Roleff v Chubb Insurance Co of Aust Ltd
[2010] VCC 42
•17 February 2010
| IN THE COUNTY COURT OF VICTORIA | Unrevised |
Not Restricted
AT MELBOURNE
CIVIL DIVISION
SERIOUS INJURY
Case No. CI-07-00067
| MICHAEL ROLEFF | Plaintiff |
| v | |
| CHUBB INSURANCE COMPANY OF | Defendant |
| AUSTRALIA LIMITED |
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| JUDGE: | HIS HONOUR JUDGE BOWMAN |
| WHERE HELD: | Melbourne |
| DATE OF HEARING: | 6, 9, 10 and 11 November 2009 |
| DATE OF JUDGMENT: | 17 February 2010 |
| CASE MAY BE CITED AS: | Roleff v Chubb Insurance Co of Aust Ltd |
| MEDIUM NEUTRAL CITATION: | [2010] VCC 0042 |
REASONS FOR JUDGMENT
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Catchwords: Accident Compensation Act 1985 – s.134AB(38) – application for leave in respect of both pecuniary loss damages and pain and suffering damages, but concession that if plaintiff fails in respect of s.134AB(38)(e) and (f) application fails generally – reliance upon paragraph (c) of definition of serious injury – plaintiff employed in insurance industry at time of injury and currently – whether “without injury” earnings should be indexed either within or beyond “window” period – whether plaintiff has discharged burden by establishing required 40 per cent loss of earning capacity.
| APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr S McCredie | Lennon Mazzeo |
| For the Defendant | Mr D Brookes SC with | Thomson Playford Cutlers |
| Ms M Tsikaras | ||
| HIS HONOUR: |
General background
1 This matter comes before me by way of an application pursuant to s.134AB(16)(b) of the Accident Compensation Act 1985, hereinafter referred to as “the Act”.
2 The plaintiff seeks leave to bring proceedings in respect of both pain and suffering damages and pecuniary loss damages. In so doing, he relies upon paragraph (c) of the definition of “serious injury” contained in s.134AB(37) of the Act.
3 The plaintiff relies upon permanent severe mental or permanent severe behavioural disturbance or disorder being, in essence, an adjustment disorder with anxiety and depression and with symptoms and consequences including panic attacks, anger, insomnia, lethargy and social withdrawal. The injury is alleged to have arisen during the course of the plaintiff’s employment with the defendant between January 1999 and December 2001.
4 Mr S McCredie of counsel appeared on behalf of the plaintiff. Mr D Brookes SC with Ms M Tsikaras of counsel appeared on behalf of the defendant. The plaintiff gave evidence and was cross examined. The plaintiff’s current treating general practitioner, Dr Roozbeh Malekzadeh, similarly gave evidence. The plaintiff’s most recent treating psychiatrist, Dr Ajit Selvendra, also gave evidence, adopting his medical reports and being cross-examined. A similar course was adopted in relation to Mr Charles Veevers, a treating psychologist. Evidence was also given by the plaintiff’s wife, Ms Jacinta Roleff. The balance of the evidence was documentary in nature and was tendered by consent, which was a most sensible and cost-effective manner in which to run an application such as this. In addition, counsel made thorough and very helpful submissions. The plaintiff bears the burden of proof in this matter, although it was argued by Mr McCredie that, in some particular circumstances which shall be described, a type of reverse burden might apply.
A concession made on behalf of the plaintiff in relation to the issues to be determined
5 At the outset, Mr McCredie made the very proper and sensible concession that, unless I was satisfied that there existed the 40 per cent or more loss of earning capacity required in accordance with the formula set out in s.134AB(38)(e) and (f) of the Act, and accordingly the plaintiff failed to obtain leave in relation to pecuniary loss damages, there would be no need for me to go further and consider whether the “narrative” test was satisfied in relation to pain and suffering damages. I say that such a concession was very sensible because of the particular facts of this case, which facts shall be discussed subsequently. In essence, the plaintiff, who has a background in insurance, was employed by the defendant as the manager of the accident and health division of its business. As shall be discussed, his position essentially involved him in setting up and developing this aspect of the defendant’s insurance portfolio. He alleges that it was the injury upon which reliance is placed, with its attendant stresses and personality conflicts, which led to the cessation of such employment. The plaintiff appears to have ceased attending work in December 2001 and had his employment with the defendant terminated in June 2002. It should be said that his work with the defendant would be considered by many to be well paid.
6 For a period, he was then out of employment or attempting work in other less remunerative occupations until commencing his current employment. Since 2006, he has been employed as an insurance advisor with the Victorian Management Insurance Authority at quite a substantial wage. His current employment is on a full-time basis.
7 Obviously Mr McCredie perceived difficulties in satisfying the requirements of the “very considerable” test in such circumstances. In any event, whatever the reasoning behind it, the above concession was made and I was asked by the plaintiff to deal with the matter accordingly, so that the satisfying of the requirements of s.134AB(38)(e) and (f) effectively determined the outcome of the case. In this regard I was referred to the decision of the Court of Appeal in Advanced Wire & Cable Pty Ltd & Anor v Abdulle [2009] VSCA 170.
