 1996
GALLOP MILES and FOSTER JJ
20 December 1996
CANBERRA
IN THE FEDERAL COURT OF AUSTRALIA )
)
AUSTRALIAN CAPITAL TERRITORY )
) No. ACT G38 of 1996
DISTRICT REGISTRY )
)
GENERAL DIVISION )
ON APPEAL FROM THE SUPREME COURT OF THE
AUSTRALIAN CAPITAL TERRITORY
BETWEEN: RACHAEL REBECCA PARKINSON
Appellant
AND: UTE KUEHNAST
Respondent
CORAM: Gallop, Miles and Foster JJ
DATE: 20 December 1996
PLACE: Canberra
MINUTES OF ORDER
THE COURT ORDERS THAT:
(1)the appeal be allowed;
(2)the award of damages be set aside;
(3)an award in favour of the respondent of $270,380.00 be substituted; and
(4)the respondent pay the appellant's costs of the appeal.
NOTE:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA )
)
AUSTRALIAN CAPITAL TERRITORY )
)No. ACT G38 of 1996
DISTRICT REGISTRY )
)
GENERAL DIVISION )
ON APPEAL FROM THE SUPREME COURT OF THE
AUSTRALIAN CAPITAL TERRITORY
BETWEEN: RACHAEL REBECCA PARKINSON
Appellant
AND: UTE KUEHNAST
Respondent
CORAM: Gallop, Miles and Foster JJ
DATE: 20 December 1996
PLACE: Canberra
REASONS FOR JUDGMENT
GALLOP J: The factual background of this appeal is set out in the judgment of Foster J, a copy of which I have had the advantage of reading. I adopt his Honour's analysis of the judgment and the evidence before the learned trial Judge.
Before going to the various components of the award of damages which are brought under review by this appeal, I think it is useful to state again the principles which should guide an appellate court in reviewing an award of damages for personal injuries. The principles are conveniently collated in the judgment of Miles J in Oliver Davey Glass Pty Limited v Hollands (unreported, Federal Court of Australia, delivered 5 July 1990). Before an appellate court interferes with an award of damages it should be satisfied that the trial judge acted on a wrong
principle of law or misapprehended the facts, or for these or for other reasons, made a wholly erroneous estimate of the damage suffered. It is not enough that there is a balance of opinion or preference. The scale must go down heavily against the figure attacked if the appellate court is to interfere either on the ground of excess or insufficiency (Davies v Powell Duffryn Associated Collieries Limited [1942] AC 601 per Lord Wright at 616-7, cited with approval by Dixon CJ and Kitto J in their joint judgment in Miller v Jennings (1954) 92 CLR 190 at 195-6, and by Barwick CJ in Gamser v The Nominal Defendant (1976-77) 136 CLR 145 at 148).
As the Judicial Committee of the Privy Council observed in Paul & Anor v Rendell (1981) 34 ALR 569 per Lord Diplock at 571, the assessment of damages in actions for personal injuries is not a science. An assessment of future economic loss involves a double exercise in the art of prophesying not only what the future holds for the injured plaintiff, but also what the future would have held for him if he had not been injured.
Some aspects of an award of damages for personal injury involve what has been called a "discretionary judgment" (Miller v Jennings (supra) at 197 per Dixon CJ and Kitto J), or even the exercise of a discretion (Kalnins v Marshall (1970) 44 ALJR 152 at 152 per Barwick CJ). As Miles J observed in Oliver Davey Glass Pty Limited v Hollands (supra), the evaluation of those sorts of components of an award of damages requires the court as best it can to place a monetary value on something which does not
lend itself easily to such a process. The component which places a monetary value on pain and suffering is a notable example. An appellate court will be slow to interfere with that aspect of the trial judge's award. On the other hand, there are other aspects of an award of damages which involve simple inferences from primary facts found by the trial judge. The calculation of loss of wages for a closed period by a person in regular employment is an example.
I turn to the contentious components of the award of damages, namely general damages, past wage loss and future loss of earning capacity.
General Damages
I agree with the approach of Foster J to this component. It is of fundamental significance that the respondent suffered a simple whiplash type soft tissue injury. She already had degenerative changes in her neck prior to the subject accident. As the trial Judge found on the evidence, the degenerative changes were not caused by the accident. Notwithstanding the trial Judge's description of her condition as amounting to "significant disability", the respondent is not one of those injured plaintiffs who has undergone a surgical intervention to control the pain and disability caused by the subject accident. The evidence before the learned trial Judge was that the respondent did not wish to undergo surgical intervention even though she had been advised that there would
be a good chance that such treatment would abolish the pain in her neck.
Many cases of this type have come before the Supreme Court of the Australian Capital Territory in the personal injuries list. By far the greater proportion of such cases arise out of motor vehicle accidents. In some cases, the injury sustained is confined to soft tissue and ligamentous damage, and in other cases surgical intervention has been necessary. As a Full Court of the Supreme Court of the Australian Capital Territory observed in Hebditch v Sheppeard (unreported, Gallop ACJ, Higgins and Ryan JJ, delivered 12 July 1996), the trend has been to award higher awards of damages in the latter class of case than in the former.
It goes without saying that in assessing damages, the court must draw upon its own experience, rely upon its own analysis of the evidence in the particular case and reach an opinion about the correct assessment of compensation for the injury sustained, pain and suffering, loss of amenities, and all the other matters that are required to be taken into account in assessing general damages.
The court must recognise also that no two cases are wholly alike and that apparent similarities are often superficial. Because the elements which constitute the basis of an assessment of damages for personal injuries vary so infinitely, there can be no fixed or unalterable standard for
assessing the amounts for those particular elements. Nevertheless, it is not out of place for the court, in its endeavour to assess damages within a recognised range, to search for any trend of awards of reasonably comparable cases, and use a current path as a guide to making its assessment. By looking at comparable cases, the court does not leave itself little room for flexibility. The proper award cannot be arrived at by adopting fixed limits. But it is proper for a judge to take notice of recent assessments made by other judges of the same court in cases which bear a reasonably close resemblance to the case under consideration.
