Shankar v The Uniting Church in Australia; Shankar v Domino's Pizza Enterprises Limited - [2012] NSWSC 1552

Supreme Court

New South Wales

Medium Neutral Citation: Shankar v The Uniting Church in Australia; Shankar v Domino's Pizza Enterprises Limited [2012] NSWSC 1552
Hearing dates: 12.04.2010 - 16.04.2010, 19.04.2010 - 20.04.2010, 12.05.2010 - 13.12.2010
Decision date: 13 December 2012
Jurisdiction: Common Law
Before: Hidden J
Decision:
Judgment for plaintiff against first defendant

Catchwords: PROCEEDINGS FOR DAMAGES - personal injury - accident at retreat conducted by first defendant in course of plaintiff's employment by second defendant - claims under Trade Practices Act, alternatively Civil Liability Act - claim under Trade Practices Act successful.
Legislation Cited: Civil Liability Act 2002
Trade Practices Act 1974 (C'th)
Cases Cited: - Action Paintball v Clarke [2005] NSWCA 170
- Galea v Bagtrans Pty Ltd [2010] NSWCA 350
- Earle v Castlemaine District Community Hospital [1974] VR722
Category: Principal judgment
Parties: Vinay Shankar (plaintiff)
The Uniting Church in Australia Property Trust (NSW) trading as Vision Valley Conference & Recreation Centre (first defendant);
Domino's Pizza Enterprises Limited t/as Domino's Pizza (second defendant)
Representation: A J Lidden SC with J M Fraser (plaintiff)
S Torrington (first defendant)
P N Khandhar (second defendant)
Robert Brydon, Bryden's Law Office (plaintiff)
Gillian Davidson, Sparke Helmore (first defendant)
Samuel Kennedy (Turks Legal) (second defendant)

File Number(s): 2009/29762; 2009/29760

Judgment

HIS HONOUR: The plaintiff, Vinay Shankar, brings these proceedings for damages for personal injury said to have been sustained in the course of an incident which occurred on 6 November 2003 at the Vision Valley Conference and Recreation Centre. That centre is on a semi-rural property at Arcadia, and at the relevant time was operated by the first defendant, The Uniting Church Property Trust (NSW) trading as Vision Valley Conference and Recreation Centre. I shall refer to the first defendant as "Vision Valley." Mr Shankar was undertaking activities at the centre in the course of his employment by the second defendant, Domino's Pizza Enterprises Limited, to which I shall refer as "Domino's."

At the time of the incident Mr Shankar was 27 years old. He was the manager of the Domino's store at Rooty Hill. At Vision Valley he and other Domino's employees were attending a retreat directed to their personal development. It is common ground that Domino's required their attendance. A feature of the retreat was their participation in challenging physical exercises designed to foster their self-confidence and their bonding.

Mr Shankar gave evidence that on 5 November 2003, the day before the retreat, he injured his left hand in a minor accident at the Rooty Hill store. He slipped on the floor, grabbed hold of a bench to steady himself, and in the process impaled his hand on a document spike on the bench. His fiancée, who was a nurse, was in the vicinity. She applied disinfectant to the wound and bandaged his hand. He said that it was quite painful and that movement of his hand was restricted. This was still the case on the following day.

On that day, 6 November, he attended Vision Valley with fellow Domino's employees. Also present were senior members of Domino's staff, including Mr Grant Bourke. They were addressed by a member of the Vision Valley staff, whom he knew only as Bernie and who appeared to be running the retreat. The exercises were conducted by Vision Valley instructors.

Mr Shankar attempted four of the exercises. The first, called "Vertical Challenge", involved climbing a set of timber rungs. He said that he was unable to complete it because he had difficulty gripping the rungs with his left hand.

It was the second exercise, known as the "Leap of Faith", which is alleged to have caused the personal injury the subject of these proceedings. For the purpose of this exercise Mr Shankar wore a helmet and a harness, to which a rope was attached. He climbed a tall tree, using metal U-bars driven into the trunk, until he reached a platform attached to the tree 7 or 8 metres above the ground. The rope was threaded through a pulley attached to a cable suspended above the platform, and the other end of it was controlled by two Vision Valley instructors on the ground. Their function was to control Mr Shankar's movement during the exercise by a process known as belaying, which I shall examine later.