8 Accordingly, it seemed to me at the outset that mathematical calculations were going to play a significant role in the outcome of the case, and that continued to be my impression. Of course, what is required is an examination of earning capacity as opposed to actual earnings, and this involves more than just the examination of wage rates. I also appreciate that the defendant is arguing that, on the facts, there is no current loss of capacity, or alternatively, if there is any such loss, it is no longer materially contributed to by the relevant injury. The permanence of any alleged consequences was thus also under attack. However, even allowing for this, it seems to me that the presentation of the case, and particularly the defendant’s case, at times drifted for periods, which were perhaps overly long, away from the fundamental issue of satisfaction of the “40 per cent formula”.
A preliminary ruling
9 I was asked to determine a preliminary issue concerning the operation of the formula referred to above. I shall not set out my ruling in full, it being given on 9 November last. Suffice to say that I determined that the plaintiff’s “after injury” earnings and his capacity in such regard are to be calculated as at the date of hearing, and that they are then to be compared with the “without injury” earnings or capacity during the portion of the six year pre and post- injury period as most clearly reflects the plaintiff’s earning capacity. I had been urged by Mr McCredie to take into account the plaintiff’s potential earnings occurring more than three years after the occurrence of the injury. I determined that the section did not operate in this way and that projected earnings beyond the “closing of the window” three years after the date of injury were irrelevant, save insofar as they might be used for the possible purpose of inferring what might have been earned within the window period. That last-mentioned exception did not apply in the present case. Accordingly, I ruled that, the injury having occurred at its latest in December 2001, the window for the purposes of the formula closed in December 2004, and I referred in particular to observations contained in Barwon Spinners v Podolak (2005) 14 VR 622 and Hayhill Pty Ltd & Ors v Hodge [2006] VSCA 194. I also rejected an argument by Mr McCredie that, alternatively, “after injury” earnings can in some way have negative inflationary effects applied to them so as to make the required comparison during the window period more fair. Doubtless the provisions as they stand can produce results which are unfair, but what is set out in the relevant sub-sections, and as interpreted by the Court of Appeal, must be applied.
Factual background
10 The following findings of fact are made for the purposes of this application and are not intended to be findings which are in any way determinative in relation to issues of negligence, the quantum of damages, entitlement to statutory benefits and the like.
(i) The plaintiff 11 On balance, I found the plaintiff to be a witness who was doing his best to answer questions in an honest fashion. In a case such as this, and given the nature of the injury alleged, the existence of some inaccuracy or uncertainty is not altogether surprising. If there are two areas in which a challenge could be made to the plaintiff’s reliability, they would be firstly in relation to the details of prior problems as supplied to some examiners, and secondly some uncertainty arose as to whether the plaintiff took any, and if so what level of, medication during quite a lengthy period after initial treatment. However, the bottom line is that I accept that, generally, the plaintiff was doing his best to answer questions truthfully. In cases such as this, with a foundation of workplace disputes and psychiatric or psychological conditions, it is not unusual for those involved to take a particular attitude or have a particular perception in relation to what has occurred and who was right or wrong. In the present case, it seems to me that the plaintiff, whilst admitting some errors, was perhaps trying to vindicate his position in the face of considerable dissatisfaction from his superiors. He attributed considerable blame to one particular superior. I am not of the view that he was deliberately trying to mislead in this regard, but it also seemed to me that there may have been a degree of ex post facto rationalisation on the part of the plaintiff.
12 Further, the plaintiff struck me as an intelligent man who was currently employed in a position which, by community standards, would be regarded as being a responsible and well-paid one. He also impressed me as being personable, and one could readily imagine him presenting as an attractive proposition to potential employers. During cross examination, he appeared to be a person who could deal with detailed and quite vigorous questioning in a considered, competent and logical manner.
(ii) The plaintiff’s background, training and employment prior to injury 13 The plaintiff is aged 47 years, having been born on 28 May 1962. He is a married man with two children.
14 The plaintiff was educated to Year 12 level, completing that year. From 1980 to 1982 he worked as a clerk for Australian Eagle Insurance. From February 1983 until December 1985 he worked as a clerk in the Accident & Health Department of American International Group (another insurer). Between 1982 and 1986, he completed a part-time course in business studies, obtaining a certificate which enabled him to become an associate of the Australian Insurance Institute. From February to October 1986 he worked as a clerk for Chamber of Manufacturers Insurance Company, and thereafter, until January 1993, for Sigma Insurance. Whilst there, he was promoted to the position of marketing manager for Victoria in relation to accident and health insurance.
15 In early 1993 he was headhunted to return to work with the American International Group as the southern regional manager, with responsibility for Western Australia, South Australia, Victoria and Tasmania, and whilst there he and a subordinate, Mr Brian Ridley, significantly increased that insurer’s market share in the accident and health portfolio.
16 In June 1998 the plaintiff was approached by Mr Paul Baldacchino (“Baldacchino”), who was the Australian accident and health manager of the defendant. He was informed by Baldacchino that the defendant wished to establish an accident and health division in Melbourne and then make significant inroads into the market. Ultimately the plaintiff and Mr Ridley moved from the American International Group to the defendant, having effectively been headhunted. With the defendant, they faced the challenge of establishing in Melbourne an accident and health division “from scratch”. The plaintiff was interested in such a challenge. The plaintiff ultimately took with him a number of the clients with whom he had dealt whilst with the American International Group. The details of the salary package offered and the plaintiff’s contract of employment generally shall be discussed later.