Having done that in this case, I have reached the conclusion that the amount awarded for general damages was excessive. An award of $80,000.00 is outside the recognised range for cases of this type and at variance with the trend of awards in reasonably comparable cases. I would substitute an award of $40,000.00, apportioned in the same ratio as his Honour, which was 50% to the past. The award of interest, therefore, in round figures, is $5,000.00.
Loss of earning capacity
There are certain well known principles to be applied in assessing damages for lost earning capacity. An injured party is only entitled to be awarded damages in respect of lost earning capacity if the loss is, or may be, productive of financial loss. Other than to allow for the vicissitudes of life, it is undesirable that damages be assessed upon a hypothetical basis
and then discounted by a selected percentage as his Honour has purported to do in this case. Such an approach was criticised by Brennan and Dawson JJ in Malec v J C Hutton Pty Limited (1990) 169 CLR 638 at 639, to which I shall return.
There was no evidence at the trial of the amounts earned by the respondent prior to her accident on 27 February 1992 and the calculations arrived at by his Honour in respect of past wage loss were arrived at by reference to wages which she was offered or actually paid after the accident.
I agree with Foster J that his Honour was entitled to look at the respondent's post-accident earnings as some guide to her earning capacity after the accident. The respondent's claim for past wage loss was for a specified period, 1 September 1992 to the date of trial. His Honour's approach was to calculate the loss for the whole of that period deducting only the sum of DM33,759.84, representing the amount which she actually earned between 15 June 1994 and 14 June 1995, and applying a discount of 12.5% allowing for the respondent's pre-accident employment history and "significant gaps for personal reasons".
In my view, his Honour's calculations failed to make any allowance for the respondent's residual earning capacity after the accident and up to the date of trial. She admitted that she would have been able to do the job which was offered to her in July 1992 except for the fact that it involved driving up to 200kms. She said that she wanted to do the job and admitted
that she had "a very big spectrum" of work available to her in advanced education as a teacher and as a social adviser. She had continued to apply for jobs that she expected would pay her a similar salary as her first job after the accident.
I agree with Foster J that the primary Judge's assessment of past wage loss is underpinned by the concept that she would have been in employment up to the date of judgment allowing for some significant gaps for personal reasons. That approach cannot be adopted as it is not supported by the evidence for the reasons expressed by Foster J, namely, after graduation from University, and prior to leaving on her extensive trip, the respondent's employment history could only be described as sporadic. Although she had skills consistent with the performance of work that she was later unable to perform because of neck pain, she does not indicate in her evidence any significant attempt to obtain such employment on a full time basis. She inherited money which enabled her to travel in this period and there is a fairly clear indication in the evidence that she would have wished to travel in the future to an extent incompatible with a finding that, had it not been for the accident, and subject to some gaps "for personal reasons", she would have sought full time employment at that level.
In truth, there was very little evidence about her intentions in relation to employment. The indications are that she would not have sought full time employment.
On that state of the evidence, the trial Judge was faced with the fact that the respondent had not been working for some time before the trial and, of course, there was a difference between not working for some time before the trial and evaluating the respondent's earning capacity claimed to have been destroyed in the subject accident.
As Brennan and Dawson JJ said in Malec v Hutton (supra), the fact that the respondent did not work is a matter of history and facts of that kind are ascertained for the purposes of civil litigation on the balance of probability: if the court attains the required degree of satisfaction as to the occurrence of an historical fact, that fact is accepted as having occurred. By contrast, earning capacity can be assessed only upon the hypothesis that the plaintiff had not been tortiously injured: what would he or she have been able to earn if he or she had not been tortiously injured. To answer that question, the court must speculate to some extent. As the hypothesis is false - for the plaintiff has been injured - the ascertainment of earning capacity involves an evaluation of possibility, not establishing a fact as a matter of history. Hypothetical situations of the past are analogous to future possibilities - in one case, the court must form an estimate of the likelihood that the hypothetical situation would have occurred. In the other, the court must form an estimate of the likelihood that the possibility will occur. Both are to be distinguished from events which are alleged to have actually occurred in the past.
Later, their Honours said,
We think it undesirable for damages to be assessed on the footing of an evaluation expressed as a percentage. Damages need not be assessed by first determining an award on the footing that the hypothetical situation would have occurred and then discounting the award by a selected percentage. Damages founded on hypothetical evaluations defy precise calculation.
In addition to making an award and then discounting it by a percentage which, in accordance with High Court dicta, was an error, his Honour's calculations failed to take into account extensive periods after the accident when the respondent would, in any event, have been unable to work. She returned to Australia in December 1993 and remained until 2 May 1994. She broke her right ankle in October 1993 and broke her left ankle in January 1994. As his Honour found, neither of these injuries could be related back to the accident in question and would undoubtedly have prevented her from working for a considerable period of time.
Furthermore, in the period before trial, the only medical evidence which supported any restrictions was a single certificate from a Dr Goeing in respect of the experience by the respondent in undertaking lengthy car trips. By the time of the trial she was able to drive for up to an hour without difficulty. There was no other medical evidence to support the respondent's claim of impaired earning capacity.
In view of the absence of medical evidence that the respondent's symptoms in fact prevented her from carrying out her normal work duties beyond 1992, the amount awarded and the
approach to the award should be substantially reduced. I would substitute a figure of $45,000.00. Interest should be awarded on that sum at the same rates as at trial, namely 7.5% from 1 September 1992 to 30 June 1993 and thereafter at 5% to date of judgment. That yields a figure of $11,000.00 in round figures.
Future loss of earning capacity
The award of damages under this component was $167,346.00. Foster J has analysed the trial Judge's approach to this award. It was arrived at by accepting that the respondent would have retired at the age of 60 which was approximately eight years after the award of damages. He then calculated an earning rate and discounted that earning rate by 45% by taking into account her desire to travel from time to time and his assessment that she would become more adept at coping with her disability when she put the case behind her and proceeded with her life.
I would add to those factors the medical evidence from Dr David Lee in the form of a report given only a fortnight before the trial that the respondent's prognosis was good and that the existing degenerative changes may give her trouble in the form of aches and pains from time to time.