A trapeze bar was suspended about a metre out from the platform. Mr Shankar's task was to summon the courage to jump from the platform and, if possible, seize that bar. If he succeeded, he was to let go of the bar and was to be lowered gradually to the ground by the belayers controlling the rope below. If he did not reach the bar it was still the task of the belayers to ensure his gradual descent.

He was reluctant to undertake this exercise. He told Mr Bourke, who was with the group, that his left hand hurt and he did not think that he could do it. Mr Bourke had previously done the exercise himself. He asked the Vision Valley instructor who was co-ordinating it to reassure Mr Shankar that it was safe. That gentleman said to Mr Shankar, "You'll be fine." He saw several Domino's employees do the exercise before he did. Some succeeded in seizing the trapeze bar but others did not. However, in each case the participant was lowered safely to the ground.

When Mr Shankar climbed the tree and got to the platform, he was scared. Mr Bourke urged him to "have a go," as did his fellow employees in the group. He jumped and reached the trapeze bar, grasping it with both hands. The impact hurt his left hand and he released it. Because he could not maintain his hold with his right hand alone, he let go and he fell. His evidence was that he fell some distance in an uncontrolled manner until he came to a sudden stop. In the process his body turned, so that he was suspended more of less horizontally, with his head down, and upside down. He said that when he stopped he was at about eye level with the instructors on the ground. He was then lowered gradually to the ground, landing on his buttocks.

In evidence in chief he said that his uncontrolled fall was for "a few metres," but in cross-examination he said that it was "about a metre or two metres." However, if it is true that he came to a stop at eye level with instructors on the ground, and accepting that the platform was 7 or 8 metres high, he must have fallen for something of the order of 5 metres.

His evidence was that when he stopped abruptly he felt pain in his lower back, radiating down his legs. He tried two further exercises, but could not complete them because of his back pain. He stayed at the centre overnight, but could not sleep. It is his case that the back condition endured, and that it was significantly aggravated about 5 months later, on 25 March 2004, when he was performing duties at the Domino's store at Wentworthville. Apart from a spinal condition, his claim extends to problems with urination and bowel movements, together with psychological sequale. These conditions are said to have had a significant effect upon his professional and personal life.

Nobody who was present at the Leap of Faith when Mr Shankar undertook the exercise was called to give evidence: none of the Domino's employees, including Mr Bourke, and no one from Vision Valley, in particular, the instructors. The reliability of Mr Shankar's account falls to be tested by reference to evidence from Vision Valley staff at the time about the practice surrounding the exercise and the equipment used, together with expert evidence.

Two issues which occupied some time in evidence and submissions can be put to rest. Firstly, in accordance with the practice at Vision Valley, it was made clear to Mr Shankar and the participants that, while they were encouraged to undertake the exercises, they were under no obligation to do so. It was for each of them to assess whether he or she was prepared to undertake any particular exercise. Mr Shankar agreed in cross-examination that, although he was reluctant to do the Leap of Faith, he "chose to accept this challenge ... ."

Secondly, while counsel for Vision Valley did not challenge Mr Shankar's evidence that he had injured his hand the day before, it was not conceded that he appeared to Vision Valley instructors to have such an injury or made it known to them that he did. Evidence was led from the Program Manager at Vision Valley at the time, Mr Nicholas Cole, that a person with such an injury would not have been permitted to take part in the Leap of Faith. However, the condition of Mr Shankar's hand is not relevant for present purposes. As I have said, he should have been lowered safely to the ground whether or not he succeeded in seizing the trapeze bar. Moreover, having seized the bar, the object of the exercise was for him to release his grip, trusting that his descent would be controlled by the belayers. That the injury to Mr Shankar's hand had no bearing on the question of liability was affirmed in the expert evidence and, ultimately, was accepted by the parties.

Expert evidence about the Leap of Faith was given by two appropriately qualified scientists: Mr Richard Delaney, engaged by Mr Shankar's solicitors, and Dr Andrew Short, engaged by the solicitors for Vision Valley. Both of them supplied reports, supplemented by concurrent oral evidence in court and during an inspection of the scene. At that inspection I also saw a demonstration of the exercise, as it is currently conducted, by members of the Vision Valley staff. The expert reports, particularly that of Dr Short, are lengthy and detailed. However, their concurrent evidence had the benefit of narrowing the issues raised by them.