17 The plaintiff was required to report to a branch manager in Melbourne but essentially reported directly to Baldacchino in Sydney. In the first year with the defendant, the plaintiff and Mr Ridley very comfortably exceeded the premium target which had been set. In March 2000 the plaintiff was advised that, as a result of his performance during the 1999 financial year, he had earned a cash incentive bonus and his salary package was increased. Some problems in respect of the relationship between the plaintiff and Baldacchino commenced to arise in April 2000, these initially springing from what Baldacchino regarded as the unauthorised renewal of some risky personal accident/sickness policies relating to franchisees of Jim’s Mowing in South Australia. Further problems in relation to the plaintiff’s activities and whether he was complying with company policy arose. Details of the deterioration of the relationship and what could be described as the disciplining of the plaintiff by Baldacchino, and particularly events in 2001 surrounding the suffering of injury, shall be discussed under the next heading.
Injury
(a) The state of the plaintiff’s health prior to 2001 18
In his detailed affidavit of 31 August 2006, the plaintiff has referred to receiving medical treatment for anxiety in approximately 1990-91 when he believed that he was being over-worked and when there were considerable demands upon his time both in and outside the workplace. He recalls that he saw a general practitioner, was prescribed medication, but does not believe that he took it.
19
In his affidavit he also refers to suffering from depression in 1995 due to family problems. He was referred to a psychiatrist, Dr Bagulo, and took Zoloft for approximately four to six months. He lost no time from work. Subsequently he felt stressed from time to time, saw his general practitioner, Dr Asad, and was prescribed Cipramil as needed.
20
His affidavit also refers to his becoming anxious and feeling overwhelmed by the size of the job facing him a couple of months after he started work with the defendant. He again saw Dr Asad, was prescribed Cipramil, and took that intermittently. His symptoms subsided.
21
Whilst it is alleged that situations of conflict and of pressure arose in the workplace during 2000 and early 2001, as best as I can understand the situation the plaintiff next attended upon a doctor for reasons associated with stress on 11 October 2001. On that occasion he was seen by Dr El-Khorury at the Complete Family Care Medical Centre at Newport. He complained of hearing conversations at work in which his boss was talking about how to get rid of him if there was no profit, and generally of a hostile work environment with tension commencing from mid-2000. He was diagnosed as suffering from anxiety and depression secondary to work, was asked to rest for one week, was referred to a psychologist for counselling, and was asked to “continue” on Cipramil.
22
Dr El-Khorury has reported that, on 19 October 2001, the plaintiff had decided not to submit any WorkCover claim and took 10 days sick leave, but was still anxious, tense and had difficulty sleeping. The next reported attendance is on 21 December 2001, which effectively coincides with the plaintiff’s cessation of employment.
23
As stated, it would seem that the plaintiff’s last working day with the defendant was 21 December 2001. His contract of employment continued until 25 June 2002 when it was treated by the defendant as having been repudiated, but it would appear that he did not attend at his workplace for the purpose of performing his duties after 21 December 2001. A discussion of the medical treatment received by him after cessation of work shall follow shortly.
The factual background – events leading up to the plaintiff’s ceasing to perform work duties on 21 December 2001.
24 Mr Brookes conceded at the outset that the defendant would not be challenging the occurrence of the original injury or its relationship to employment, but would be focussing upon incapacity and the requirements of the statutory tests. Therefore, a detailed history of the various events and disputes in which the plaintiff and defendant were involved is not required. However, some understanding of them assists, and accordingly a summary of these events shall follow my findings in relation to the contract of employment pursuant to which the plaintiff was engaged, and arrangements concerning his earnings.
(i) The contract of employment 25 The terms of the plaintiff’s employment with the defendant are set out at some length in a letter of the defendant of 17 December 1998 (Exhibit “MR-1”) exhibited to the plaintiff’s affidavit of 31 August 2006. Essentially the plaintiff was offered the position of Melbourne Department Manager – Accident Benefit & Life, reporting to a gentleman called Brendon Allan, the dual accountability manager being Baldacchino. The plaintiff was to establish an Accident Benefit & Life Practice in Melbourne and develop the business throughout Victoria, South Australia and Tasmania. Certain financial objectives were set out in this regard. It became apparent from the evidence that two other officers of the defendant who were superiors of the plaintiff and who were involved in disputes and the disciplining of him were Michael Collins (“Collins”) and Stephen Warren (“Warren”), the latter being the manager of the zone of which the Australian enterprise was part and, seemingly, the plaintiff’s ultimate superior.
26 As the parties ultimately agreed that the base figure for the purposes of calculating the plaintiff’s “without injury” earnings was $136,017.96, this figure relating to the financial year ending 30 June 2001, it is unnecessary for me to go further into financial details such as those relating to superannuation or the awarding of a bonus. The last mentioned aspect has the potential to be of significance in relation to what the plaintiff might have earned in the years following 21 December 2001 and within the window period, but the role it played in the calculation of the base figure referred to above is not relevant. As shall be discussed, a critical element of the dispute centred not upon the calculation of the base figure, but whether it should be indexed in some way so as to produce a larger figure of “without injury” earnings. Suffice to say at this stage that it was not argued that the contract of employment contained any provision relating to indexation or specified annual increases of salary. Issues of whether or not indexation applies during any part of the window which is relevant, and applicable post-2001, remained after the agreement in relation to the base “without injury” earnings was finalised (see transcript pages 194-196 and 208-210). Perhaps it should be added that by 2001 some difficulties between the plaintiff and the defendant were quite evident, and it would appear that the plaintiff was not paid a bonus in 2001.