I think there is much force in the submission on behalf of the appellant that, in the light of the respondent's work history, the extent of the degenerative changes which were already present at the time of her accident and the lack of
medical evidence to support any claim for impaired earning capacity, this was not a case which supported an award of a precisely calculated weekly or monthly sum discounted for vicissitudes so as to arrive at the appropriate measurement of the damages to be awarded for impaired earning capacity. The respondent had, at the time of trial, a considerable residual earning capacity. She had demonstrated that earning capacity between accident and trial and she was, on the evidence, continuing to apply for jobs that would have paid her in accordance with her qualifications. In short, it was not a case in which the evidence supported a conclusion that the respondent was precluded, by reason of her symptoms, from engaging in full time employment. Rather, it was a case that demonstrated that she had a continuing capacity to perform full time work and the fact that she had not done so was attributable to her travelling in Australia and not staying in Germany where her qualifications were recognised or, alternatively, she was simply unable to obtain a job.
I agree with the submission on behalf of the appellant that, in that situation, the assessment of damages for loss of earning capacity should have been approached by providing some sort of buffer for the respondent, not arrived at by arithmetical calculation, but by intuition.
As the Full Court of the Federal Court said in Miller & Anor v Hillsley (Gallop, Davies and Finn JJ, unreported decision delivered 16 May 1996), the difficulty in assessing a
net loss is accentuated by reason of the uncertainty, speculation and conjecture which surrounds this respondent's hypothetical capacity and the actual capacity, together with the imponderability of the number of years for which she probably would have gone on working. In my view, it is a fair approach to make an intuitive assessment rather than an arithmetical one. Adopting that approach, I would reassess the respondent's damages for future economic loss at $100,000.00 which I think is even a little on the generous side but it is the best I can do in reaching a lump sum for loss of earning capacity where it is not appropriate to make precise calculations.
Accordingly, the award for this component should be reduced by $67,346.00.
Superannuation
It was submitted on behalf of the appellant that a review of the components of damages for past and future economic loss necessarily make it appropriate to adjust the amount awarded in respect of superannuation to accommodate the altered figures. The amount awarded for past superannuation loss was $4,998.00. The appellant did not advance any cogent reasons why that figure should be interfered with, and having regard to the modest size of the figure, I would not be prepared to interfere.
In summary therefore, the alterations which I would make to the various components of his Honour's award are as follows,
General damages $ 40,000.00
Interest thereon $ 5,000.00
Past wage loss $ 45,000.00
Interest thereon $ 11,000.00
Future loss of earning capacity $100,000.00
The substitution of those figures means that the total award of damages to the respondent has to be reduced by $174,116.00. Accordingly, I would allow the appeal, set aside the award of damages made in the Supreme Court of the Australian Capital Territory and substitute an award in favour of the respondent of $270,380.00. I would order the respondent to pay the appellant's costs of the appeal.
I certify that this and the twelve (12) preceding pages are a true copy of the Reasons for Judgment herein of his Honour, Mr Justice Gallop.
Associate:
Date:20 December 1996
IN THE FEDERAL COURT OF AUSTRALIA )
AUSTRALIAN CAPITAL TERRITORY ) No. ACT G38 of 1996
DISTRICT REGISTRY )
GENERAL DIVISION )
ON APPEAL FROM THE SUPREME COURT OF THE
AUSTRALIAN CAPITAL TERRITORY
BETWEEN: RACHAEL REBECCA PARKINSON
Appellant
AND: UTE KUEHNAST
Respondent
CORAM: Gallop, Miles and Foster JJ
DATE: 20 December 1996
PLACE: Canberra
REASONS FOR JUDGMENT
MILES J: I have read the judgments of Gallop J and Foster J in draft form. I do not differ on any matter of principle enunciated in either of the judgments. They illustrate, if I may say so, the difficulty of assessing the monetary value of loss of earning capacity both in the past and in the future where the facts require consideration of a multitude of hypotheses as to what life might have held for the plaintiff if not injured and also as to what life might still hold for the plaintiff in the injured condition. Reasonable minds may well differ as to the importance of competing hypotheses and the extent to which they permit the sort of arithmetical valuation favoured by Foster J or whether the circumstances are so imponderable as to require the intuitive selection of
a figure such as Gallop J would award as a sort of buffer. As Gallop J observes, there is some guidance from Brennan and Dawson JJ in Malec v. J.C. Hutton Pty Limited (1990) 169 CLR 638 at 640, where their Honours express disapproval of a process whereby damages are assessed “on the footing of an evaluation expressed as a percentage”. However, their Honours appear to qualify this disapproval by going on to say that damages “need” not be assessed by first making the assessment on the assumption that the hypothetical event would have occurred or will occur and then discounting by a selected percentage for the chance that the hypothetical event might not have occurred or may not occur. Their Honours appear to leave it open in appropriate cases to award damages by the method which they disapprove and that method is not condemned in the majority judgment in Malec. Furthermore, in practice the obvious dangers of an intuitive approach may be minimised by checking the figure chosen against what might be arrived at by taking the alternative, arithmetically-based approach in which a reduction is made by way of a selected percentage.
Accordingly, whilst on balance I think that the approach of Gallop J is to be preferred in the circumstances of the present case, the correctness of the result so reached is only confirmed by the approach of Foster J. I agree with the orders proposed by their Honours.
I certify that this and the preceding page are a true copy of the Reasons for Judgment herein of his Honour, Justice Miles.
