Reynolds v Roche Bros Pty Ltd
[1999] WASCA 141
•20 AUGUST 1999
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
TITLE OF COURT : THE FULL COURT (WA)
CITATION: REYNOLDS -v- ROCHE BROS PTY LTD [1999] WASCA 141
CORAM: PIDGEON J
IPP J
WALLWORK J
HEARD: 18 MARCH 1999
DELIVERED : 20 AUGUST 1999
FILE NO/S: FUL 103 of 1998
BETWEEN: MARK GEORGE REYNOLDS
Appellant (Plaintiff)
AND
ROCHE BROS PTY LTD
Respondent (Defendant)
Catchwords:
Negligence - Damages - Loss of future earning capacity - 20 per cent deduction for contingencies - Reduced to 10 per cent - Decided on facts
Legislation:
Nil
Result:
Appeal allowed
Representation:
Counsel:
Appellant (Plaintiff) : Mr D R Clyne
Respondent (Defendant) : Mr A J Power
Solicitors:
Appellant (Plaintiff) : Friedman Lurie Singh
Respondent (Defendant) : Jackson McDonald
Case(s) referred to in judgment(s):
Abbott v Pacific Industrial Company WA Pty Ltd as trustee for Steelfab Unit Trust T/As Pacific Industrial Company (1979), unreported; FCt SCt of WA; Library No 970079; 4 March 1997
Arthur Robinson (Grafton) Ltd v Carter (1968) 122 CLR 649
Black v Motor Vehicle Insurance Trust [1986] WAR 32
Bowen v Tutte (1990) A Tort Rep 81-043
Broadribb v Hanna (1969) 1 NSWR 35
Clark v Chandler (1973) 5 SASR 416
General Motors - Holden's Pty Ltd v Moularas (1964) 11 CLR 234
Jones v Schiffmann (1971) 124 CLR 303
Lulich v Bell Bros Pty Ltd (1967) 41 ALJR 268
Wynn v New South Wales Insurance Ministerial Corporation (1995) 184 CLR 485
Case(s) also cited:
Bresatz v Przibilla (1962) 108 CLR 541
Malec v J C Hutton Pty Ltd (1990) 169 CLR 638
Miller v Jennings (1954) 92 CLR 190
Thomas v O'Shea (1989) A Tort Rep 80-251
Wade v Allsop (1976) 10 ALR 353
Wilson v Peisley (1975) 7 ALR 571
PIDGEON J: I agree with the reasons to be published by Ipp J and Wallwork J and with the orders proposed by Wallwork J.
IPP J: : I have had the advantage of reading the reasons to be published by Wallwork J. I agree with his Honour's reasons and conclusions and merely wish to add some comments of my own.
The learned trial Judge deducted a discount of 20 per cent for contingencies in arriving at the awards for future economic loss and future superannuation. In my opinion, for the reasons set out below, the discount of 20 per cent was too high.
There were only two factors which arguably warranted a discount rate higher than the usual. Firstly, the appellant had a "pre‑existing degenerative change evident in his spine" (to use the learned Judge's words). This meant, as his Honour put it, that "there may have been breaks in employment", even had the accident not occurred. Secondly, although – prior to the accident - the appellant intended to work until the age of 65 years, he would not have been able to work as a plant operator after the age of 55 years. After 55 years of age he would only have been able to work as a supervisor and there was no certainty as to whether he would have been able to obtain work as such. It is not entirely clear whether the appellant's earnings as a supervisor would have been the same or less than as a plant operator. Had he been required to obtain work in some capacity other than as a supervisor, the likelihood is that he would have earned less than what he earned as a plant operator.
Other than these two factors there was nothing in the appellant's employment or physical condition that made the appellant's situation in any way extraordinary or unusual.
There were, moreover, matters that tend to counterbalance the appellant's pre‑existing condition, and the uncertainty as to his prospective income after the age of 55 years. These stem from the learned Judge's assumption that the appellant would obtain work on the very date that judgment was delivered and, utilising his retained earning capacity, would be employed every day of his working life until the age of 65 years. There are a number of difficulties with this reasoning. Firstly, by the time judgment was delivered the appellant had been out of work for about three years. He had attempted to retrain for other employment and attempted to obtain work, but these attempts were not particularly successful. It is plain that account has to be taken for some period after the date of judgment within which the appellant would undergo further retraining and
look for work, and during which he would have no earning capacity. Further allowance has to be made for the fact that with his spinal problems the appellant might have difficulties in obtaining work. Thirdly, allowance has to be made for the contingency that the appellant may well not be able to work every day of his working life until the age of 65 years. This contingency is exacerbated by the spinal injuries suffered in the accident.