27 Mr McCredie made it clear that bonuses were not being relied upon as part of the “without injury” earnings calculations – see transcript page 134 and following. However, he also added that they were “part of the mix”. In any event, it was ultimately agreed between the parties that the base figure of without injury earnings, being for the year 2001, is $136,017.96. Thus, issues of superannuation contributions, bonuses and the like were ultimately removed from consideration when the base figure was agreed.
28 Other issues remaining after this agreement had been reached related to whether any incapacity or limitation suffered by the plaintiff in relation to his “after injury” earnings are attributable to his underlying condition and personality as opposed to being attributable to the injury, and whether the plaintiff’s capacity extends to performing duties similar to those which were performed whilst he was employed by the defendant. However, as I remarked more than once during the conduct of this case, mathematical calculations and the application of the formula contained in s.134AB(38)(e) and (f) seems to me to be at the heart of this dispute.
(ii) Events leading up to 21 December 2001 29 At this stage, I shall not analyse these events in detail. There were a number of them, and I find that they were productive of the injuries sustained by the plaintiff, as has been conceded. The events in question include an apparently erroneous renewal of a policy in respect of Jim’s Mowing in South Australia; the allegedly unauthorised insuring of a mining consultant resulting in a substantial payout following the collapse of a mine; subsequent threats of dismissal by Baldacchino; further clashes with Baldacchino concerning certain re-insurance policies; unhappiness concerning the profit margin; displeasure at an allegedly offensive remark made by the plaintiff to an important superior; a dispute concerning the insuring of Tasmanian jockeys and harness drivers; and general “micro-management” allegedly carried out by Baldacchino in particular and others of the plaintiff’s activities. These areas of dispute shall be examined in greater detail in my Ruling when I am considering whether or not the plaintiff had reached the limit of his capacity and whether the defendant was likely to pay to him increased earnings.
30 On 21 December 2001 the plaintiff met with Baldacchino and some others, and following this the plaintiff was effectively warned that, if his performance did not improve within one month, he would no longer be employed by the defendant. Whilst this may have been more in the nature of a final warning with a time limit imposed, it was not the first time that the plaintiff had been made aware that his employment with the defendant was at risk. As previously stated, 21 December 2001 was the last day upon which the plaintiff attended at the defendant’s workplace and performed any duties.
(iii) The injury and its treatment after 21 December 2001 31 That the plaintiff did suffer an injury arising out of or in the course of his employment was not disputed. That injury has been described in different ways by the various examiners, including both treaters and those who saw the plaintiff for medico-legal purposes.
32 Dr El-Khorury, the treating general practitioner, diagnosed an acute depressed mood with few panic attacks and recurrent somatic symptoms. He referred the plaintiff to a psychologist, Mr Alan Havelock, who saw the plaintiff on four occasions between 22 December 2001 and 16 February 2002. The testing which he carried out indicated that the plaintiff suffered from severe depression. The plaintiff was also referred to Dr John Honey, psychiatrist, who commenced seeing the plaintiff in February 2002. He gained the impression that the plaintiff was anxious and depressed and prescribed appropriate medication. He also diagnosed an adjustment disorder. Initially he felt that any incapacity suffered by the plaintiff was temporary. By January 2003, he was opining that the plaintiff would be fit to return to work during that year, but was also of the view that the plaintiff could not return to the particular job in which he had been engaged. He supported the link between employment and injury. It would appear that he last saw the plaintiff on 6 November 2003 when the plaintiff’s condition remained essentially unchanged.
33 As at 7 October 2003 the plaintiff commenced seeing Dr Malekzadeh who diagnosed anxiety and depression. He felt that matters relating to the court case exacerbated the plaintiff’s condition from time to time. Treatment in relation to insomnia and panic attacks was also carried out. In 2004 the plaintiff commenced working casually up to three days per week. In his last report of 22 June 2009, Dr Malekzadeh felt that the plaintiff still had a partial disability in that he could not carry out his pre-injury duties. Cross examination of this doctor based upon his clinical notes indicated that the plaintiff did suffer from other conditions, and also that the plaintiff was seeing a psychologist, Mr Charles Veevers. Mr Malekzadeh was also cross examined at some length concerning the medication prescribed for the plaintiff, the thrust of the cross examination being to the effect that the plaintiff had not been prescribed any medication such as Valium or Zoloft since August 2004.
34 A psychiatrist who treated the plaintiff, Dr Agit Selvendra, also gave evidence and his reports were tendered. He initially saw the plaintiff on 14 December 2007 and saw him on approximately five occasions until 4 April 2008. He diagnosed social phobia with a significant anxiety episode at the workplace. However, he also expressed the view that the plaintiff had “little limitation of his current work and functional capacity”, but would find it easier to work with employers other than the defendant. In his report of 2 June 2009 he pointed out that the plaintiff was able to work in a full-time capacity whilst undertaking some after hours study. He expressed the view that the plaintiff’s condition was stable and that he should be able to continue working full-time in the insurance industry. He agreed that he could understand how others would have diagnosed the plaintiff’s problem as being an adjustment disorder with depressed and anxious mood. In his evidence he referred to a specific phobia suffered by the defendant, namely social phobia. He had prescribed medication for insomnia.