Associate:
Date:
IN THE FEDERAL COURT OF AUSTRALIA )
AUSTRALIAN CAPITAL TERRITORY ) No. ACTG 38 of 1996
DISTRICT REGISTRY )
GENERAL DIVISION )
On appeal from a Judge of the Supreme Court
of the Australian Capital Territory
BETWEEN:RACHAEL REBECCA PARKINSON
Appellant
AND:UTE KUEHNAST
Respondent
CORAM: GALLOP, MILES and FOSTER JJ
DATE:
PLACE: CANBERRA
REASONS FOR JUDGMENT
FOSTER J: This is an appeal from a judgment of Higgins J given on 14 June 1996, in which his Honour awarded the plaintiff (the present respondent) damages in the sum of $444,496 in respect of injuries, disabilities and consequent losses suffered by her in a motor vehicle accident on 27 February 1992. His Honour found that the respondent was the driver of a vehicle which had become stationary in Barry Drive, Canberra at its intersection with Moore Street, in response to a red traffic control light. Whilst stationary her vehicle was struck from behind by a vehicle driven by the
defendant (the present appellant) in what was described by his Honour as being "a relatively minor impact". Because of pre-existing degenerative changes in her neck, however, this impact occasioned significant consequences to her. His Honour found liability in favour of the respondent. This finding is not challenged on appeal.
The appellant, however, challenges the award of damages as being excessive. It is contended that the amounts awarded for general damages ($80,000), past wage loss ($97,375) and future loss of earning capacity ($167,346) require intervention and reduction by this Court.
GENERAL DAMAGES
It is convenient to consider in the first place the award for general damages, as it involves a consideration of the plaintiff's injuries received in the accident and their effect upon her in her ordinary activities and enjoyment of life.
The respondent is a German national having been born in Hamburg, Germany, on 2 May 1943. She was, accordingly, nearly 50 years of age at the time of the accident. She had married in 1962 and between 1963 and 1971 had borne 4 daughters. Prior to 1979 she had done occasional work, to which reference will be made later. In 1979 she undertook an educational course preparing her for university entrance which she completed successfully in 1980. In 1981 she entered the University of Oldenburg from which she graduated in 1987 as a qualified educationalist. During this period, in 1985, she and her husband were divorced. Thereafter she had certain jobs, the last being that of a marketing consultant between September 1990 and September 1991, in which month, after inheriting some money, she left Germany on a six month world trip, during which she suffered the subject accident. She said in evidence, and his Honour accepted, that she had not previously suffered any pain or restriction in her neck, shoulders or arms but had had previous arthritic pain in her left hip which was treated on occasions by injections administered by her doctor. This latter condition appears to have been at least temporarily exacerbated by the accident but was only a minor consideration in the award of damages.
She suffered no immediate effects from the accident but later, whilst out that evening, she experienced problems with vision, became nauseous, and developed a severe headache. She also had symptoms of tightness on each side of her neck. She was obliged to return home and the next day saw Dr Lee, a general practitioner in Canberra. At that time she had pain in her neck and was restricted in the movements of her left arm, shoulders and back. X-rays were taken. She was given medication and, on the doctor's advice, commenced physiotherapy. She was also advised to wear a neck collar when travelling. She saw Dr Lee on two other occasions in March 1992 before continuing on her trip, which had been pre-booked. She continued to suffer discomfort in the neck and left arm with occasional numbness in the fingers of the left hand. She also had headaches. When staying in major cities she obtained medical and physiotherapeutic help. Because of continuous pain and discomfort she eventually shortened her itinerary by two weeks, when in America, and returned to Germany in June 1992.
In Germany she came under the care of Dr Goeing, an orthopaedic specialist, who prescribed physiotherapy and gave her a course of injections in the neck and shoulder. These gave temporary relief. She suffered from fluctuating headaches and consulted a neurologist about recurring numbness in her hands. She unsuccessfully sought work in Germany in 1992 in circumstances to which I shall refer later. She was still unemployed in December 1993 when she returned to Australia to take part in legal proceedings, which had been commenced on her behalf before she had left Canberra. These proceedings, however, did not go on at the time because it was necessary that they be transferred to the Supreme Court. She remained in Australia until the end of April 1994. During this time she had further treatment for the persisting symptoms in her neck and arms. She also consulted Dr Robson, a neurosurgeon, in March 1994 who, having ordered and considered x-ray imaging of her neck, recommended an operation at three vertebral levels. Whilst the respondent was considering this advice she received a communication from Germany offering her a job. She decided to return to Germany, arriving back on 2 May 1994. She took up the job on 15 June 1994. The job, to which reference will be made later, lasted for a year. The respondent appears to have no intention of undergoing neck surgery, although Dr Robson corresponded with a colleague in Germany in relation to her case. She has, however, continued to take anti-inflammatory medication and undergo repeated physiotherapeutic treatments. She has continued to suffer pain in the affected areas.
She has suffered gastritis as a result of the anti-inflammatory medication that she has been taking.
In November 1995 she returned to Australia for the hearing of the case. She had a number of medical examinations. She returned to Dr Lee in December 1995 in relation to her neck problems. He prescribed medication. She was also reviewed by Dr Robson who renewed his advice that she should have operative intervention. She also saw a number of medical practitioners on behalf of the appellant, none of whom was called in the case.
The only medical evidence tendered was in the form of certificates from Dr Lee and Dr Robson in Australia, and Dr Goeing and Dr Dickmann, a neurologist, from Germany. There were also radiological reports and reports from physiotherapists. His Honour accepted that when in employment full time in Germany in 1994 she "suffered numerous headaches, shoulder and neck pain. She needed pain killing drugs during the day and also physiotherapy to keep going". He found that her main complaint was neck pain and headaches which occurred two to three times per week, sometimes daily, the neck being always stiff, sometimes including the shoulders.
The reasons for her symptoms were explained in the medical evidence, which his Honour accepted and which was not challenged. His Honour stated:-
"The diagnosis was that there had been hyper-extension injury to the neck and shoulder strain. There had been spondylosis at C4/5, C5/6 and C6/7 levels. Dr Dickmann, a neurologist and psychiatrist, considered that there was sensory compression syndrome of the nerve root C7 left.
Dr Robson, neurosurgeon, considered that, at least without surgery to repair damage to discs in the neck, the plaintiff's condition will continue.
The accident did not cause degenerative changes in the plaintiff's neck or her left hip. It did stir up the hip and exacerbate its condition. It caused the neck to become symptomatic and exacerbated the underlying degenerative changes. But for the accident that might have never occurred. The fact that a plaintiff is more susceptible to serious harm from a relatively minor impact does not reduce the defendant's responsibility for the consequences. It may, of course, have an adverse effect on the assessment of unfavourable vicissitudes."
