Phillips v Brown - [2001] WADC 123

JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CIVIL

LOCATION: PERTH

CITATION: PHILLIPS -v- BROWN [2001] WADC 123

CORAM: MULLER DCJ

HEARD: 2-4 MAY 2001

DELIVERED : 23 MAY 2001

FILE NO/S: CIV 94 of 2000

BETWEEN: RICHARD WAYNE PHILLIPS
Plaintiff
AND
EDWARD BROWN
Defendant

Catchwords:

Damages - Assessment - 51 year old retired bank officer with severe shoulder injury following motor vehicle accident - Loss of earning capacity from date of accident to trial - Downturn in turnover of cleaning business operated by plaintiff - Whether decline in business caused by plaintiff's injuries - Measure of damages - Calculation of future loss of earning capacity - Damages for past and future gratuitous services - Award for non-pecuniary loss

Legislation:

Motor Vehicle Third Party Insurance Act 1943, s 3C

Result:

Judgment for plaintiff

Representation:

Counsel:

Plaintiff: Mr K J Bradford
Defendant: Mr B C Sierakowski

Solicitors:

Plaintiff: Bradford & Co
Defendant: Brian C Sierakowski

Case(s) referred to in judgment(s):

Caltex Oil (Australia) Pty Ltd v The Dredge "Willemstad" (1976) 136 CLR 529
Husher v Husher (1999) HCA 47
Malec v J C Hutton Pty Ltd (1995) 169 CLR 638
March v Stramare Pty Ltd (1991) 171 CLR 506
Medlin v State Government Insurance Commission (1995) 182 CLR 1
Perre v Apand Pty Ltd (1999) ALR 607
Sellars v Adelaide Petroleum NL (1994) 179 CLR 332
Southgate v Waterford [1990] 21 NSWLR 2
Wylde v Arriaza, unreported; FCt SCt of WA; Library No 970359; 23 July 1997

Case(s) also cited:

Wynn v New South Wales Ministerial Corporation (1995) 70 ALJR 147

MULLER DCJ: The plaintiff, who was born on 25 October 1958 and is now aged 51, was injured in an accident in Fremantle on 8 July 1998 when a motor vehicle driven by the defendant collided with the plaintiff's motor cycle throwing him over the bonnet of the motor vehicle onto the surface of the road. The defendant has admitted that the accident occurred as a result of his negligence and the only issue in the trial was the measure of damages to which the plaintiff was entitled.

Extent of plaintiff's injuries

Following the accident the plaintiff was transferred to Fremantle Hospital where he was found to have sustained a fracture of the medial malleolus of the left ankle and a comminuted fracture of the left proximal humerus. He underwent surgery for the injury to his ankle on 8 July 1998. He returned to theatre on 11 July 1998 when a left hemiarthroplasty was undertaken to repair the fracture of the left proximal humerus. The fracture of the left proximal humerus was severe and had resulted in the humeral head splitting into four or five pieces. The only viable method of treatment was the insertion of an artificial ball to replace the fractured head. The force of the impact to the left proximal humerus had also resulted in rotator cuff muscle and tendon damage that had to be repaired surgically on 16 March 1999.
The plaintiff remained in hospital for approximately two weeks before being discharged with his leg in plaster and his arm in a sling. Subsequently the wound on his ankle became ulcerated and required constant cleaning and dressing. On 18 May 1999 the plaintiff commenced physiotherapy treatment for the injury to his left shoulder.
Mr Michael Halliday, the orthopaedic surgeon who attended to the plaintiff at the time of his accident, expressed the view that the injury to the plaintiff's left ankle had resulted in a decreased range of movement of approximately 50 per cent compared to his right ankle. While this injury will, in Mr Halliday's opinion, continue to cause the plaintiff occasional pain, the major problem will be the limitation on his mobility in walking, running or standing for any length of time. While recent x‑rays have not revealed any arthritic change, Mr Halliday was of the view that damage to the underlying joint surface might have passed undetected but there was less than a 10 per cent chance of the plaintiff developing arthritis in his left ankle at some time in the future. If a complication of that nature developed he would have to undergo further surgery and another period of convalescence and incapacity.
The plaintiff's major problem is the injury to his left upper limb. Without surgical intervention the plaintiff would have been left with no movement at all. While the successful hemiarthroplasty has maintained or restored some mobility of the joint, Mr Halliday emphasised that the plaintiff had severe limitation of movement of the left shoulder associated with mild ongoing pain. His limitations would affect his lifting capacity which has been reduced to weights in the range of 5‑10 kg. Repetitive use of the left upper limb also has to be avoided. The extent of the limitation to the range of movement in the left upper limb was demonstrated by the plaintiff himself who was only able to abduct his left arm forwards, backwards and sideways to an angle of approximately 15‑20 degrees.
Apart from the limitations he now has in his left upper limb the plaintiff is considered to have a greater than 50 per cent chance of developing arthritis in the glenoid of his left shoulder over the next 10‑15 years. Any such complication will result in increased pain levels and, in Mr Halliday's opinion, might require further surgical intervention ranging from revision of the left hemiarthroplasty to a total shoulder replacement.
Apart from the physical injuries he sustained in the accident the plaintiff was also treated for anxiety and depression. In August 1999 he underwent counselling by a clinical psychologist, Jennifer Taylor, who describes him as depressed, anxious, pessimistic and lacking in self worth. She expressed the view that his depressed mood was the result of the pain he suffered and the restrictions his injuries placed on his capacity to work and live a normal life. Having undergone a series of consultations with the clinical psychologist it was accepted that his condition had improved although it was considered he would need further counselling in the future to assist him overcome his depression and anxiety.