Taking into account the counterbalancing matters, I agree with Wallwork J that a discount of 10 per cent should be allowed.
WALLWORK J: The appellant in this case appeals against the amount which he was awarded for damages for negligence in the District Court at Perth on 17 June 1998. The appellant had injured his back whilst driving a loader at work on 20 June 1995. At that time he had jarred his back when the loader had encountered an oversized rock. After about 20 to 30 minutes, when he had tried to get out of the loader, he was unable to stand or bear any weight on his legs. He could not straighten his back. Liability for damages was conceded.
The learned trial Judge awarded the appellant a total sum for damages of $505,245.73. The appellant has appealed on two grounds against that part of the damages awarded to him for loss of future earning capacity.
The first ground complains that those damages were assessed on the basis that the appellant could go straight from the Court and find employment without any lapse of time. The second and more significant ground is that the learned trial Judge erred in deducting 20 per cent the sum awarded for loss of future earning capacity to allow for contingencies.
Following the accident the appellant was taken to the Kalgoorlie Hospital. He was then away from work for three weeks. He returned to light duties where he remained until 22 September 1995. Since that time he had not worked in any capacity.
Prior to the accident the appellant had been an active athlete. He had intended to follow a career in mining in the hope that he would eventually be appointed a supervisor. His choice would have been to work in an outdoor position, rather than in an office.
On 13 June 1996, which was approximately one year after the accident, an MRI scan showed very minor disc bulging at the L4/5, disc
degeneration at L5/S1, and a small central and left of centre herniation, but no impingement. Dr Connaughton thought that the symptoms were most likely facetal in nature. There was no indication for surgical treatment. It was Dr Connaughton's view that the appellant would not be fit for loader driving again in the future. He thought the appellant had the capacity for work on a full-time basis as a "parts interpreter" in heavy duty earthmoving equipment, counter sales, hardware store employee or storeman.
Mr Frank Bell thought there was a bulge at the L4/5 disc and a possible fracture of the right lumbosacral facet. He considered that the appellant had a facet joint problem at the lumbosacral level in the back - an injured right lumbosacral facet joint. He did not consider the appellant fit for his pre‑accident work, but "clearly he has a capacity for a sedentary job when he can attend a Union course for six weeks. I believe he could probably work as a storeman in light industry."
At a later time Mr Bell said that the appellant had a capacity to undertake other forms of employment "either in an office‑type job, sales person of hardware, or perhaps mining machinery. He could work as a gardener, courier and probably even as a truck driver, since sitting does not seem to be a great problem to him".
The learned trial Judge noted that that last comment contrasted with the appellant's attitude in court when he did not sit at any stage.
Mr Batalin diagnosed the appellant's condition as that of a "jarring work aggravation of degenerative lower lumbar disc disease". He thought there was "no contra indication for undertaking alternative light, semi-sedentary employment on a full-time basis, provided he does not subject his spine to repetitive bending or lifting."
Another orthopaedic surgeon, Mr Woodland, noted on the MRI scan:
"A very small posteria disc herniation with annula tearing at the L4/S1 level and minor left of centre posterior herniation, but no actual focal protrusion or nerve root impingement."
The appellant had told Mr Woodland that with Panadeine Forte medication he might be able to sit for two hours, but otherwise he was limited to sitting for 30 minutes. Mr Woodland thought the appellant would require ongoing use of analgesic and anti‑inflammatory medications and possibly anti‑depressant medications. He might require physiotherapy from time to time for symptomatic exacerbation, but not on a regular frequent basis. He thought the appellant was not fit to return to any type of work involving significant manual duties such as repetitive bending and lifting of significant weights, nor could he work as a plant operator involving operating heavy machinery. Mr Woodland thought the appellant should aim to get back to the workforce in a semi‑mobile or light duty type of work not involving repetitive bending and lifting. He said the appellant had a capability to work on a part‑time basis for about 20 hours per week.
Mr Peter Watson, a neurosurgeon thought that the appellant had a permanent disability of 10 per cent loss of the function of the lumbar spine.
The learned trial Judge came to the conclusion that the appellant had suffered a moderate aggravation of a lower lumbar disc, or facet joint injury. His Honour found that there was no restriction of sitting or standing, with the appellant having nearly a full range of movement at the back. No surgery in the future would be required. The appellant would not in the future be fit for heavy manual work, or work as a plant operator of heavy equipment. The appellant is, and has been fit for work as a hardware storeman, sales person and courier driver. His Honour found that such work is available.
With respect to general damages the learned trial Judge found that the appellant can sit or stand without discomfort. He could not however engage in his previous sporting activities and he would not have unlimited opportunities to work in the mining industry.