His Honour went on to find that the plaintiff's enjoyment of life had been seriously affected and that she was "significantly disabled". He assessed general damages in the sum of $80,000.
It is submitted on behalf of the appellant that, even after making due allowance for the fact that his Honour had the advantage of observing the plaintiff and acknowledging that the assessment of damages for pain and suffering involves a high degree of discretion, the figure awarded was excessive to the point of demonstrating appealable error.
I have found this aspect of the appeal difficult to decide. The figure is considerably higher than I would have awarded on the evidence but that, of course, is not the test. It is important to recognise that this is not a case of a simple whiplash type soft tissue injury. There has been, undoubtedly, an exacerbation of a pre-existing spondylitic condition at three levels of the neck. His Honour has accepted the plaintiff's evidence that prior to involvement in this fairly minor accident she had been fortunate enough not to have experienced pain in these areas. His Honour's finding that there might never have been an occurrence of symptoms had it not been for the accident leaves open, of course, the possibility that some other relatively minor event, occurring later, would have produced the same result. Unfortunately, no oral medical evidence was given and this question remained unexplored except to the extent that the underlying condition of the neck, as demonstrated in the sophisticated radiological investigations that were undertaken, would necessarily demonstrate the vulnerability of the discs in the three areas in question. The question necessarily arose whether the effect of the accident was not one of temporary exacerbation of the underlying condition causing symptoms in the period of some months after the accident but with the plaintiff's ultimate continuing condition being no more than the condition which the degenerative changes in her neck at the three levels were inevitably leading to. As his Honour has found, on the evidence, the degenerative changes were not caused by the accident.
His Honour does not undertake a review of the medical evidence in his judgment. I consider that I should make some reference to it.
Dr Lee, shortly after the accident, reported to the respondent's solicitors that she had suffered a hyper-extension injury to her neck and slight strain to the shoulders in the motor vehicle accident. He described the injury as moderately severe with emotional disturbances. X‑ray examination indicated cervical spondylosis at C4/5, C5/6 and C6/7 levels with small osteophytes encroaching on the inter-vertebral foramina of those levels; spondylosis being degenerative changes with the passage of years. He expressed the view in March 1992 that he would expect her problems to continue for a further six weeks as a consequence of aggravation of a pre-existing condition with gradual subsidence of neck pains and headache and discomfort from nerve conduction in the left arm and leg. He reviewed her again when she returned to Australia in December 1995. She was complaining of a painful neck with movement and at rest. He prescribed analgesic medicine. He saw her again in January 1996. As at February 1996 he expressed the opinion that her prognosis was good but that the existing degenerative changes "may give her trouble in the form of aches and pain from time to time".
Dr Dickmann examined her in Germany in June 1992 on reference from Dr Goeing. His report would appear to indicate that he gave her a full neurological examination. He agreed with Dr Goeing that "the patient's statements are very typical ... of a compression syndrome of the nerve root C7 left". He noted that the respondent "prefers to be content with conservative treatment for the time being". He said that he could not "diagnostically characterise with certainty the complaint of headaches and impaired vision". He indicated that "EEG and visually evoked potentials [were] without pathological findings".
Dr Goeing commenced to treat the respondent in Germany on 5 June 1992. In relation to the neck she diagnosed a "reactive functional disorder of the cervical vertebral column after a whiplash injury and irritation syndrome of the sensory nerve root C7 left". She prescribed physiotherapy and associated measures. She administered a number of injections into the shoulder region, the back of the neck and the cervical spine. She expressed the view that at that time "no absolute incapacity to work existed". She also expressed the view, in December 1992, that "the impairment to daily normal life between June 92 and the end of August 92 amounted to 40% since September 92 up to now approximately 30%". I assume from this statement that she was noting generalised improvement in the respondent's condition. She was of the view that treatment, including injections, was still necessary but that surgical intervention was not indicated.
In June 1993 she indicated that the respondent was being treated with medication, physiotherapy and pain relieving treatment such as therapeutic local anaesthesia.
Dr Robson examined her in Australia in February 1994 and reported to her solicitors. He took the view, after appropriate x-rays, that "it does seem to me to be likely that her troubles are attributable to mechanical structural change in discs which were already imperfect when the accident happened". He said that she had three options. The first was "to understand the problem, accept it as it stands, put up with the discomfort and just get on with life". The second was to continue with medication and therapy of one kind or another "that can at best only offer temporary help". The third was surgical intervention which would involve fusing the discs at all three levels. He advocated this approach but, as I have already indicated, the respondent has indicated no intention of following this advice.
In January 1996 Dr Robson, having examined the respondent again, noted, from her description, that she was "in just the same trouble as before as far as her neck is concerned, and it fluctuates in severity, it comes and goes but the overall problem is essentially unchanged". He said that "she, in commonsense terms, either has the choice of putting up with it and taking Panadol or some such medication, or on the other hand pursuing surgical treatment" which he advocated, saying that "she would have a far better than 80% likelihood of a very good result if all three of the discs were fixed".
A fairly detailed report was given by a physiotherapist who had treated the respondent after the accident and on the occasions of her visits to Australia thereafter. She gave a prognosis that the plaintiff "will continue to have low grade pain and stiffness from time to time over the next two years or so". She expressed the view that the respondent's "intermittent arm symptoms" should be investigated more closely. She finally said:
"Ute does not allow her disability to interfere with her love of travel and her enthusiasm for life. However there is little doubt that she has had to modify her activities of daily living to accommodate her pain. I believe that she will always have to consider her neck injury in relation to activities that she wishes to undertake."
Reading the available medical evidence and accepting that the respondent does not wish to undergo surgical intervention which could abolish the pain in her neck, I feel that this last statement provides a fair summation of her condition and one which accords reasonably with the evidence she has given. It is, of course, possible to describe this condition as amounting to "significant disability". This is, however, to do no more than to attach a label to the evidence. I have come to the conclusion that the award of $80,000 for the injuries and consequent disability exceeds what is reasonable in the circumstances to an extent that warrants appellate intervention. I say so with due regard and respect for the careful view formed by the learned primary judge. In my respectful opinion, the respondent's pain, suffering and disability cannot command an award higher than $40,000 (apportioned in the same ratio as his Honour, which was half to the past). The appropriate award of interest in relation to this award is $5,000. I propose that the amount awarded be reduced accordingly.