The plaintiff's work experience before the accident

The plaintiff was educated in Mildura in Victoria, left school at the end of year 10 and began a career as a batching clerk with the ANZ Bank. He remained with the bank for no less than 33 years reaching the position of relieving Manager (Lending). He transferred from Victoria to Perth in July 1987. He was married in 1972 and had two children, the first being born in 1975 and the second in 1978. While employed by the bank the plaintiff acquired a number of skills in a variety of different areas including bank related accounting, management training, on‑line computing, lending, sales techniques, office management, record keeping and customer service. He was also practically inclined and completed both a landscaping and bricklaying course.
In 1995 the bank offered redundancy packages to senior employees. Initially the plaintiff declined an offer of redundancy but in 1997 changed his mind and left the bank. After examining various possibilities he decided to purchase a cleaning business and on 12 September 1997 purchased a business trading under the name of "Calypso Cleaning" for $105,000. The business employed 13 cleaners and had an anticipated annual turnover of $245,302.
The plaintiff, who had no real experience in the cleaning industry, decided that during the first 12 months of operation he would concentrate on familiarising himself with the business and taking the necessary steps to ensure his clients remained satisfied with his performance. Since he intended taking part in the operational, as well as the managerial, side of the business during this initial period, he did not contemplate any expansion of the business during the first 12 months of its operation. His objective was to gain the necessary experience during the first 12 months and avoid any rapid growth or expansion that might lead to cash flow problems.
In the first nine months prior to the plaintiff's accident the business did reasonably well. The plaintiff employed an experienced supervisor and personally took part in the operational activities of the business. The profit and loss account of the business for the year ending 30 June 1998 reflects a total income of $184,803. An examination of the expenses incurred by the business as reflected in the profit and loss account reveal that the plaintiff claimed to have received the following income and financial benefits from the business between 1 October 1997‑30 June 1998:
"(a) Wages  $17,908.80
(b) Depreciation  $3,281.00
(c) Motor vehicle depreciation, fuel, interest
registration and repairs (paid by the company)        $6,798.89
(d) Subscriptions  $500.00
(e) Superannuation  $2,395.13
(f)   Half telephone costs  $850.00
(g) ANZ business mortgage (in lieu of rent)                 $2,683.34
(h) Net profit  $10,411.34
(i)   PAYE proportion    $5,491.20
Total  $50,319.70"
During this period the plaintiff was working on average 30‑40 hours a week and, on occasions, up to 60 hours a week.