35 In cross examination Dr Selvendra agreed that the plaintiff was vulnerable to depressive and anxiety conditions. He again referred to a loss of confidence on the part of the plaintiff, in addition to anxiety in relation to the defendant. He also agreed that, when last seen, the plaintiff had a deeper understanding of his condition insofar as it was social phobia. He agreed that the plaintiff was able to work in a full-time capacity and undertake some studies. He expressed the view that the plaintiff’s condition was relatively stable and he should be able to continue working full-time in insurance and in his current job. This may be so even though the plaintiff now takes the initiative less than he used to, and may be less of a “spontaneous self-starter”.
36 Evidence was given by Mr Charles Veevers, psychologist, who commenced treating the plaintiff on 23 October 2008. The plaintiff was “self-referred” to a weekly depression and anxiety group facilitated by Mr Veevers. He initially rated the plaintiff as experiencing extremely severe levels of depression and anxiety but normal levels of stress. By 14 December 2009, the rating was that the plaintiff was experiencing moderate levels of depression, severe levels of anxiety and normal levels of stress. Whilst finding difficulty in assessing the degree to which the plaintiff’s current psychological condition would place restrictions on his earning capacity, Mr Veevers reported that the plaintiff was restricted from performing to his potential. Mr Veevers also referred to anxiety and panic disorder.
37 Mr Veevers also expressed the view that it was too soon to evaluate the plaintiff’s prognosis, and he believed that he was a suitable candidate for treatment. In cross examination he agreed that it was too early to evaluate whether the plaintiff’s condition was permanent. In re-examination, Mr Veevers stated it might take some two years before there was “good improvement” in the plaintiff’s condition.
38 Whilst I shall not go through all of the various reports, the plaintiff has also been examined for medico-legal purposes. Dr Michael Epstein, consultant psychiatrist, examining and reporting at the request of the plaintiff’s solicitors, diagnosed a chronic adjustment disorder with mixed anxiety and depressed mood, and related this to the relevant employment. He expressed the view that ongoing treatment might be necessary, whilst also stating that the plaintiff was clearly able to work on a continuing basis at a reasonable level but could not return to work as a senior manager. He described the plaintiff’s condition as stable.
39 Dr George Wahr, consultant psychiatrist, examined the plaintiff on behalf of the defendant in 2002 and 2003, and, whilst diagnosing an agitated depressive reaction, did not relate this to work.
40 Associate Professor George Mendelson has reported three times to the defendant. His last report is dated 3 March 2008. He diagnosed chronic dysthymic disorder, and stated that, as at the time of that last report, the plaintiff was able to work full-time. He did not relate any incapacity then suffered by the plaintiff to his employment with the defendant. Generally, he did not support the link between injury and employment.
41 In my opinion the plaintiff did suffer injury arising out of and in the course of his employment, this occurring because of the incidents described. In any event, as previously stated, the initial link between employment and injury was conceded.
42 As to the actual description of the injury sustained, some of the diagnoses, whilst employing different terminology, appear to overlap at least to a limited extent. The diagnosis of Dr Epstein of chronic adjustment disorder with mixed anxiety and depressed mood perhaps best summarises the condition, although elements of the social phobia also referred to would appear to be present. On balance, I am satisfied that the plaintiff continues to suffer some impairment in relation to loss of confidence, not being so much of a “self- starter”, and the like. However, it is quite apparent that the plaintiff is able to work full-time in a comparatively demanding occupation, and has demonstrated the ability to carry out some studies at the same time. I am of the view that he continues to have some impairment of a somewhat limited nature. As opined by Mr Veevers, the opportunity for some improvement still remains. It may be that the plaintiff will continue to have some impairment, even if this be seen as relatively moderate, for the foreseeable future, but, given the evidence of Mr Veevers, whether the consequences will continue to be of the same magnitude is a moot point.
43 Given the plaintiff’s previous medical history, including some susceptibility to anxiety and depression, it is certainly arguable that the injury sustained by the plaintiff is in the nature of an aggravation. In accordance with the authorities, I shall take into account only the consequences of the injury in question as opposed to any underlying condition.
Developments since the occurrence of injury
44 As stated, the plaintiff ceased performing work duties for the defendant on 21 December 2001, and his contract of employment came to an end on 25 June 2002. After an earlier failed attempt, in November 2003, he entered into a partnership with another gentleman in respect of maintenance and cleaning services. This was done on a casual basis. In 2004 he felt well enough to look for work in the insurance industry, and contacted employment agencies in this regard. After some frustration in relation to this, he worked as a van driver for approximately six months, and then as a machinist for another six months. In January 2006 he obtained employment in the insurance industry with an insurance broker, earning approximately $42,000 gross per year in addition to superannuation and the use of a car.
45 On 6 August 2007, the plaintiff commenced employment with the Victorian Managed Insurance Authority as an insurance adviser. In order to obtain such employment, he was required to complete a Diploma of Financial Services in Insurance Broking. After obtaining this employment, which is ongoing, he also studied for a Diploma of Financial Services in Risk Management. By the time of swearing his affidavit of 21 October 2009, the plaintiff had completed that course of study, and was undertaking study for a Diploma of Financial Services – General Insurance in order to maintain his status as a Senior Associate with the Australian & New Zealand Institute of Insurance & Finance.