PAST WAGE LOSS
His Honour noted that the respondent obtained tertiary qualifications as an educationalist in 1987. It also appears that she returned to university to obtain some further qualification but did not continue with the course as she obtained employment "as a sales manager in a shop". During 1988 and 1990 she worked for seven months in this capacity. Thereafter, between 1990 and September 1991 she obtained employment as a real estate marketing consultant, at first part time and then full time. Her evidence indicates that this work involved showing prospective customers around lease-hold premises and arranging for them to sign rental contracts.
In September 1991 she obtained work as a marketing consultant. The evidence does not make clear what was involved in this work. It appears that it had something to do with promoting the sales of a cleaning firm. She says that "the job was a lot of work and didn't bring much money". It also appears that she inherited money in September 1991, at which time she decided to leave Germany and undertake the trip during which the accident occurred.
The situation prior to her accident, then, does not reveal any established pattern of work, despite the qualification as an educationalist that she had obtained. No evidence was given in respect of earnings in this period. The claim for past wage loss was based upon earnings achieved by her after the accident. It was argued on behalf of the appellant that this was an impermissible approach. I do not agree. I consider his Honour was justified in looking to post-accident earnings as a guide to wage loss up to the time of judgment. It was also submitted that his Honour erred in finding a wage loss up to the time of judgment insofar as the plaintiff's original claim as particularised had terminated at the point of time when she returned to Australia in December 1995. There is no error in his Honour's approach. Obviously, it was necessary for her to return to Australia for the hearing of her case and the period that she was necessarily in Australia prior to and during the hearing could properly be taken into account in arriving at the relevant wage loss.
However, in my respectful opinion, there are more significant difficulties in relation to the primary judge's approach. These arise from the use that was made of an employment contract that she secured upon her return to Germany. This was a contract that was to commence from 1 September 1992. It was for employment as an "educationalist/ social worker" with an association described as the Infant School Association Oldenburg Inc. This appeared to be work in keeping with her tertiary qualifications. It was to "focus on educationalist expert consultancy with the child care staff employed at the centre" and associated activities. A problem arose, however, in relation to her acceptance of this employment. The problem and its result was stated, by his Honour, in the following terms:-
"The plaintiff had believed that the employment would be in the Oldenburg area. It was, however, spread over a 200km radius. Her neck was continuing to cause trouble. She was advised that the level of driving required would exacerbate her symptoms. She was given medical advice to limit her driving. However, that proved unacceptable to the employer. As a result, before she took up her duties, the contract was, by mutual agreement, cancelled. The plaintiff would have been paid DM 3,412.58 net of social security and tax."
These findings were not challenged but there was a challenge to the use to which they were put. I shall refer to this later.
The respondent obtained no further work, although she registered for it with the relevant employment agency. As his Honour found, she obtained a certificate under relevant German legislation that she was "30% disabled" by her injuries. In my view, the evidence does not really clarify
the effect of this classification. His Honour makes no finding other than that she was so classified.
In December 1993, apparently not having worked in the meantime, she returned to Australia, as already indicated. Her claim was not then heard but she returned to Germany in April 1994 having received a job offer. This was with an organisation known as ALSO Unemployment Self-Help Reg. This employment commenced on 15 June 1994 and consisted of a one year contract to work as a "social adviser". His Honour referred to her earnings in this employment as follows: "the gross salary for this position as `a social adviser' was DM 4,320.66 gross, net DM 2,813.32, after tax, health insurance, pension insurance, unemployment insurance and `payment VWL (whatever that was)'".
As his Honour found, the employment was full time. The plaintiff performed the work although she suffered headaches, shoulder and neck pain requiring "pain killing drugs during the day and also physiotherapy to keep going".
When this contract expired in June 1995 she became unemployed until returning to Australia in November of 1995 for her case. She says that she applied for three positions but that they were already filled.
The question of how she supported herself during what were fairly extensive periods of unemployment was not the subject of much attention in the case. The evidence would appear to establish that she was eligible for unemployment benefits which she called "the dole", but only for a limited time because she had a father who was capable of supporting her. The degree to which she had independent means, or the extent of the inheritance to which she made reference was not explored. It must be taken, however, that she had means of support in these periods from some source other than employment. The evidence does not supply much detail as to the nature of the employment she unsuccessfully sought after the termination of her contract with the ALSO organisation. However, the following evidence was obtained in cross-examination:-
"MR PARKER: Now, what was the last job that you applied for? -‑‑That was - I had three. I think that was in Oldenburg or in Hamburg. I applied in Hamburg because my father would give me a flat there then if I have - had been able to get a job there.
What sort of a job was that?---That was also in social. It was with - working with long-term unemployed refugees and people that are on - paid by government, paid for further or advanced education.
HIS HONOUR: Scholarships?---Yes, things like that. Elderly people that have to undergo a certain education to make them - that they could get the job much easier if they have more skills.
MR PARKER: Right. And now what salary would you have received if you had been awarded that job?---Like a Diplom Padagogin.
Like a - - -?---Not as a social worker, like a - my profession is a Diplom Padagogin we call it. It is a sort of Master of Advanced - Master Degree of Advanced Education.
Well, how much would you have expected to get per month?---I think the same than in the first job because it's paid by BRT, at the tariff.
And the job before that, that you applied for?---That was sort of the same thing in a school in Oldenburg and it is all - I am employed on the basis of my education. It is all then BRTVR. It is - they have - they can't employ you under that what are your skills.
And that pay includes, does it, some allowance, some allocation related to your age?---What allocation?
Well, some part of that relates to - the older you get, the more you get for any particular - - -?---yes, but that's the tariff then. It's all - they don't make it for you. That's the - - -
Anybody who has that profession - - -?---Yes, and has that age, gets that money.
All right. And you're continuing to apply for those sorts of jobs at the present time?---Yes, if they - if I read it in the paper or so, yes."