Plaintiff's earnings following accident

The plaintiff's accident on 8 July 1998 marked the beginning of a substantial downturn in the turnover of the business. After two weeks in hospital the plaintiff returned home and began convalescing. Approximately two weeks after his return home he began doing a limited amount of administrative work connected with the business. He described how his work was limited to making and receiving telephone calls and attending to the payment of staff wages. On one occasion he tried unsuccessfully to do some cleaning work but had to abandon the task. The other side of the business he claims he neglected after the accident was client liaison and dealing with complaints. While he saw some clients after the accident he never gave that side of the business the attention he had given it before the accident. His explanation for not doing so was that he had become depressed after his second operation and lacked the motivation to return to that aspect of his work.
In the 12 months following the accident the plaintiff's business lost no less than nine contracts of which four were major ones. While three new contracts were entered into during that period the losses far outweighed the gains. The downturn was reflected in a loss of approximately $90,000 in the annual turnover of the business.
The timing of the initial signs of dissatisfaction with the level of performance is significant. The first of the major clients to terminate its contract with Calypso Cleaning was the Indiana Tea House. This contract was terminated either on the day before or the day of the plaintiff's accident. Like the majority of the customers of the business, the Indiana Tea House had been acquired as a client by the former proprietor of the cleaning business before that business was sold to the plaintiff. The contract involved five hours work on a daily basis for seven days a week and its loss represented an approximate downturn of $40,000 per annum. According to the plaintiff he was never told why the Indiana Tea House terminated the services of Calypso Cleaning.
The second major client to withdraw its services was the Matilda Bay Restaurant. This contract was worth approximately $37,000 annually and involved four hours work a day for seven days a week. Matilda Bay had been obtained as a client by the former proprietor of the cleaning business before it was sold to the plaintiff. Before his accident the plaintiff claimed he had personally worked at Matilda Bay as he had at Indiana Tea House. While the plaintiff conceded he had had some problems at Matilda Bay, and acknowledged there might have been complaints about sub‑standard levels of performance, he said he had arranged for his experienced supervisor, Juan Juncal, to be transferred to Matilda Bay to avoid any repetition of these earlier problems. This contract was terminated following the plaintiff's injury.
The third major customer to terminate the cleaning business's services was Clancy's Fish Pub. This contract had also been acquired by the plaintiff from the former proprietor of the business and was worth between $22,000‑$25,000 per annum. The contract was terminated in December 1998 for what the plaintiff claimed was a breach of security on the part of one of his employees. He agreed, however, that he had had discussions with management in relation to earlier allegations of sub‑standard levels of performance.
The final major customer lost by the plaintiff was TVW7. This customer terminated its contract in January/February 1999. The contract was worth $25,000 per annum and, according to the plaintiff, the services of his business were terminated because of pilfering.
The marked downturn in the business after June 1998 was also reflected by a reduction in the number of employees engaged by the plaintiff from a high of 15, including himself and his supervisor, to a low of four. The downturn was also reflected in the profit and loss accounts for the years ending June 1998 and June 1999. An examination of these documents reveals that the plaintiff's income from the business dropped to a weekly average gross of $278 in 1999 and $204 in the year 2000. His earnings were claimed to have been made up as follows:
"1999
(a)   Vehicle  $4,278.19
(b)   Subscription  $625.00
(c)    Mortgage loan  $4,193.85
(d)   Superannuation  $42.00
(e)    Telephone  $500.00
(f)    Wages  $460.40
(g)   PAYE tax  $139.60
(h)   Net profit  $4,231.80
Total  $14,470.84
2000
(a)   Vehicle  $1,389.00
(b)   Depreciation  $507.00
(c)    Mortgage loan  $3,589.65
(d)   Motor vehicle depreciation  $1,802.00
(e)    Motor vehicle expenses  $319.53
(f)    Telephone  $385.00
(f)    Wages  $460.40
Sub‑Total  $7,992.18
Gross earnings at VCS Products  $2,622.00
Total  $10,614.18"
In March 2000 the plaintiff sold his business for $46,000 to the person he had employed as a supervisor. Following the sale of the business he underwent work rehabilitation and worked for a trial period doing work of a light nature. On 13 March 2000 he began work with VCS Products after initially working there on a trial basis. His duties include answering the telephone, labelling stock, stacking shelves and selling products. He initially worked reduced hours but by May 2000 worked for 30‑32 hours on four days a week and earned an average income of $400 net per week. Since his accident the plaintiff has earned:
(a)   1999 ‑ $245.00 x 52  $12,740.00
(b)   2000 ‑ $188.00 x 52  $9,776.00
(c)    1 July 2000 to date of trial - $400.00 x 44             $17,600.00
Total net income since accident  $40,116.00

Extent of plaintiff's incapacity

I am satisfied that the plaintiff's injuries rendered him incapable of doing the physical side of the work he was involved in prior to the accident. The extent of his incapacity was not challenged by the defendant. The severe limitation of movement in his left shoulder was estimated by Mr Halliday to be only 25‑30 per cent of the normal range in movement. In addition, the injury to his left ankle has decreased his range of movement to approximately 50 per cent of that of the right lower limb. In a medical report tendered by consent Dr Steve Clarke, an occupational physical, expressed the opinion that the plaintiff will be unable to manage more than light work and would never be able to return to cleaning or any other type of work involving a significant manual input particularly where he was required to carry objects or use his arms to any significant extent.
While the plaintiff's injuries have certainly restricted him from a physical point of view it is common cause that he has a substantial retained capacity to do a wide range of work involving a minimum of physical activity. His experience in the banking industry over many years, together with his own outside interests, provided him with a wide range of skills and knowledge and equipped him to contribute usefully in occupations of a predominantly sedentary nature. His present employment is a good illustration of his worth as an employee. Since May 2000 he has been employed by VCS Products predominantly in the area of sales. His physical limitations preclude him from unloading trucks or driving the firm's delivery vehicle but he is nevertheless regarded as a very good employee with an excellent attitude towards his work. Notwithstanding his physical limitations his current employer is prepared to keep him in his employ indefinitely and offer him full time employment if his condition permits it.

