QBE Workers Compensation (NSW) Ltd v Pearsall

[2005] NSWCA 278

CITATION:	QBE Workers Compensation (NSW) Ltd v Pearsall [2005] NSWCA 278
HEARING DATE(S):	21/06/05
JUDGMENT DATE:	1 September 2005
JUDGMENT OF:	Beazley JA at 1; Ipp JA at 2; Brownie AJA at 3
DECISION:	Appeal dismissed with costs.

CATCHWORDS:	Damages - no question of principle.
PARTIES:	QBE Workers Compensation (NSW) Ltd Harry Pearsall
FILE NUMBER(S):	CA 40691/04
COUNSEL:	A: Mr J E Maconachie QC/Mr I Judd R: Mr L King SC/Mr K Pierce
SOLICITORS:	A: Hunt & Hunt R: Roach & Halligan

LOWER COURT JURISDICTION:	Supreme Court
LOWER COURT FILE NUMBER(S):	20901/01
LOWER COURT JUDICIAL OFFICER:	Smart AJ

CA40691/04
CL20901/01

BEAZLEY JA
IPP JA
BROWNIE AJA

Thursday 1 September 2005

QBE WORKERS COMPENSATION (NSW) LTD v HARRY PEARSALL

Judgment

1 BEAZLEY JA: I agree with Brownie AJA.

2 IPP JA: I agree with Brownie AJA.

3 BROWNIE AJA: The respondent suffered personal injury whilst in the course of his employment by Bitly Holdings Pty Ltd (“Bitly”). He successfully sued the appellant, as the insurer of Bitly, for damages. There is no need to mention the circumstances in which he recovered judgment directly from the appellant, since only one ground of appeal was argued, so far as concerns any question about liability.

4 The appellant submitted that the only case that the respondent pleaded, and the only case that he conducted against it at trial, was that his injury was the result of the negligent conduct of Bitly in having an unsafe system of work, whereas the sole basis upon which the learned trial judge, Smart AJ, found against the appellant was that a Mr Whittington, another employee of Bitly, was guilty of a casual act of negligence.

5 The respondent was injured when he and Whittington, working together, attempted to move a heavy object. At trial, there were several questions in contention as to how the injury occurred, and one of the questions was whether the lifting operation had been properly coordinated. His Honour said that “the lift was not adequately coordinated as a team effort”, and that there was not “any system of work to ensure that lifts were adequately coordinated”, and that the respondent had made out a case, identified in the amended statement of claim, “that Bitley had failed to devise, maintain and ensure a safe system of work”.

6 Whilst his Honour may be taken to have found Whittington to have been negligent, his findings do not justify the contention that the only negligence for which Bitly and the appellant were responsible was some casual act of negligence on the part of Whittington.

7 The real issues on appeal concerned the assessment of damages, focussing upon three elements in the damages that were assessed: the damages awarded for impairment of earning capacity prior to the date of judgment, the damages awarded for impairment of earning capacity after the date of judgment, and the damages awarded for out of pocket expenses expected to be incurred after the date of judgment. I will deal with the first two of these matters together, as the evidence largely overlaps.

Impaired Earning Capacity

8 The respondent was injured on 27 May 1999. His Honour gave reasons for judgment on 20 July 2004, inviting the parties to make submissions concerning certain calculations, tentatively made. Having heard submissions, he gave judgment on 6 August 2004, effectively assessing damages as at 20 July 2004, about 268 weeks after injury. The respondent did not work during that period, and his Honour assessed damages for impairment of earning capacity during that period of about 268 weeks, on the basis that but for the injury the respondent “would probably have worked about 160 weeks”, measuring the loss at $889 per week for those 160 weeks. In a practical sense, his Honour discounted the period of the claim by about 40 percent. The appellant submitted that the discount should have been 50 percent, or greater, not disputing the figure of $889 per week.

9 His Honour assessed damages for impairment of earning capacity after judgment, by awarding the then present value of $889 per week for twelve years, less a discount of 10 percent.

10 There is little dispute about most of the facts, although some of the evidence is imprecise, but there is a great deal of dispute about the inferences to be drawn as to what would have happened but for the injury.

11 The respondent was born on 8 November 1955, so that he was 43 years old when injured, and 48 at the time of judgment. He had an unfortunate childhood, apt to lead to subsequent psychological problems. He left school at the age of 15, having completed three years of secondary schooling. He worked in panel beating for about two years, and later became a trades assistant and ultimately a leading hand in the fire protection or fire sprinkler industry, working in that industry for some 17 years. Work in that industry is punctuated by periods of unemployment.