The passage is, of course, not entirely clear but a reasonable construction of it is that she sought employment consistent with the tertiary qualification that she had and in which she would have been paid at the same rate as the employment that she was unable to take up because of the driving difficulty from which she then suffered. It should be noted that her driving ability had improved prior to her returning to Australia in that, because she had been provided with a specially designed seat for her car, she could drive for periods up to one hour before needing to rest because of discomfort in the neck and shoulder. It must also be noted that in relation to work that she could do consistent with her skills she said "I have an MA in advanced education, so I can train apprentices and I can work as a teacher and as a social adviser. It is a very big spectrum...". The work that she had applied for was "sort of social work, some of these where I applied for, it was sort of social work also and teaching".
His Honour's approach to the assessment of past wage loss appears in his judgment as follows:-
"As to past wage loss, the net monthly wage should be the gross sum, less only the tax thereon. Deductions for voluntary or discretionary purposes, for example, child care, mortgages, health insurance and the like, should be ignored. Thus the remuneration for the plaintiff's position with the Infant School Association would have been DM 4,356.07 monthly or DM 1,005.25 weekly.
The subsequent employment contract with ALSO was, on that basis, DM 3,768.16 monthly or DM 869.58 weekly. The plaintiff's particulars claim an earning capacity of DM 853.15 per week. The past wage loss was calculated by applying an earning rate of DM 3,412.58 monthly. That would have been DM 787.52 weekly.
Those rates are less than the apparent rate warranted on the assumption that the employment contracts the plaintiff obtained represented her capacity for full-time employment. They do not include allowances for superannuation and health insurance. I accept the earning rates particularised on that basis.
The amount the plaintiff could have earned net of the sum she did earn would be DM 126,631.42 up to the date of judgment. The plaintiff's employment history persuades me that there may have been significant gaps for personal reasons which would have reduced the average net earnings. I consider a further discount of 12.5% would allow for that. I therefore award DM 110,802.50, that is, $97,375.00 for the past wage loss. The award of interest thereon is claimed from 1 September 1992 to 30 June 1993 at 7.5% and to date at 5% on that figure. That yields a figure of $20,449.00."
His Honour did not provide particulars of how the figure of DM 126,631.42 was arrived at, but it appears that he accepted that the respondent's earning rate but for injury would have been DM 3,412.58 per month (DM 787.52 per week), and that during such time as she in fact worked, her earning rate was DM 2,813.32. His Honour also said:-
"I have noted that the plaintiff had not had a steady work history before 1990. However, she was in constant employment until September 1991. Further, had she been able physically to perform the duties of the position she was engaged to perform in July 1992, as from 1 September 1992, I consider she would from then on have been in constant employment in that or a similar capacity until retirement at least to the extent she desired to be. It is, therefore, legitimate to use the level of earnings from her employment contracts following the accident as a guide to her earning capacity but for the injury."
A challenge was made to his Honour's failure to include the "deductions for voluntary or discretionary purposes" which he refers to in the calculation. I do not think that this objection is established. In my view, it was, in the circumstances, within the range of his Honour's discretion to leave those matters out of account.
The significant challenge that is made, however, is to his Honour's general approach, namely that, had it not been for the accident, the respondent would have accepted the contract with the Infant School Association Oldenburg Inc and, effectively, remained in that employment until age 60, which, on the evidence, would have been her required retiring age. So far as the assessment of past wage loss is concerned the concept that she would have been in this employment up until the date of judgment underpins the award. A calculation based on that concept was reduced by a discount of 12.5% on the basis that there "may have been significant gaps for personal reasons" in her employment. In my respectful opinion, this
approach cannot be adopted unless the evidence allows it. In my view, it does not.
It is clear that, after graduation from university, and prior to leaving on her extensive trip, the plaintiff's employment history could only be described as sporadic. Although she had skills consistent with the performance of work that she was later unable to perform because of neck pain, she does not indicate in her evidence any significant attempt to obtain such employment on a full time basis. She inherited money which enabled her to travel in this period and there is a fairly clear indication in the evidence that she would have wished to travel in the future to an extent incompatible, in my view, with a finding that, had it not been for the accident and subject to some gaps "for personal reasons", she would have sought full time employment at that level. There is, indeed, very little evidence bearing upon her work intentions, but what there is supports the latter picture rather than the former. She gave the following evidence in chief:-
"MR STRETTON: Is there any requirement in Germany that you retire at a particular age?---yes.
What is the retiring age?---Retiring age for a woman, as I told, would be 60 if you have worked that time and 65 if you didn't, and for a man, I think it's 63, it's different.
Do not worry about the man. If you had received this job in September 1992 and continued to work in it, at what age would you have expected to retire?---At 60."
I note that the third question is hypothetical and was, no doubt, deliberately so. The answer is, in my view, not capable of supporting a finding that the respondent intended to work in the job until retiring at age 60.
The respondent also agreed, in cross-examination, that she very much enjoyed travelling and that over the years she had done a lot of travelling, mostly to Australia.
She gave the following evidence:-
"MR PARKER: Well, had you not had this accident, you would have done a lot more travelling, would you?---Yes.
And you would have travelled fairly regularly to Australia?---Depends. If I would have stayed on that job I would only have five to six weeks every year, so I think I would have come every two years.
Is the job though you are speaking of with the Olden Kindergarten?---Yes."
Again, in my view, this answer falls far short of establishing that she had, prior to the accident, the intention of continuing in the Olden Kindergarten job until retirement age. It is not submitted that there is any other evidence in the case bearing upon this aspect. It is conceded that at no point did the respondent assert positively that she had had any such intention.
On the contrary, in my view, the evidence points more towards the respondent's having the intention of working
for periods of time followed by periods of unemployment during which she might travel.