46 The plaintiff continues in his employment as an insurance advisor with the Victorian Management Insurance Authority. It is agreed that, after deductions in respect of superannuation, his “after injury” earnings are $88,975.28. I also accept that, whilst this position might not be as demanding as that which he occupied with the defendant, it is one of some responsibility and requiring some skills and expertise in the insurance industry.
Ruling 47
Having found that an injury occurred as alleged and that there are some ongoing consequences, albeit far from totally disabling, which flow from it, I now turn to my ruling in respect of the discharge of the burden of proof.
48
It seems to me that the starting point must be whether or not the “40 per cent” requirements of the formula contained in s.134AB(38)(e) and (f) have been satisfied. Mr McCredie conceded that, if they were not, there was no point in moving on to the narrative or “very considerable” test. I agree with that. Accordingly, I shall now rule as to whether or not the statutory requirements have been met.
(i) “After injury” earnings 49
These are agreed. The relevant figure is $88,975.28. There may well be argument as to whether or not this represents the plaintiff’s entire earning capacity or whether, if such earnings are less than those which he was achieving with the defendant, this is as a result of an underlying disorder rather than being a consequence of the relevant injury. However, for the purposes of the present exercise, I shall treat the plaintiff’s “after injury” earnings as being $88,975.28.
(ii) “Without injury” earnings 50
As stated, what can be described as the base figure for these is $136,017.96. It is agreed that this is the highest figure which the plaintiff earned prior to injury. There is no evidence of what a comparable employee might have subsequently earned, and indeed it was explained by Mr McCredie that such a figure could not be obtained owing to the unique position occupied by the plaintiff, he having been headhunted effectively to set up this particular department. It was suggested by Mr Brookes that a Mr Esposito, who signed a contract of employment with the defendant on 4 July 2007, could be such a comparable employee. This was disputed by Mr McCredie, given the passage of time in which the plaintiff was engaged and the work which he performed. I am inclined to agree with Mr McCredie that Mr Esposito is not a comparable employee. Firstly, he entered into the contract of employment well outside the closing of the window. Secondly, the salary package payable to him of $143,000 per annum, if used as a comparator, would leave the plaintiff falling short of establishing the required 40 per cent loss.
51
If the figures referred to above ($88,975.28 and $136,017.96) are compared, and as revealed by the calculations thoughtfully provided by Mr McCredie, the plaintiff’s “after injury” earnings are 65.41 per cent of the base “without injury” earnings. Therefore, he would fail.
52
To his affidavit of 4 November 2009, the plaintiff exhibited a budget estimate for the year 2002 which had come into his possession. That estimate revealed an increase in his salary package of four per cent, although, as quite rightly conceded by Mr McCredie, some error seems to have occurred and the actual budgeted increase is three per cent. Otherwise, there is no evidence available as to prospective earnings of the plaintiff with the defendant or the earnings of comparable employees. In those circumstances, the plaintiff has been forced to rely upon increases between the date of injury and the closure of the window which allegedly would have occurred as a result of Average Weekly Earnings Indexation or upward movements in the Consumer Price Index.
53
Firstly, because of the peculiar position of the plaintiff and the difficulties in relation to the profitability of his division and of the defendant generally, I am far from convinced that the budget estimate for 2002 would have resulted in his salary being in fact increased. Budget estimates are just that. There is no satisfactory evidence that it was guaranteed, or that the plaintiff was promised, any such increase. Secondly, even if it were accepted that the plaintiff would have gained such an increase, and even allowing for four per cent as opposed to what seems to be the correct figure of three per cent, the revised figure for “without injury” earnings would be $141,458.68. His “after injury” earnings would be 62.90 per cent of that figure. The plaintiff would still fail to meet the statutory requirements.
54
Accordingly, if the plaintiff is to succeed, his “without injury” earnings must be greater than the maximum figure which it is agreed that he earned prior to injury, and greater than those contained in the budget estimate, even assuming that such estimate was applicable. This can only be achieved by indexation, and, as conceded by Mr McCredie, only if such indexation was carried out in accordance with Average Weekly Earnings. Increases calculated in accordance with the Consumer Price Index and then translated into “without injury” earnings would still leave the plaintiff marginally short of satisfying the statutory requirements.
55
There is no satisfactory evidence before me to indicate that the plaintiff’s remuneration package would have increased in accordance with either Average Weekly Earnings or the Consumer Price Index.
56
There is nothing in s.134AB(38) which mandates indexation either by way of Average Weekly Earnings or by the use of the Consumer Price Index. In particular, there is no reference to the use of indexation in relation to “without injury” earnings during the six year window. “Without injury” earnings are to be calculated by ascertaining the gross income which the relevant worker was earning, was capable of earning, or would have been capable of earning during that part of the window period which most fairly reflects the worker’s earning capacity had the injury not occurred. This assessment is made on the basis of the evidence available and it was not suggested that the onus in this regard lies anywhere other than on the plaintiff.
57
There may be situations where the evidence takes one to a consideration of, for example, the Consumer Price Index. It may be that, in a particular case, a contract of employment is linked to such Index or that the evidence otherwise establishes that, in measuring earning capacity, the nature of the particular employment in some way ties it to such Index. That is not the situation here. There is no evidence that the plaintiff’s earnings had been, or would be, linked to either the Consumer Price Index or Average Weekly Earnings. His was something of a unique position and, after his initial salary was fixed, thereafter his income was performance based and, it would seem, at least in part related to the profitability of the enterprise.