History of plaintiff's business performance

Counsel for the plaintiff has contended that the plaintiff's damages for loss of earning capacity, both past and future, ought to be based on the difference between the plaintiff's personal earnings from Calypso Cleaning Services before the date of the accident on 8 July 1998 and his income from the same business, and later from VCS Products, after the accident date. The major area of dispute in the trial was whether the plaintiff's pre‑accident earnings from Calypso Cleaning Services was a true and accurate reflection of his earning capacity before he was injured. While the plaintiff attributed the decline in the financial turnover of Calypso Cleaning Services to the injuries he sustained in the accident and his inability to play a meaningful role in the affairs of that business, the defendant contended that the obvious and marked decline that took place was due to the plaintiff's inability to manage and run the business properly rather than to his physical limitations following the accident. The critical issue is simply this: were the plaintiff's earnings from Calypso Cleaning Services prior to the accident a true reflection of his earning capacity or simply a temporary windfall following the acquisition of a viable business with existing valuable contracts?
There was substantial conflict in the evidence on this critical issue. The plaintiff, as I have already said, acknowledged the decline in the level of performance of the cleaning services he provided but attributed this decline to his inability to carry out his pre‑accident duties. His employee and supervisor, Juan Juncal, who subsequently purchased Calypso Cleaning from the plaintiff and is currently renting premises from the plaintiff, confirmed the latter's evidence that the plaintiff performed a substantial part of the manual labour before he was injured in the accident. The witness also acknowledged that four of the major customers terminated their contracts with Calypso Cleaning Services in the months following the plaintiff's accident. The first major customer to terminate the plaintiff's services was the Indiana Tea House which, according to the witness Juncal, found other cleaners who charged less than Calypso Cleaning Services. He did concede in cross‑examination, however, that he was aware of complaints from the management of the Indiana Tea House before 8 July 1988 when the plaintiff's accident occurred. These complaints, according to Juncal, were of a minor nature only but he did concede that he and the plaintiff were required to attend two meetings in February/March 1998 with the management of the Indiana Tea House when the standard of the cleaning service being provided was criticised.
While the supervisor, Juan Juncal, did not do any manual work at the Matilda Bay Restaurant before the date of the plaintiff's accident, he visited the restaurant periodically in order to supervise the work being done there and, following the accident, was asked by the plaintiff to clean the premises as well. He was unable to cast any light as to why this cleaning contract was terminated.
The supervisor, Juan Juncal, also worked at Clancy's Fish Pub. He denied the proprietor of that establishment ever complained about the standard of work being done by Calypso Cleaning Services although he did concede that the contract was terminated because of a breach of security when his daughter left the security keys in the front door of the restaurant.

The only really positive independent evidence as to the standard of the work done by Calypso Cleaning Services came from Antonia Gullotti, the finance manager of TVW7, who had dealt with the plaintiff when Calypso Cleaning Services worked at his establishment between August 1997‑October 1998. He said before the accident the plaintiff worked personally on the premises and, when problems arose, he was able to ask the plaintiff to address those issues personally. During this time he said no extraordinary problems arose and he believed the standard of the plaintiff's work was very good. It was only after the plaintiff's accident that standards began to fall. The witness recalled that, when he tried after the accident to contact the plaintiff to attend to problems that had arisen, the plaintiff rarely attended to discuss those issues. Eventually the standard of the cleaning services being provided fell to such an extent that he terminated the contract in January 1999.
The proprietors or managers of the other major customers of Calypso Cleaning Services were all called to give evidence by the defendent. The first of these witnesses, Warwick John Lavis, who was the manager of the Matilda Bay Restaurant, confirmed that Calypso Cleaning Services had taken over the task of cleaning the premises on 1 October 1997 but problems arose within the first six months involving sub‑standard and inconsistent levels of performance. The witness said he contacted both the plaintiff and his supervisor, Juan Juncal, to discuss the problems that had arisen but the real improvements only occurred when Juncal actually attended the premises and worked there. The inability of Calypso Cleaning Services to raise its standards to a consistent level led to its contract with Matilda Bay being terminated in August 1998.
Another of Calypso Cleaning Services' major customers was Clancy's Fish Pub. As with its other major customers Calypso Cleaning Services began working at Clancy's in October 1997. Matthew Fisher, the owner of the establishment, said that while the service provided was of a satisfactory standard to begin with it began to deteriorate to the extent that he found it necessary to speak both to the plaintiff and Juan Juncal, the supervisor, on several occasions. The deterioration in the service provided was gradual and, while the plaintiff did respond to Fisher's complaints, the latter considered the response less than satisfactory. The witness, Matthew Fisher, expressed the view that the level of performance was initially satisfactory but began declining in the last six months of the contract. Two serious security breaches by members of the cleaning staff triggered the termination of the cleaning contract.
The final major customer of Calypso Cleaning Services was the Matilda Bay Restaurant. This customer, like the others already mentioned, had been acquired by the plaintiff when he purchased the cleaning service from the former proprietor. The performance of Calypso Cleaning Service at the Matilda Bay Restaurant was certainly less than satisfactory. Warwick Lavis, the manager of the restaurant, soon found fault with the standard of the cleaning work and found it necessary to speak to the plaintiff about what he perceived to be the deficiencies in the work being done. He described how the plaintiff's attendances became less regular and he turned to his supervisor, Juan Juncal, when problems had to be addressed. Within six months of Calypso Cleaning Services taking over the contract the management's dissatisfaction with the level of the cleaning services being provided was already high. The witness, Warwick Lavis, described how he contacted the plaintiff and was told that the problems had arisen because of a high turnover of staff. The plaintiff also undertook to provide the services of Juan Juncal, who was an experienced cleaner, to work at the restaurant. No real improvement occurred after that. According to Warwick Lavis the standard of work remained inconsistent to the point that the contract was terminated in August 1998.