In these circumstances I have come to the conclusion, with respect, that his Honour erred in approaching the assessment of past wage loss by accepting a proposition of continuous employment up to time of judgment in the Olden Kindergarten or its equivalent and then making a discount as he did. In my view, the matter has to be approached on the basis that the respondent, although having the relevant demonstrated earning capacity, would not have chosen to exercise it continuously. The approach that I would adopt is to commence on the basis that the respondent would have sought to exercise her earning capacity for only three quarters of that period. This would produce a basic figure which would itself require reduction by the application of an appropriate discount rate for contingencies. The basic figure is calculated by multiplying DM 787.52 per week (the amount apparently accepted by his Honour, outlined at page 18 above) by 197.17 weeks from 1 September 1992 to 14 June 1996, the date the contract with the Infant School Association Oldenburg Inc would have commenced to the date of his Honour's judgment) and by three quarters. This produces the basic figure of DM 116,456.48.
I also find myself in respectful disagreement with his Honour as to his selection of a rate of 12.5% for contingencies. I consider that more than the usual contingencies of life would apply in the respondent's case. In the first place, the evidence indicates that work in the respondent's field of skill was by no means automatically available. It is established, clearly enough, that she could perform work in that area if the heavy driving requirement was not involved. Nevertheless, her efforts to obtain work had not been successful, insofar as jobs for which she applied had already been filled. Accordingly, she may well have been unable to exercise her earning capacity even to the extent which I have found, on the probabilities, she would have wished. More significantly, she would have been at risk of suffering incapacitating exacerbation of her underlying degenerative condition of the neck from a range of relatively minor traumas in her ordinary life. I consider that a 25% discount should be applied to the basic figure in order to take account of these matters. DM 116,456.48 reduced by 25% is DM 87,342.36. From this figure of DM 87,342.36 there should be deducted the amount actually earned by her over the period, namely, DM 33,759.84. The end figure for past loss of earning capacity arrived at in this way is then DM 53,582.52 or $47,088.95.
Of course, it must be recognised that the approach I have adopted of utilising mathematical computations based upon factual assumptions is capable of producing a false appearance of precision. Such assumptions and calculations can never be more than a useful guide or check. However, as they are the product of a reasoned approach to the assessment of an award of damages they must be a more valuable approach that one involving mere speculation. For my part I do not understand anything in the judgments of the members of the High Court in Malec v JC Hutton Pty Limited (1990) 169 CLR 638 to gainsay the usefulness of this approach. The traditional warning is, however, sounded that care must be taken to acknowledge that the appearance of accuracy can be fallacious. It is necessary to examine any figure so produced to determine whether it accords with what could be described as an intuitive judicial satisfaction as to its appropriateness. It must always be reasonable to reduce or increase a figure so obtained, usually by a process of rounding off. In the present case I consider that it is reasonable to reduce the figure thus arrived at to a round figure of $45,000 which, indeed, accords with the figure arrived at independently by Gallop J. It is appropriate to award interest on this figure in the sum of $11,000 so that, in my view, past earning loss is appropriately compensated for in the sum of $56,000.
FUTURE LOSS OF EARNING CAPACITY
His Honour, in reaching the figure which has been challenged, used as a starting point the figure of DM 317,371.08, this being the present value at time of judgment of wages payable under the Infants School Association Oldenburg Inc contract up to age 60, a period of approximately eight years. He said that the selection of this period in itself contained an element of discount as the plaintiff might have worked until age 65. However, having regard to the evidence as to retiring age and the difficulty of older workers obtaining employment, it would appear that his Honour regarded this discounting factor as quite minimal. I would agree. His Honour took into account, however, that "the plaintiff's desire to travel from time to time" provided a further discounting factor. He also considered that the plaintiff would become "more adept at coping with her disability" when she "puts this case behind her and proceeds with her life". He obviously considered that this would have a beneficial effect on her residual earning capacity in that she should be able to earn at a higher rate than that achieved in performance of the ALSO contract.
It is clear that his Honour took these matters into consideration when he came to the following decision: "I consider her residual capacity, including other contingencies, require a 40% discount of the total value of the lost earning capacity, having regard to the choice of age 60". This discount reduced the total figure already referred to, to the figure of DM 190,422.64, i.e. $167,346.00, the amount under challenge.
As I see it, with respect, the same difficulty applies to this reasoning as applied to the assessment of past wage loss. It is necessary to make an appropriate estimate of the extent to which the respondent would have exercised her earning capacity over this period and then to take into account contingencies which would have affected that exercise. In my view, it is reasonable to assume that she would have sought to exercise that capacity for a period not exceeding three quarters of the period which would elapse from the date of his Honour's judgment until her achievement of the age of 60. Accordingly, the starting figure must be reduced from DM 3,412.58 per month or 787.52 per week (the amounts apparently accepted by his Honour, outlined at page 18 above) to three quarters of that figure, which is DM 590.64 per week. On the 3% discount table, the present value of such a loss for a period of 7 years would be DM 194,911.20, and for 8 years would be DM 219,718.08, or an average of DM 207,314.64.
The contingency relating to the vulnerability of her neck is significant and would continue into the future. The ordinary contingencies of everyday life, including the availability of work in her chosen field must also be taken into account. Furthermore, the respondent, on her evidence, has indicated the existence of a considerable residual earning capacity as she said "over a wide spectrum".
In order to take account of all these matters I consider that a discount of 45% should be applied to the basic figure of DM 207,314.64 arrived at in the manner I have indicated. The result is DM 114,023.05 or $100,204.80. In my opinion, the round sum of $100,000 is an appropriate award for future loss of earning capacity. It accords with the figure arrived at by Gallop J in his reasons for judgment.
In the result, I agree with Gallop J that the total award of damages must be reduced by $174,116. The appeal should be allowed, the primary judge's award of damages should be set aside and there should be substituted an award in favour of the respondent in the sum of $270,380. The respondent should pay the appellant's costs of the appeal.
I certify that this and the preceding twenty-six (26) pages are a true copy of the reasons for judgment herein of the Honourable Justice M. L. Foster.
Associate:
Date:
APPEARANCES
Counsel for the Appellant: Mr P J Deakin
Instructing Solicitors: Barker Gosling
Counsel for the Respondent: Mr D Feller
Instructing Solicitors: Deacons Graham James
Date of Hearing: 21 October 1996
Date of Judgment: 20 December 1996
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