It is necessary to examine more closely the belaying equipment in use at the relevant time. As I have said, Mr Shankar was wearing a harness to which the rope was attached. There is a dispute about the nature of that harness, and that is a matter to which I shall return. Of the two instructors acting as belayers, one was also wearing a harness, to which was attached a belay device. The rope towards ground level was threaded through that device, and there was an attachment to the device anchored to the ground. The operation of that device is also a matter to which I shall return.

That belayer's function was to control the rope during Mr Shankar's ascent to the platform and, more importantly, during his descent after he leapt from it. Behind that belayer was another instructor acting as a backup belayer. That person did not have any equipment, but assisted by gripping the lowest end of the rope with his or her hands. The general layout of the area where the exercise was conducted, and the position of the belayers, is represented diagrammatically in figures 1 and 2 in Mr Delaney's report.

On the basis of Mr Shankar's account, Mr Delaney concluded that the incident was the result of an inappropriate harness and poor belaying. Mr Shankar gave evidence that he was supplied with a "sit" harness, that is, a harness resembling a pair of hipster briefs to which the belay rope was attached at the front at waist level. Mr Delaney explained that a harness with such an attachment, close to the wearer's centre of gravity, permits a person to fall in a variety of orientations. In particular, a person might flip over and descend more or less head first, landing on his or her buttocks, in the very way Mr Shankar had described.

Mr Delaney's evidence was that this would not have occurred if Mr Shankar had been wearing a full body harness, that is, a harness which is a single assembly of interconnected shoulder and leg straps. A person wearing a full body harness is depicted in photographs A1, A14, A16 and A18 in Dr Short's report. In such a harness the belay rope is attached dorsally, towards the middle of the back between the shoulder blades. With that harness a person descends in an upright position, landing on his or her feet. The difference is illustrated diagrammatically in figures 2 and 3 in Mr Delaney's report.

However, Mr Delaney continued, even with a sit harness proper belaying should have ensured a "soft catch", his weight being taken by a tight rope as soon as he let go of the trapeze, and enabled a gradual, safe descent, even if his body had assumed an inverted position. The fact that he was in free fall for a significant distance could be attributed only to faulty belaying.

Mr Delaney reported that the manner of Mr Shankar's fall would have resulted in the application of "a sudden folding force" to his body, translating to "both tension and shearing forces at the lumbar spine." A surgeon, Dr Max Ellis, gave evidence that the accident was "very dangerous" in its effect upon the intervertebral discs of the spine, saying that upon the sudden arrest of a fall, "the mobile parts of his spine, the cervical spine, the neck and the lumbosacral discs, being least supported, are very likely to be subjected to violent movement and injury." He noted a CT scan of 11 November 2003, five days after the incident, which disclosed a moderate left posterior disc prolapse at L5 - S1. This, he said, was consistent with the injury Mr Shankar claimed to have suffered.

Dr Ellis was an expert witness in Mr Shankar's case. His view on this was not shared by Dr Paul Spira, a neurologist who gave evidence in Vision Valley's case. He reported that the incident was more likely to have caused injury "to soft tissue structures with referral from muscles in his low back." His evidence was that this was consistent with the attitude of Mr Shankar's body descending in a sit harness, depicted in figure 2 in Mr Delaney's report. This, he said, could lead to a hyperextension injury, leading to musculo-ligamentous strain, as opposed to a hyperflexion injury, which is more likely to cause a disc protrusion. In the CT scan of November 2003 he observed what he described as "some chronic changes", which suggested that the moderate disc prolapse at L5 to S1 might have predated the incident. This is a controversy which I will revisit when dealing with damages but, on either view, it is clear that the fall described by Mr Shankar could have led to a significant back injury.

In Vision Valley's case two former employees who occupied senior positions at the relevant time were called. I have already referred to Mr Cole, the Program Manager at the time. Also called was Mr Matthew Davidson, who was then the Manager of the centre.

Mr Cole gave evidence that at the relevant time the harness used for the Leap of Faith was what might be called a "double" harness, comprising a sit harness and a chest harness which were connected at the centre by a karabiner. He was appointed the Program Manager in late 2000, when sit harnesses were used for the exercise, but he said that they were replaced by double harnesses in 2002. Mr Shankar was firm in his evidence that he used a sit harness only, and this issue was pursued in cross-examination of both Mr Cole and Mr Davidson. From inventories of equipment kept by Vision Valley it appears that there were three chest harnesses at the centre at the relevant time, although the question was raised whether they were sufficient to ensure that a double harness would always be available for the Leap of Faith.