Whether decline in business caused by accident

In considering the critical question of whether the obvious decline in the plaintiff's business was caused by his injuries following the accident and his inability to contribute to the extent he had before he was injured, or whether the deterioration was due to poor management, incompetence or some other reason unconnected with his injury, I do not have to be satisfied that the defendant's wrongdoing was the sole or even the dominant cause of the plaintiff's loss. If I conclude that the defendant's tortious act was a material cause, and was more than merely negligible, I would be justified in finding that the marked downturn in the business was triggered by the defendant's negligence. The test to be applied in deciding the issue of causation was explained by McHugh J in Medlin v State Government Insurance Commission (1995) 182 CLR 1 at p 20. See also March v Stramare Pty Ltd (1991) 171 CLR 506 at 514. The question I have to decide is whether, as a matter of common sense, the financial loss that the plaintiff claims he suffered as a result of the downturn in the earnings of his cleaning business arose out of the negligence of the defendant rather than his own inability to run and manage the business properly before his injuries.
I have come to the conclusion that the plaintiff's losses were caused by the defendant's negligence but that, even if the accident had not occurred, the business was in decline and, at best, would have continued to operate at a substantially reduced rate of turnover.
I have reached this conclusion for a variety of reasons. First, the turnover of the business during the pre‑accident period was, in my view, largely due to the existing contracts entered into by the former proprietor of the cleaning business the benefits of which the plaintiff acquired upon the purchase of the business in October 1997. The maintenance of the business's annual turnover depended on the plaintiff being able to keep these contracts and, possibly, expand his areas of work at some time in the future. The evidence clearly establishes this was not to be. I am satisfied that before the accident the plaintiff played an active part in both the manual and managerial operations of the cleaning business. While he was not seen performing manual tasks by the majority of the proprietors and managers of the major customers whose premises he had contracted to clean it is more likely than not that the unusual hours during which he had to work meant that he would not have been seen by the staff of these various establishments. I have no reason to disbelieve the evidence of his supervisor, Juan Juncal, that he worked with the plaintiff at Indiana Tea House on a regular basis between 2‑6 am. I also accept the plaintiff's evidence that he did approximately 20‑30 hours manual work, principally on weekends or during nights, in order to avoid paying his staff additional wages. I am also satisfied that the plaintiff, before he was injured, personally addressed any problems that might have arisen and made a point of visiting his customers regularly in order to maintain a sound business relationship. After the accident, however, the situation changed markedly. Not only did Calypso Cleaning Services lose the Matilda Bay contract on the day before or of the plaintiff's accident but it also lost its contracts with the other major customers over the next 6‑7 months. During this period the plaintiff was largely incapacitated. His physical injuries and state of depression were such that he was indifferent to the needs and demands of his business. On his own admission he confined himself to essential administrative duties such as the payment of staff wages and attending on telephone calls. He did not visit his clients and, it appears, left the running of the cleaning services to his supervisor, Juan Juncal.
Accepting, as I do, the plaintiff's evidence that after the accident his physical and mental state was such that he became indifferent to the needs and demands of his business I am satisfied that the decline in his subsequent business fortunes was partially due to the defendant's negligence. My finding is reinforced by the evidence of Antonino Gullotti, the Finance Manager of TVW7, who knew the plaintiff and said the standard of the cleaning work was very good until August‑October 1998 after the plaintiff had been injured. Prior to the plaintiff's injury Gullotti confirmed that the plaintiff had worked personally on the premises and had always made himself available to discuss problems that arose and personally addressed areas of concern. After the accident, however, Gullotti noticed a significant change. He endeavoured to continue contacting the plaintiff when the need arose but he confirmed the plaintiff rarely attended and the standard of cleanliness fell to the point that he felt he had no alternative but to terminate the contract with Calypso Cleaning Services in January 1999.
While I have found that the plaintiff's injuries in the accident contributed to the decline in the business I am also satisfied there were other major contributing causes unconnected with the defendant's negligence. It is significant that at the time of purchase the business had contracts valued at approximately $245,000. When the plaintiff finally sold the business to Juan Juncal the value of those contracts had plummeted to $70,000. This marked downturn in the earnings of the business must, in my view, have been due in no small measure to mismanagement. Confirmation of this finding lies in the evidence of the proprietors and managers of the major customers, apart from TVW7, which found it necessary to terminate the services of Calypso Cleaning. Each of those major customers, as I have said earlier, found that the standard of performance of Calypso Cleaning was less than satisfactory before the plaintiff was injured in the motor vehicle accident. Matilda Bay terminated the contract on the day before or of the plaintiff's accident; standards were observed to decline at Clancy's Fish Pub 2‑3 months after Calypso began working there; similar problems arose at the Indiana Tea House as early as February/March 1998 resulting in no less than two meetings between the plaintiff and management.
What emerges from this evidence is that the decline had set in before the plaintiff was injured. This evidence, when viewed as a whole, lends itself to the finding that it is more probable than not the plaintiff was simply not experienced enough, or lacked the necessary ability, to manage a commercial cleaning company on the scale on which Calypso Cleaning Services operated. Even if the accident had not occurred I am satisfied it is more likely than not the business would have continued to decline to the point that it began to lose major contracts. An assessment of the extent to which poor performance contributed to this downturn will have to be made. The standard of proof was considered by the High Court in the case of Malec v J C Hutton Pty Ltd (1995) 169 CLR 638 in the following terms:
"When liability has been established and a common law court has to assess damages, its approach to events that allegedly would have occurred, but cannot now occur, or that allegedly might occur, is different from its approach to events which allegedly have occurred. A common law court determines on the balance of probabilities whether an event has occurred. If the probability of the event having occurred is greater than it not having occurred, the occurrence of the event is treated as certain; if the probability of it having occurred is less than it not having occurred, it is treated as not having occurred. Hence, in respect of events which have or have not occurred, damages are assessed on an all or nothing approach. But in the case of an event which it is alleged would or would not have occurred, or might or might not yet occur, the approach of the court is different. The future may be predicted and the hypothetical may be conjectured. But questions as to the future or hypothetical effect of physical injury or degeneration are not commonly susceptible of scientific demonstration or proof. If the law is to take account of future or hypothetical events in assessing damages, it can only do so in terms of the degree of probability of those events occurring. The probability may be very high ‑ 99.9 per cent ‑ or very low ‑ 0.1 per cent. But unless the chance is so low as to be regarded as speculative ‑ say less than 1 per cent ‑ or so high as to be practically certain ‑ say over 99 per cent ‑ the court will take that chance into account in assessing the damages. Where proof is necessarily unattainable, it would be unfair to treat as certain a prediction which has a 51 per cent probability of occurring, but to ignore altogether a prediction which has a 49 per cent probability of occurring. Thus, the court assesses the degree of probability that an event would have occurred, or might occur, and adjusts its award of damages to reflect the degree of probability. The adjustment may increase or decrease the amount of damages otherwise to be awarded. See Mallett v McMonagle; Davies v Taylor; McIntosh v Williams. The approach is the same whether it is alleged that the event would have occurred before or might occur after the assessment of damages takes place."
I am not prepared to find, as counsel for the defendant urged me to conclude, that the cleaning business was doomed to failure notwithstanding the plaintiff's injuries. That finding would not be consistent with the evidence I have outlined above. What the evidence does permit me to conclude, however, is that the business was in a state of decline before the plaintiff was injured. I believe it is more probable the plaintiff, had he not been injured, would have been able to continue operating the business although on a turnover substantially less than what was earned at the end of the 1998 financial year. I am unable to calculate mathematically what the future earnings of the business would have been but I find that the declining level of performance would have accounted for 40 per cent of the business's downturn in turnover.