58
The situation concerning indexation and s.134AB is to be contrasted with that which prevails in relation to statutory benefits. Section 100 of the Act deals with the indexation of such benefits and the formulae to be applied. No such provisions are to be found in relation to s.134AB.
59
I do not accept the arguments of Mr McCredie in relation to a type of “broad brush” approach which should be adopted in relation to average weekly earnings and how they tend to balance out over a period of time. I also do not accept that there exists a type of reverse onus whereby, it having been established that average earnings have increased during the window period, it was then up to the defendant to prove that, effectively, the plaintiff would not have been the recipient of some form of increase. In my view, pursuant to the Act, the burden remains with the plaintiff.
60
In summary, I reject the argument that some form of indexation should be applied in this case, and I am certainly not satisfied that the amount of the applicant’s earnings prior to injury should, virtually automatically, be indexed and increased over the following years in accordance with average weekly earnings. I appreciate that this means that, given the basis upon which the plaintiff’s case was presented, he does not succeed. However, it seems to me that I should also consider the issue of the plaintiff’s capacity generally and fix a figure representing “without injury” earnings.
61
What s.134AB(38)(e) and (f) require is the assessment of capacity as described above. In my opinion the figure of $136,017.96, being the agreed figure for the 2001 year, is the figure which should be adopted as “without injury” earnings. On the basis of the evidence that has been adduced, it is that year which more fairly reflects the plaintiff’s capacity had the injury not occurred. I have arrived at this conclusion for the following reasons:
(a)
There is no satisfactory evidence that the plaintiff’s earning capacity would have increased beyond that amount. Indeed, the available evidence suggests that he had reached the limit of such capacity, if not gone beyond it. Certainly there is no satisfactory evidence that in the years following 2001 his earnings or earning capacity would have increased. The fact that there exists a budget estimate of somewhat unclear origin and made on a date which is not readily apparent does not mean that the plaintiff’s earnings would have increased in this fashion. Indeed, given the dissatisfaction of management with his performance, such an increase does not seem to have occurred and it strikes me as being highly unlikely that it would have occurred had the plaintiff continued to work for the full financial year. It is also to be remembered that, even if such an increase was allowed and the financial year ending 30 June 2002 selected as being the period which most fairly reflected the plaintiff’s earning capacity had the injury not occurred, he would still fall short of establishing the required 40 per cent reduction in income.
(b)
Apart from there being no satisfactory evidence that the plaintiff’s earning capacity would have increased above that which existed in the financial year ending 30 June 2001, the evidence is suggestive of the fact that such year represented the limit of his capacity. The plaintiff was headhunted to perform a particular task and occupy a particular position. I accept that there were demands upon him. After a promising start, difficulties arose.
In April 2000 there were the problems in relation to the policies with franchisees of Jim’s Mowing in South Australia. The plaintiff admits in his affidavit of 31 August 2006 that he erroneously left Baldacchino with the impression that such policies would not be renewed with the defendant and it would be off risk. In fact, he had not organised this, and ultimately failed to contact the relevant broker until after the renewal period, by which time she had rolled over the policies. The plaintiff has stated frankly in this affidavit that: “Although I had much work on at the time I had made a mistake and was not proud of my failure”.
At about the same time, a problem arose in relation to a policy underwritten by the plaintiff in respect of accident insurance for a mining consultant. Baldacchino was highly critical of this, informing the plaintiff that the individual risk written was above his authority. He was also critical of the fact that the plaintiff had not supplied a list of the insured’s duties which should have referred to matters such as underground mining work, a risk which had to be carefully underwritten. The mining consultant was seriously injured in a mine collapse, and Baldacchino was critical of the fact that the plaintiff had at no time mentioned or referred to the risk which was involved. Effectively as a result of this, the plaintiff’s authority to underwrite personal accident and sickness business in any form was withdrawn for a minimum of three months. Whilst the plaintiff had an explanation in relation to this incident, the impression which I gained was that he had not performed in accordance with his authority and there is no doubt but that management was highly displeased.
On 5 February 2001 the plaintiff completed a self appraisal, this being Exhibit MR-9A to the affidavit of 31 August 2006. In that he clearly indicated that he did not meet business goals in relation to commission and loss ratio. He gave himself a zero in relation to the item “Keypunch loss ratio under 40%” and, in relation to strategies relating to profit performance, gave himself only a one, the observation opposite this being “liaison with Claims department achieved but not often enough and not monitored with regularity”. Thus, the plaintiff himself appears to have been aware of some shortcomings in his performance.
In his email to the plaintiff of 7 June 2000 (Exhibit “MR-6”) following the problem with the mining consultant, Baldacchino informed the plaintiff that his behaviour had been unacceptable and that his underwriting attitude must change. Indeed, he went so far as to state that: “If any other matter like this occurs your tenure at the company will cease immediately. Personally I believe you can do the job we want you to.” Some advice followed.
In July 2001 the plaintiff was reprimanded by Baldacchino in respect of a remark made by the plaintiff to the Australian manager at a luncheon. In his affidavit the plaintiff has described the remark as being “mildly offensive”, but it resulted in further disciplining.