In the event, this question does not need to be resolved. It was the evidence of both Mr Delaney and Dr Short that with a combination sit and chest harness the belay rope was still attached frontally at waist level, rather than dorsally. Mr Delaney made it clear in oral evidence that the crucial difference between a full body harness, on the one hand, and a sit harness or double harness, on the other, is the position of the rope attachment. It is the dorsal attachment on a full body harness which ensures that the wearer remains in an upright position during descent. He was "firmly of the opinion" that only a full body harness should have been used for the exercise.

Indeed, Mr Delaney noted that Vision Valley subsequently adopted full body harnesses (with dorsal attachments) for the Leap of Faith, and that that is its current practice. That was the system in place when Dr Short inspected the facility, and he prepared his report upon the assumption that full body harnesses were in use in 2003. It was in the light of that assumption that he expressed the view in oral evidence that it would be "extraordinary" for someone "similar to Mr Shankar's age" to sustain an injury in the activity.

Dr Short was asked in cross-examination whether there would be "far more scope" for spinal injury to a person if that person fell "to a horizontal position" wearing "a simple sit harness with the top half of the body completely unrestrained" rather than "a full harness with a point of attachment to the back". He replied, "Yes, with an inexpert participant it falls around more on the spine certainly." He assumed that Mr Shankar was an inexpert participant. However, when Mr Shankar's description of his fall was put to Dr Short, and it was also put that he had fallen 4 or 5 metres, the doctor said, "It's not possible to tell that this would exceed the forces that would normally cause spinal injury such as Mr Shankar's."

The belay device is a braking mechanism designed to prevent or inhibit the free play of the rope during the participant's descent, so as to promote a gradual descent and a safe landing. There is an issue as to which of two belay devices was in use at the relevant time. One is the Sticht plate, explained at par 8.2 of Mr Delaney's report and depicted in figure 5. He gave evidence that it is not an automatic locking device. It works on friction, and will not prevent the play of the rope without manual control by the belayer. How that control is achieved is explained in par 8.1 of Mr Delaney's report. In evidence, the experts were agreed that if that manual control is lost it is difficult for the belayer to prevent the rope playing out through the device. It is for that reason that a backup belayer is employed.

The other device is the GriGri, which is an automatic locking device. It is explained in appendix B to Dr Short's report, and is depicted in photograph A7. If the belayer were to release the rope during descent, a cam would automatically pinch the rope and brake the descent. However, it emerged in evidence that the rope must be loaded into the device in a particular direction. If it is loaded in the wrong direction the locking device would be ineffective.

A GriGri was the device used for the Leap of Faith when Dr Short inspected the activity and, again, he prepared his report upon the basis that it was in use in 2003. That, however, is far from clear. Mr Cole gave evidence that when he took up his position at Vision Valley Sticht plates were in use. He said that GriGris were "trialled" in 2001, as I understand it, using devices supplied by a couple known to him who were involved with ambulance rescue. He estimated that GriGris were being used for the Leap of Faith by "at least the end of 2002."

However, the first entry concerning a GriGri in the inventories to which I have earlier referred was made in December 2003. It was put to Mr Cole that it was only then that GriGris came into use, and that his recollection about that matter was a year out. He postulated that it may have been only then that Vision Valley purchased GriGris but that in the meantime they had continued to use the trial devices. With respect to Mr Cole, I have difficulty accepting that. No doubt, a trial of GriGris was undertaken before the end of 2003, but he acknowledged that some of his staff did not like to change from using the Sticht plate, which was, as he put it, "by far and away ... an easier device to set up and load." I think it more likely that GriGris were adopted as the appropriate belay device at the end of 2003, after the retreat which Mr Shankar attended.

As I have said, Mr Delaney's evidence was that Mr Shankar's free fall was the result of poor belaying. It was his opinion that the instructor with the belay device made one of two possible errors. The first was that that person did not control what he termed the "brake" rope by the method set out in par 8.1 of his report, so as to ensure that at least one "closed, stationary hand" was on that rope at all times. The other was that he did not have a "brake" hand on the rope at the moment when Mr Shankar released his grip on the trapeze bar, in which event it would be difficult to retain control of the rope as he began to fall. In either event, it seems, the instructor acting as backup belayer failed, or was unable, to promptly secure control of the rope.