Claim for past economic loss

In his claim for past economic loss the plaintiff has alleged having lost an earning capacity of approximately $500 net per week until age 65 and, in addition, the ability to make a profit from the business estimated at $500 per week. In the light of my finding that the defendant's negligent act accounted for 60 per cent of the plaintiff's loss of business income between the date of the accident on 8 July 1998 and 4 May 2001 on which date the trial concluded he would have worked a total of 147 weeks and earned an income of $79,380.
(147 weeks at $900 net per week less 40% deduction).
In making this calculation I have accepted the plaintiff's income from the business prior to the accident was as reflected in the profit and loss account for the period between 1 October 1997‑30 June 1998. In coming to this conclusion I have taken into consideration the criticism made by counsel for the defendant of the items of personal income claimed by the plaintiff in the profit and loss account. While many of the heads of personal income referred to in the profit and loss account might objectively be considered more appropriately to be expenses incurred by the company in running the business rather than personal income earned by the plaintiff I believe the extent of the losses claimed do fall within what the plaintiff had under his control or at his disposal. In that regard I find support in what was said by the High Court in Husher v Husher (1999) HCA 47:
"The financial loss occasioned by impairment of earning capacity is the loss of what (if there had been no accident) the injured plaintiff would (as opposed to could) have expected to have had under his or her control and at his or her disposal by exercising that capacity. We refer to 'control' and 'disposal' because what the plaintiff has lost are the financial rewards from work that are rewards the plaintiff would have been able to direct to whatever purpose or destination he or she chose."
From this figure of $79,380 must be deducted the income received by the plaintiff over the same period. The income he received over this period was as follows:
8 July 1998 (date of accident)‑15 May 2000 (date plaintiff began work with VCS Products): 96 weeks at $460 per week = $44,198.40
15 May 2000‑4 May 2001: 52 weeks at $400 per week = $20,800.00
Add advance paid by defendant to plaintiff against past loss of earnings = $49,340.00
Total $70,140.00
The plaintiff is entitled to the difference between his estimated loss of earnings due to the accident and his actual income during that period.
I award the plaintiff an amount of $9,240 in respect of past economic loss.