With respect to loss of future earning capacity, the learned Judge found that at the date of the accident the appellant had been earning $788 net per week. He accepted the submission that at the time of the judgment a plant operator would be earning about $800 net per week; also that the appellant could have expected to work until 65 years of age, though not as a plant operator. His Honour noted that the appellant had claimed to have intended to seek a position as supervisor and that his counsel had suggested that he would have driven a loader to at least the age of 55 years.
His Honour said that he had not been presented with evidence of a supervisor's salary and that it may not be as high as that of a plant operator. He found that the appellant retained an earning capacity for work categorised under the Shop and Warehouse (Wholesale and Retail Establishments) State Award of $353.04 net per week. Having deducted that sum from the then current earnings of a plant operator and using a multiplier to the age of 65, being 730.2, he calculated a sum of $326,370. It was from this sum that his Honour deducted 20 per cent to allow for contingencies.
A basis of his Honour's deduction of the 20 per cent was that amongst other matters, there was a very real prospect that the appellant would not have remained in the mining industry, or continued as a plant operator beyond the age of 55 years. His Honour found that the appellant may not have remained in the industry or worked as a plant operator to that age. Further, he may not have progressed to be a supervisor. In that event he could have been compelled to seek other less remunerative employment.
His Honour found that it was entirely speculative that the appellant would have become a supervisor. Also, that there may have been breaks in his employment on account of injury or change of employer. Further, there was a pre‑existing degenerative change evidenced in his spine. His Honour said that the appellant may have chosen to leave the workforce before reaching the age of 65 years. His Honour found that the work the appellant could then do might return him more than the award rate, especially having regard to considerations such as overtime. On the other hand he found that the appellant might require some time - up to six months - to find and perhaps train for the alternative employment he had mentioned. He said the appellant appeared to be an intelligent and presentable person.
His Honour took account of the fact that a person with a history of back injury is at a disadvantage in competing in the workforce. He said the evidence did not suggest that the back injury related condition would become worse, nor that the appellant was in constant pain, or could not sleep, but there might be some aspects of prospective employment where his disability might be a problem. From that he concluded that on balance there had to be a reasonably significant discount which he set at 20 per cent.
The 20 per cent deduction is said by the appellant to be too large. From that it is said to follow that there should be an increase in the sum of $18,277 which was allowed for loss of future superannuation.
The appellant does not complain of the sums taken by his Honour for retained capacity for work at $353.04 net per week, or the $800 net earnings for a plant operator. He complains of the lack of any sum allowed for the time for finding employment and the 20 per cent deduction for contingencies.
Professor Luntz in his 3rd Edition of his "Assessment of Damages for Personal Injury and Death", having discussed the decision in Arthur Robinson (Grafton) Ltd v Carter (1968) 122 CLR 649, where Sir Garfield Barwick discussed this question of an allowance for contingencies, concludes at p 285:
"It is generally recognised that (apart from death) sickness, accident, unemployment and industrial disputes are the four major contingencies which expose employees to the risk of loss of income. It is submitted that for all the impressive length of Barwick CJ's list, these are the only matters which need to be taken into account…."
Professor Luntz also says that in any individual case, it is the risk as it affects the particular plaintiff that is to be considered. He quotes as authority for that proposition General Motors - Holden's Pty Ltd v Moularas (1964) 11 CLR 234 at 241 per Barwick CJ, 250 per Menzies J, 258 per Windeyer J, 262 per Owen J, and also Clark v Chandler (1973) 5 SASR 416.
In Wynn v New South Wales Insurance Ministerial Corporation (1995) 184 CLR 485 at 497, Dawson, Toohey, Gaudron and Gummow JJ said:
"It is to be remembered that a discount for contingencies or 'vicissitudes' is to take account of matters which might otherwise adversely affect earning capacity and as Professor Luntz notes, death apart, 'sickness, accident, unemployment and industrial disputes are the four major contingencies which expose employees to the risk of loss of income'. Positive considerations which might have resulted in advancement and increased earnings are also to be taken into account for, as Windeyer J pointed out in Bresatz v Przibilla (1962) 108 CLR 541 at 544: 'All contingencies are not adverse: all vicissitudes are not harmful'. Finally, contingencies are to be considered in terms of their likely impact on the earning capacity of the person who has been injured, not by reference to the workforce generally. Even so, the practice in New South Wales is to proceed on the basis that a 15% discount is generally appropriate, subject to adjustment up or down to take account of the plaintiff's particular circumstances."