In cross-examination, Dr Short agreed that if Mr Shankar had fallen several metres, a Sticht plate was in use, and there was no mechanical failure in the belay equipment, there must have been inattention on the part of the main belayer. In particular, he agreed with Mr Delaney about the difficulty that belayer would have had in controlling the rope if he or she were not holding it at the moment Mr Shankar fell. For completeness, I should add that, if a GriGri were being used, it is most unlikely that the rope had been fed into it in the wrong direction so as to be unable to control Mr Shankar's fall. As Mr Delaney pointed out, in that event it would be surprising that all of the participants who undertook the activity before Mr Shankar descended without incident. However, as I have said, I am satisfied on the probabilities that a Sticht plate was used.

I should also add that two other matters were explored in the evidence: where the belayers were positioned at the relevant time and what type of rope was used. Dr Short observed a particular location in relation to the platform and the trapeze bar where the belayers were located, and noted that dynamic, rather than static, rope was being used. Those were also assumptions upon which his report was prepared. However, whether that was the situation in 2003 was also questioned in the evidence. In the event, the possible significance of those matters was not the primary focus of the evidence and was not pursued in final submissions. Mr Shankar's case was put on the basis of an inappropriate harness and poor belaying, and it was to that case which Vision Valley responded.

Both Mr Davidson and Mr Cole said that instructors conducting the Leap of Faith had to be at a senior level, having undergone extensive training. I do not doubt that that was so, although the detail of that training was not explored in the evidence. Both men said that at the relevant time there was in place a system of reporting any unusual incidents during the conduct of the Leap of Faith. Mr Davidson, who was employed at the centre from 1989 to the beginning of 2007, could not recall any such incidents. Mr Cole described a few incidents, quite different from Mr Shankar's experience, which had been reported during his time at the centre. He did recall one participant who "went upside down" after jumping from the platform, but he said that he never heard a complaint about belaying. He had been employed at the centre from 2000 till the beginning of 2004, although he returned from time to time as a visitor between 2005 and 2009.

From this evidence I would not be prepared to draw the inference that there was no report of an incident involving Mr Shankar and that, accordingly, his participation in the Leap of Faith must have been unremarkable. Both Mr Davidson and Mr Cole were giving evidence from memory, unaided by Vision Valley records, more than 6 years after the event. No incident reports from around the relevant time were produced. I think it entirely possible that there was a report of the incident or, if there was not, that was an omission.

All that said, I do not doubt that the Leap of Faith, properly conducted, has been a safe activity. Mr Cole estimated that in the period of roughly 3 years he was employed at the centre, over 50,000 people undertook the exercise, and I accept that unusual incidents in the course of them have been rare indeed. There is nothing in the evidence to suggest that anyone else has suffered any significant injury over the many years the activity has been in place. Mr Delaney had had extensive experience of the Leap of Faith, and he said that he had never seen anyone undergo free fall for several metres.

Liability

In his report Dr Short concluded that the equipment used for the Leap of Faith met relevant Australian Standards, that suitable procedures were conducted to minimise or eliminate slack in the rope and that, in the absence of a pre-existing condition, there would be "no expectation of injury for a healthy person below the age of 50 years." However, as I have said, his report was based upon assumptions about the exercise as it was in 2003 which I find to be contrary to the evidence: in particular, the use of a full body harness and of the GriGri device. I accept the submissions of Mr Lidden SC, who appeared with Ms Fraser for Mr Shankar, that Mr Delaney's report is to be preferred, given that it was based on correct assumptions, and having regard to his greater knowledge and experience of the Leap of Faith.

Broadly speaking, when in their concurrent evidence the two experts made the assumptions established by the evidence, there was not a marked divergence in their opinion. True it is, as I have said, that Dr Short questioned whether Mr Shankar would have suffered significant spinal injury even assuming the incident occurred as he had described it. True it is also that Dr Short has expertise in biomechanics, while Mr Delaney does not. Nevertheless, the probability of such a free fall causing some sort of back injury is established by the medical evidence.

Vision Valley

On the question of liability, the primary submission of counsel for Vision Valley, Mr Torrington, was that the incident alleged by Mr Shankar did not occur, and his descent in the course of the Leap of Faith was normal. Mr Torrington noted that no eyewitness was called in Mr Shankar's case. That submission, however, cuts both ways. Mr Lidden pointed out that the same was true of Vision Valley's case. The hearing, of course, was many years after the event. It may be that people who were present when the exercise was undertaken could not be identified or were not available to give evidence. About this, however, there was no evidence in either case. I can do no more than decide the matter on the material I have, without drawing any inference from the absence of evidence I might have had.