12 The Judge found that during his late teens and early twenties the respondent was caught up or engaged in wayward conduct. The medical evidence establishes that this conduct included episodes of binge drinking; and the respondent committed various alcohol-related offences. Over a period of years the respondent suffered a number of injuries: four fractures of the jaw or jaws in a motor vehicle accident in 1973 or 1974, resulting in a period of unemployment, probably for some months; in 1975, whilst engaged as a life-saver, he was stabbed, although there was no finding whether or not he lost time from work as a result of this incident; in about 1980 he fell off a ladder, resulting in a spinal injury and some loss of time from work; then he lost some three or four months from work after his wrist was “squashed”; and in about 1986 he fell into a pit in some workplace accident, resulting in his being off work for about three years, and the making of some claim for damages that was settled.

13 More significantly, he suffered from an alcohol abuse problem. Apart from the binge drinking episodes already mentioned, after the 1986 accident, he became depressed and drank heavily again.

14 There is no real dispute about any of these matters, perhaps accurately described as background matters. Between 1990 and 1995 he was a part owner of a business in which he worked. In January 1995 he returned to fire sprinkler fit-out work, doing various jobs, and on 10 July 1995 he commenced working for an entity described as James Hardie Building Services. It was his case that, in the course of this work, he had to perform various functions relating to fire alarm systems, and was provided with defective equipment. The use of this equipment led to numerous “false alarms”, so that fire brigade personnel had to attend to answer these alarms, and they said things and conducted themselves so that the respondent was humiliated by both the fire brigade personnel and by his co-workers; and he suffered a psychological injury resulting in a very substantial alcohol intake, depression, and other sequelae; and he brought proceedings in the Compensation Court against James Hardie. That claim appears to have been for periodic payments of workers compensation from January 1996 onwards and continuing.

15 The case was listed for hearing in the Compensation Court on 20 April 1998. On that day the respondent commenced his evidence-in-chief, but had not completed that evidence by the end of the day, and the matter was adjourned part heard until 4 September 1998. On that occasion, the parties agreed upon the terms of a settlement, the effect of which was that the respondent was paid a lump sum of $33,330.

16 The transcript of the evidence in the Compensation Court was tendered before Smart AJ. His Honour summarised that evidence by saying that the respondent had “painted a grim picture”, although the respondent points out that by the end of the day on 20 April 1998, the appellant’s evidence had not progressed beyond the point of describing his condition up to the year 1996. In any event, notwithstanding the evidence that had been given, and the compromise of the Compensation Court proceeding, the respondent commenced employment again in the fire sprinkler industry on 28 October 1998, working for Automatic Fire Protection Design Pty Ltd, and that employment continued for a period of about three months. His Honour noted the evidence of the respondent that, after the conclusion of the Compensation Court proceeding, he took the advice of his union to work in a different sector of the building industry, and the respondent’s feeling that he had to pull himself out of the doldrums, his anxiety and his depression, and that the best thing to do was to try to go back to work.

17 His Honour then reviewed the medical evidence, which embraced reports from 23 different people, who did not speak unanimously, and none of whom gave oral evidence.

18 It is not in contention now that in the injury sued upon the respondent sustained a serious and disabling organic back injury. The question is what would have happened had he not sustained that injury. The appellant pointed to the fact that during 1996 and 1997 the respondent had been suffering from depression and alcohol abuse, and was unable to work; to the evidence he gave in the Compensation Court; and to the fact that notwithstanding that evidence he had gone back to work without, it may be, having received any further medical attention, suggesting that his evidence should be regarded as entirely unreliable. Nevertheless, his Honour did accept the general thrust of the respondent’s evidence, with some caution, and there is nothing that can be pointed to that would justify this Court interfering with that cautious acceptance of the respondent’s evidence.

19 The learned trial judge assessed the respondent’s loss by reference to the figure of $889 per week, representing, not the wages he had earned with Bitly, but the wages he had earned with Automatic Fire Protection Design Pty Ltd. The appellant makes no complaint about that. The assessment of loss for the period up to judgment represents an effective discount rate of about 40 percent of what the respondent might have been expected to earn, had he worked continuously in the fire sprinkler industry.

20 I do not consider that any appealable error has been demonstrated. The task was to assess what might have happened, but did not happen, and could not happen thereafter. Different minds might well come to different conclusions as to what the discount figure should have been, but I find it impossible to say that the figure of 40 percent was wrong.

21 The assessment of the loss after judgment presented additional difficulties. The Judge said that it would be wrong to assume that the respondent would have worked continuously in a job such as that he had with James Hardie or with Automatic Fire Protection Design Pty Ltd until the age of 65, a period of about sixteen years and ten months, and in the end allowed a sum assessed as the then present value of twelve years’ wages, less a discount of 10 percent for vicissitudes. In coming to the figure of twelve years, less that discount, he had regard to the respondent’s physique, to the hard work he had been doing and to the likelihood that he would not have been able to continue to do that hard work until the age of 65. He referred to the fact that the respondent had an existing degenerative disease of the back, and a small spinal canal. (One difficulty now is that none of the medical practitioners explained what the significance of that small spinal canal was, in terms of assessing the respondent’s future employment prospects, presumably because they were not asked to do so.)