In Bowen v Tutte (1990) A Tort Rep 81-043 at 6803, Malcolm CJ, when discussing the deduction on account of contingencies where it was said that a learned trial Judge had wrongly discounted the appellant's future earning capacity by 25 per cent on account of contingencies, said:
"The normal discount rate for the usual contingencies ranges between 2 to 6% although each case depends on its own facts: Black v Motor Vehicle Insurance Trust [1986] WAR 32 at 34 per Wallace J; and see Bresatz v Przibilla (1962) 108 CLR 541. It is necessary to assess the plus factors and the minus factors in the individual case."
At 68,086 of that report the Chief Justice said:
"Consequently, the basic approach adopted by the learned trial Judge in the present case to take account of the existence of a residual earning capacity by the deduction of a percentage amount from the figure he calculated for total loss of earning capacity was correct. In my opinion, however, for the reasons which I have mentioned, I consider that the learned Judge took a somewhat optimistic view of the appellant's residual capacity. As a result the amount of $126,156 which the learned trial Judge assessed was, in my opinion, disproportionately low."
In that case Wallace J agreed with the reasons of the Chief Justice. Rowland J, after discussing the facts, which concerned a plaintiff who, prior to the accident had worked as a nurse and later as an instructor of nurses; who was married and intended to have a large family and to work until she was 60, when referring to the loss of future earning capacity said at 68,092:
"It can be seen that his Honour has also discounted the sum he arrived at by 25% to account for contingencies. Counsel submits that this is too high and amounts to a duplication. In normal circumstances of course it would be too high. A discount would not usually exceed 10%. See Black v Motor Vehicle Insurance Trust [1968] WAR 32 and Bishop v Cole, FCt SCt of WA, delivered May 1987; Library No 6744. The circumstances are not normal in this case but his Honour has been committed to this method of assessment, and it is apparent that he has made one discount by adopting a conservative starting point and ignoring the prospects of increased income by way of promotion because of the possible impact of a large family. In the circumstances the deduction of 25% for contingencies which again takes this into consideration is plainly excessive. In my view his Honour is in error and that figure should be reduced from 25% to something in the order of 8%."
In Abbott v Pacific Industrial Company WA Pty Ltd as trustee for Steelfab Unit Trust T/As Pacific Industrial Company (1979), unreported; FCt SCt of WA; Library No 970079; 4 March 1997, a decision which concerned a person who had worked as a rigger and had planned to work as a rigger to the age of 60 years, and if he could have retired at 55 he would have done so, Pidgeon J when discussing a discount on account of contingencies of 25 per cent, referred to the decisions of Black v Motor Vehicle Insurance Trust [1986] WAR 32 and Bowen v Tutte (supra) and Wynn v New South Wales Ministerial Corporation (supra). His Honour noted amongst other things, that positive considerations which might have resulted in advancement and increased earnings are also to be taken into account - Lulich v Bell Bros Pty Ltd (1967) 41 ALJR 268 at 268-270; Broadribb v Hanna (1969) 1 NSWR 35 at 42; Jones v Schiffmann (1971) 124 CLR 303 at 315. His Honour also referred to a series of decisions where it was recognised that contingencies can be favourable as well as adverse, and also to the fact that contingencies are to be considered in terms of their likely impact on the earning capacity of the person who has been injured and not by reference to the workforce generally.
Pidgeon J concluded that the amount to be deducted for contingencies is essentially a matter of judgment to be decided on the facts of each case. He also referred to the fact that Wallace J in Black v Motor Vehicle Insurance Trust (supra) had said that an appellate court must look at the overall award before interfering with any identifiable error.
It is significant in this case that the appellant did not have work at the time of the judgment and that he was injured and could not compete on the open market as a person who was 100 per cent fit.
In my view there should have been some allowance made for the fact that the appellant most probably would not get work immediately, as the learned trial Judge accepted. This aspect should be taken into account under the general heading of contingencies and not treated as a separate item.
The calculation on which his Honour assessed the damages was made on the basis that the appellant would work from the date of judgment until the age of 65 years, every day, at the retained earning capacity. Work may not be consistently available in the future or he may become ill. This does not appear to have been taken into account by the learned Judge.
In my view, accepting the method in which the learned trial Judge calculated the damages, and taking into account the matter raised by the first ground of appeal, being the "start‑up" time, and also the possibility that in the last 10 years, to the age of 65, the appellant may have suffered a downturn in income, a reasonable deduction for contingencies in this case would be 10 per cent rather than the 20 per cent taken by the learned Judge.
I would therefore allow the appeal and increase the damages on that basis. The sum allowed for future superannuation would also have to be increased.
Using the method employed by the trial Judge, the sum allowed for loss of future earning capacity, instead of $261,096 would become $293,733 and the sum for future superannuation, instead of $18,277, would become $20,561.
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