In August 2001 the plaintiff was in further trouble in relation to policies written for Tasmanian jockeys and harness drivers. In an email from Stephen Warren, the zone manager of the defendant, to Baldacchino, very considerable criticism of what had occurred in relation to the assumption of this risk was conveyed. Mr Warren set out that in the plaintiff’s authority to underwrite business it was specifically stated that professional or semi-professional sports and the like had to be referred to the zone, and this had been ignored. Mr Warren concluded that to say that he was disappointed was a gross understatement and that, if this type of thing happened again, more drastic action would be taken against the people concerned. Baldacchino passed on the Warren email to the plaintiff and included some critical remarks of his own.
Following a meeting in October 2001, arrangements were put in place to monitor the plaintiff’s work. Late in October 2001, he was reprimanded for lateness. Micromanagement of his daily activities was subsequently increased. On 7 November 2001 Michael Collins, another officer of the defendant, sent the plaintiff a copy of an email which, inter alia, stated that: “Whilst I wish to work with him in a supportive way I think it is important for Mike Roleff to know that if substantial improvement was not achieved then the outcome would be that he would be dismissed”.
The plaintiff took two weeks leave, which had previously been requested, from 30 November 2001. On that day, Mr Collins forwarded to the plaintiff an email setting out a list of things that were to be done pursuant to the plaintiff’s performance improvement plan. He stated that he did not believe that the plaintiff had implemented what was in an earlier email or followed the timetable contained in it. The email of 30 November 2001 also contained the observation that: “This will give you food for thought on your leave period and you may be able to get a head start on some of these tasks so that when you return to work in mid December you can achieve all that we need you to achieve. Failure to achieve these issues in the time frames and quality required will put your employment at risk”.
Following the plaintiff’s leave, he had a further meeting with Mr Collins and Baldacchino. An email of Mr Collins of 21 December 2001 included a summary of things that were said at that meeting, including the fact that Mr Collins’ email of 30 November should be taken very seriously and that, essentially, improvement was required or the plaintiff’s employment was at risk. The conclusion was that Baldacchino and Collins advised the plaintiff that they would meet again in approximately one month to assess the extent of the improvement in his performance and, if it was unsatisfactory, he would no longer be employed. Of course, the plaintiff did not work after 21 December 2001.
I have set these matters out at some length so as to illustrate why I consider it to be highly unlikely that the plaintiff would have earned an increased amount had he remained in employment with the defendant. It is quite apparent that several of his superiors were displeased with his performance and had been displeased for some time. In those circumstances, it seems to me that the plaintiff’s income for the year ending 30 June 2001 represents the high watermark of his earning capacity during the relevant six year period. That year most fairly reflects his capacity had the injury not occurred. Indeed, it might be said that this may be a somewhat generous approach to take. There is no evidence or suggestion that the plaintiff may have been able to earn a figure in excess of $136,017.96 in some other employment.
(c)
Because of the particular nature of the plaintiff’s employment with the defendant, it was stated on his behalf that no evidence was available concerning the earnings of a comparable employee. It was asserted that no such comparable employee apparently exists with the defendant, and certainly no evidence was adduced by the plaintiff in this regard. I have previously commented upon the reference to Mr Esposito.
(d)
I would again refer to and repeat my conclusion that indexation, whether based on average weekly earnings or at all, is inappropriate in this case.
Conclusion as to “without injury” earnings
62 In summary, there is no satisfactory evidence which establishes that the plaintiff’s “without injury” earnings should be set at a figure any higher than the agreed figure for the year ending 30 June 2001. As stated several times, the financial year ending 30 June 2001 is the period which most fairly reflects the worker’s earning capacity had the injury not occurred. Therefore I find that the plaintiff’s “without injury” earning capacity is $136,017.96.
Conclusion as to “after injury” earnings
63 As stated, the plaintiff’s “after injury” earnings have been agreed in the sum of $88,975.28. I make this finding accordingly.
The application of the formula contained s.134AB(38)(e) and (f)
64 When the required comparison is made using the figures which I have found and which are set out above, the financial loss which is produced is one of 34.59 per cent. It is comfortably below the 40 per cent reduction required, and, as previously stated, this would be the case in relation to any comparison unless increases in accordance with Average Weekly Earnings were applied in the years following the injury and within the window period. There is no statutory reason or evidence which would compel or induce me to take such a course, and the end result is that the statutory requirements are not met. The plaintiff has failed to establish that he has a loss of earning capacity of 40 per cent or more. Given the reservations which I have concerning the permanency of his condition at its present level of incapacity and of the level of consequences resulting, I am also not satisfied that he will continue to have a loss of earning capacity of that magnitude for the foreseeable future. The possibility of further improvement would seem to exist.
Conclusion
65 The plaintiff has failed to discharge the burden of proof in relation to leave in respect of pecuniary loss damages. It was stated at the outset on his behalf that, if he so failed, there would be no argument that he should succeed in relation to pain and suffering damages. In any event, I find that he has also failed to discharge the burden of proof in this regard. That failure arises because of the fact that he is in full-time employment earning a considerable salary; his current treating psychologist, Mr Veevers, has given evidence that his condition may well improve; and the material contained in his affidavit and elicited from him in the witness box simply does not establish that his pain and suffering consequences are of such moment as to satisfy the “very considerable” test.
66 Accordingly, the application is dismissed. I shall hear the parties as to any ancillary orders that may be required.
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