22 His Honour apparently accepted the evidence of the respondent that he valued being able to work, and that it was one of his chief interests in life, but also commented on the respondent’s volatile temperament and a difficulty adapting to new circumstances; to the fact that work in the fire sprinkler industry is not continuous; to the respondent having in the past sought heavy work during these gaps in employment in his preferred industry; to the likelihood that with increasing age the respondent would not have been able to continue to do that heavy work, so that he would probably have obtained lighter and probably less remunerative work during these periods; and to his past employment record and the possibilities of future employment.

23 The appellant submitted that the respondent’s earning capacity was impaired by four particular factors: the fact that work in the fire sprinkler industry was not continuous; the fact that the respondent was not happy with his work with James Hardie; the fact that work in the particular industry required (sometimes at least) working at heights “which he could not do”; and the fact that he was not qualified for certain managerial type work in the fire sprinkler industry. His Honour explicitly referred to the first and second of these matters. As to the third, the position was that the respondent sometimes entertained ideas of suicide, and spoke of the possibility that if required to work at heights, he might commit suicide by jumping. His Honour dealt with this at [103]. Whilst he did not explicitly deal with the precise submission now made, it seems clear that he did take into account the difficulties involved with the respondent’s suicide ideation. The fourth matter does not seem to me to be particularly significant. So far as I can tell by reading his Honour’s reasons for judgment, he proceeded on the basis that the respondent would work in the fire sprinkler industry, perhaps as a leading hand from time to time. The fact that the respondent was not qualified to work at a higher level seems to be of theoretical rather than practical significance.

24 The real complaint of the appellant is that the Judge arrived at the figure of twelve years, and the discount figure of ten percent. The appellant did not contend that the basis for this assessment was discordant with the discount figure of about 40 percent that the Judge applied in relation to the assessment of loss prior to judgment. Rather, it contended that in each case a greater discount figure should have been applied.

25 The assessment of the loss for the period after judgment was a difficult one, involving a number of imponderables. The damages awarded represent, in the end, about 65 percent of the then present value of $889 per week from judgment until the age of 65. I do not consider that this assessment has been shown to be in error.

Future Out of Pocket Expenses.

26 The damages awarded included a series of sums representing the then present value of various future out of pocket expenses. The only question raised now concerns the number of years over which these calculations were made. At trial there was a question as to the life expectancy of an ordinary man of the respondent’s age. One set of statistics referred to gave a figure of 36.5 years, and another set a figure of 30.63 years. In the end the parties agreed to compromise this difference by having regard to “a median figure”. This median figure does not appear in the appeal books, but I take it to have been about 33.5 years.

27 Before the parties had reached this agreement, his Honour had expressed the view that the appropriate calculations should be made on the basis that, by reason of the respondent’s alcohol abuse problems, his life expectancy, compared to the life expectancy of the average man of his age, should be reduced by 10 percent. The result was that when damages were finally assessed, a figure of 30.5 years was adopted – apparently about 33.5 years less 10 percent.

28 The question now litigated is not one of the niceties of this arithmetic, but whether his Honour was in error in failing to adopt some much larger discount figure. The appellant suggested that the proper figure should have been 20 years, or at most 25 years.

29 The statistical tables may be regarded as having taken into account the normal vicissitudes of life. The additional factor present in this case, but not, it may be assumed, taken into account in the statistical tables, was the respondent’s alcohol abuse problem. His Honour said of this:

“The plaintiff sought these amounts for 36.5 years being the plaintiff’s life span on the actuarial tables as at the date of trial. While that figure would usually be taken is it appropriate to do so in the present case because of the plaintiff’s alcohol abuse? Dr R Fisher wrote on 11 November 2003 that if the plaintiff continued to drink in his current fashion he was very likely to do very serious damage to his liver and his nervous system in the medium to long term. The plaintiff’s extensive alcohol abuse has continued for many years. Because of this and the probability of serious damage to his liver, a shorter period than 36.5 years should be taken.”

30 At trial, no witness spoke of the respondent’s life expectancy. On appeal, the respondent pointed to the fact that, at least in the main, the respondent’s heavy drinking in recent years was apparently reactive upon stresses and setbacks suffered, although of course stresses and setbacks were likely enough to have been suffered even if he had not been injured, and, as his Honour noted in a different context, the cessation of the litigation was likely to reduce the stresses then being suffered by the respondent. The trial judge, a medical layman, had to do his best with the evidence, and I do not consider that his assessment can be described as having been in error.

31 I propose that the appeal be dismissed with costs.

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