Future loss of earning capacity

While counsel for the plaintiff urged me to find that a reasonable starting point for the calculation of the plaintiff's future loss of earning capacity was a figure of $900 I find I am unable to do so because this figure presupposes that, but for the accident, the cleaning business would have continued to earn the same level of income it had in the nine months prior to the accident. I find I am unable to use that figure as a starting point because of my finding that, notwithstanding the plaintiff's injuries, the business would in any event have declined appreciably for the reasons I have already mentioned. In my view any calculation for future loss of earning capacity must be based upon a figure representing 60 per cent of what the plaintiff would have earned had he continued his work at Calypso Cleaning Services and earned the same net salary as he had in the nine months preceding his accident.
$900 x 60% = $540 net per week.
The plaintiff has a retained capacity to earn $400 net per week. Assuming he would normally have continued working until age 65, and selecting a multiplier of 450.5, his total loss of earning capacity is as follows:
$140 x 450.5 = $63,070.
There are several contingencies that ought to be taken into account, including, for example, the likelihood of the plaintiff having to undergo major shoulder reconstruction in the next 10‑15 years although, if arthritis does set in, the probabilities are that he will have almost reached the end of his working life. Given the evidence that the plaintiff is very tired after working a full day four days a week, it is unlikely that he will return to working a five day week in the future and might even have to reduce the number of days on which he works. I believe the most appropriate course would be to inrease the award of $63,070 to one of $75,000 to reflect these contingencies.
I award the plaintiff an amount of $75,000 in respect of his future loss of earning capacity.

Loss of services

I am satisfied that, since he began sharing a house with the witness Juncal, most of the household work has necessarily had to be carried out by Juncal. The plaintiff's limitations are, in my view, severe enough to preclude him from making any meaningful contribution to household services. I accept the submission made by counsel for the plaintiff that, if he were to live on his own, the plaintiff would have to pay for such assistance if it was not given gratuitously. Taking into account Juncal's evidence that he worked approximately seven hours per week doing household chores, and remembering this is a two person household and that Juncal will be performing some of those services for himself, I agree that a period of five hours per week at the rate of $12 per hour agreed to by counsel is a reasonable amount. Using these figures the plaintiff is entitled to an amount of $8,820 for services rendered in the 147 weeks leading up to the date of trial and reasonable interest on this sum at a rate of 3 per cent per annum for a period of three years in an amount of $750. I accept that he probably has another 25 years of life ahead of him and that, given the probability that his shoulder will become arthritic in 10‑15 years time, it is very likely his needs will increase. I believe a figure in the region of $50 per week for the next 20 years, reduced to some extent to reflect contingencies, is an appropriate award. I would award the plaintiff a lump sum of $30,000 in respect of this head of damage.

Pain and suffering and loss of amenities

I have already described how, following the accident on 8 July 1998, the plaintiff was admitted to Fremantle Hospital where he underwent surgery to both his left lower limb and left shoulder. The schedule of medical treatment presented during the trial reveals that he underwent surgery on 8 July 1998 and again on 11 July 1998 and 16 March 1999. Following his discharge after two weeks in hospital he was handicapped by having to wear a cast on his leg and keep his arm in a sling. His movements were necessarily restricted. He had to use a crutch in order to walk and felt constantly tired. He was in pain and on medication. At first he was unable to carry out the most basic tasks without assistance. He was provided with help and relied upon such help in order to shower and change his dressings. After his professional help was withdrawn his family and friends continued to assist by cleaning the house, maintaining the gardens and performing other household chores he had, prior to the accident, either been able to perform himself or to assist in.
Apart from his physical injuries, which required him to remain on pain killing medication, I have already mentioned how the plaintiff became depressed, anxious and pessimistic to the point where he found it necessary to undergo psychological counselling and, although his mental condition has improved, he anticipates he will still be in need of professional assistance in the future.
The extent of the plaintiff's physical limitations has meant that he is no longer able to pursue some of his earlier social activities such as golf and riding his motor cycle as part of a motor cycle club. He is also unable to ride a push bike or go for long walks as he had in the past.
The plaintiff's injuries arose from a motor vehicle accident after 8 July 1998. The provisions of s 3C of the Motor Vehicle (Third Party Insurance) Act 1943 govern the amount of damages to be awarded to the plaintiff for non-pecuniary loss.
Non-pecuniary loss is defined in the Act to include pain and suffering, loss of amenities of life, loss of enjoyment of life, curtailment of expectation of life and bodily or mental harm. Subsection (2) of s 3C of the Act provides that:
"(2)The amount of damages to be awarded for non -pecuniary loss is to be a proportion, determined according to the severity of the non -pecuniary loss, of the maximum amount that may be awarded."
The maximum amount of damages that may be awarded under the Act for non-pecuniary loss is currently set at a figure of $207,000. ("Amount A").
Subsection (3) of s3C provided as follows:
"(3)The maximum amount of damages that may be awarded for non-pecuniary loss is Amount A, but the maximum amount may be awarded only in a most extreme case."
A useful guide to the interpretation of these provisions is to be found in Southgate v Waterford [1990] 21 NSWLR 2. The New South Wales legislation under consideration in that case was set in somewhat different terms to s 3C of the Act but, as it stood at the time, provided that damages for non-economic loss were only to be awarded in cases where there had been significant impairment of an injured person's quality of life and required the court to assess the amount of damages to be awarded for non-economic loss as a proportion, determined according to the severity of the non-economic loss, of the maximum amount to which the legislation permitted to be awarded.
In their joint judgment Gleeson CJ, Kirby P and Meagher JA said at 440:
"There are a number of ways by which trial judges could approach the task of apportionment required by s 79(2) and s 79(3). I is inappropriate in this case for this Court to mandate any particular way of arriving at the 'proportion' required by s 79(2). But clearly, because the task in hand is that of awarding damages for 'non-economic loss ', it is appropriate for the trial judge to consider and make findings on those elements in the evidence which are relevant to such loss. This will require the judge to consider and make findings on the evidence relevant to those heads of damage formerly considered in the award of general damages. Then it is necessary for the judge to conceive 'a most extreme case'. Only for such a case may the maximum amount provided by s 79(3) be awarded. The use of the indefinite article 'a' has already been noted. Opinions of what constitute 'a most extreme case' will doubtless vary. But clearly quadriplegia would fall into that class. The amount to be awarded must then be apportioned somewhere between nil and $180,000; but in a ratio which the judge fixes keeping in mind the fact that the cap of a statutory maximum is retained for 'a most extreme case'."
See also Wylde v Arriaza, unreported; FCt SCt of WA; Library No 970359; 23 July 1997.
Having identified the evidence relevant to those heads of damage that customarily fall within an award of general damages, the next step I am required to take is to postulate what might be a most extreme case in which the maximum amount of damages, currently standing at $225,000, may be awarded for non-pecuniary loss, and then apportion damages by comparing the severity of the plaintiff's non-pecuniary loss with that likely to be suffered in a most extreme case. When the plaintiff's injuries and associated symptoms are compared with what may be regarded as a most extreme case, for example, quadriplegia, it seems clear that the plaintiff's initial injuries and symptoms, their progression and treatment, the prognosis for their improvement and the effect they have had had on his enjoyment of life place his case at no more than 20 per cent of a most extreme case. 20 per cent of $225,000 is $45,000.
Section 3C(6) provides that:
"If the amount of non pecuniary loss is assessed to be more than Amount C but less than the sum of amounts B and C, the amount of damages to be awarded for non -pecuniary loss is the excess of the amount so assessed over -
Amount B - [Amount so assessed - Amount C]"
Amount C is $34,000. The non-pecuniary loss of $45,000 is more than Amount C but less than the sum of amounts B and C. This means no deduction need be made.
I award the plaintiff $45,000 for non‑pecuniary loss.

Claim for capital loss

The evidence revealed that the plaintiff paid $100,000 for the goodwill of the business when he purchased it and only received $38,000 for the sale of the goodwill. He has claimed that he is entitled to an award of $62,000 in respect of the loss of goodwill. In making this claim counsel for the plaintiff accepted the damages of this nature are not damages for loss of earning capacity as such but rather damages for pure economic loss. The recovery of damages for pure economic loss has been the subject of a series of decisions in the High Court beginning with Caltex Oil (Australia) Pty Ltd v The Dredge "Willemstad" (1976) 136 CLR 529; Sellars v Adelaide Petroleum NL (1994) 179 CLR 332; Perre v Apand Pty Ltd (1999) 164 ALR 607. Accepting that it was reasonably foreseeable to the defendant that his negligence was likely to cause harm to the plaintiff I cannot accept that there existed between the defendant and the plaintiff a relationship characterised by the law as one of "proximity" or "neighbourhood". See judgment of Kirby J in Perre v Apand Pty Ltd (supra). Adopting the reasoning of Gibbs J in Caltex Oil (Australia) Pty Ltd v The Dredge "Willemstad" (supra) at p 555 I am satisfied that this type of economic loss is not recoverable because the negligent defendant did not know, or have the means of knowing, that the plaintiff as an individual, and not merely as a member of an unascertained class, would be likely to suffer economic loss as a consequence of his negligence.
I should also mention that the apparent diminution in the value of the goodwill of the business was due, not only to the plaintiff's injuries following the accident, but also to the loss of the major contracts I referred to earlier as a consequence of sub‑standard work.
I decline to make any award of damages under this head.

Special damages

Past special damages have apparently been paid and, by agreement between the parties, future special damages have been fixed at $2,000.

Summary of award

Non‑pecuniary loss  $45,000.00
Past economic loss  $9,240.00
Future loss of earning capacity  $75,000.00
Loss of services  $39,570.00
Special damages  $2,000.00
$170,810.00