In cross-examination of Mr Delaney, Mr Torrington raised the possibility that Mr Shankar's account might have been the result of a mistaken perception of what occurred during his descent. Mr Delaney agreed that participants in the activity who had never done it before might have different perceptions of what occurred, even though on each occasion the belaying was appropriate and their descent was normal. It emerged in the evidence of Dr Short that, with appropriate belaying, there might still be a measure of free fall at the beginning of the descent, albeit minimal. Asked how participants might perceive the manner in which their descent was stopped, Mr Delaney said that there would be "a very different reported experience of whether it was a sudden catch or a gradual arrest of that movement." Asked whether he would accept that participants might even perceive a slow descent as being sudden, he replied, "To some extent, but I can't make that generalisation."

Nevertheless, I accept that Mr Shankar did undergo a free fall and an abrupt stop, as he described. I cannot say how far he fell but I accept that it was a significant distance. His account of the manner in which his body turned in the process is consistent with the evidence of Mr Delaney summarised at [18] of these reasons. The detail of his description of this unusual event, including his evidence that when he stopped he was at eye level with the instructors, has the ring of truth about it. I cannot dismiss it as the product of misperception. Similarly, I accept that as a result of the incident he suffered a back injury, which is consistent with the medical evidence.

Mr Torrington relied upon the evidence of Mr Davidson and Mr Cole about the level of training of the Leap of Faith instructors and that activity's reputation for safety, which I accept. Those matters, however, cannot eliminate the risk of human error. After carefully considering the evidence, I have come to the conclusion that Mr Shankar's fall and abrupt stop were the result of human error, that is, faulty belaying.

I have referred earlier to the conflict between Dr Ellis and Dr Spira about the nature of the injury likely to have been caused by the incident. However, I do not understand that there to be conflict about what led to the injury, whether it be a disc protrusion or musculo-ligamentous strain. The cause of the back pain was the abrupt stop of Mr Shankar's free fall. In his report of 11 May 2007, Dr Spira referred to a "jolt" to Mr Shankar's low back "resulting in the immediate onset of low back pain." In oral evidence, Dr Ellis referred to the incident resembling "a hangman's noose type of injury when there is the sudden arrest of a fall ... ." Asked in cross-examination whether he would maintain that view if he assumed that there was "an upper and lower body harness ... so that the participant was held in an upright manner", Dr Ellis replied:

"I don't think it would make any difference. It is impossible to say which way he was flung at this stage and ... the abrupt arrest of the descent is likely to be traumatic to the discs, top and bottom."

In other words, both doctors saw the abrupt stop of the fall as the cause of injury. Their difference of opinion as to the nature of the injury arose from the significance which Dr Spira placed upon the attitude of Mr Shankar's body at that moment. That is a matter to which I shall return when dealing with damages. What emerges from this evidence is that a back injury was the likely result of the sudden arrest of Mr Shankar's fall, whatever type of harness he was wearing. While it may be that a full body harness with dorsal attachment is the best equipment for the exercise, I cannot find that the sit harness worn by Mr Shankar contributed to his injury. As I have already noted at [20] above, Mr Delaney was of the opinion that even with the sit harness effective belaying should have ensured his gradual descent to the ground.

As the pleadings currently stand, Mr Shankar sues Vision Valley in negligence, that claim being governed by the Civil Liability Act 2002. Alternatively, he alleges a breach of the warranty implied by s 74(1) of the Trade Practices Act 1974 (C'th). For present purposes, damages under that provision are to be assessed according to the common law. That is no longer the case because of a 2004 amendment to s 74, but that amendment came into force after the incident giving rise to these proceedings and does not apply here.

Vision Valley contests both claims, and alleges contributory negligence by Mr Shankar. The issue of contributory negligence can be dealt with immediately. It is based upon the assertion that Mr Shankar undertook the Leap of Faith when he should not have done because of his sore hand. As I have said, the injury to Mr Shankar's hand is irrelevant and, accordingly, the assertion of contributory negligence cannot be sustained.

Section 74(1) of the Trade Practices Act provides:

"In every contract for the supply by a corporation in the course of a business of services to a consumer there is an implied warranty that the services will be rendered with due care and skill and that any materials supplied in connexion with those services will be reasonably fit for the purpose for which they are supplied."

There was no issue about Vision Valley's corporate status. There was also unchallenged evidence that the retreat was conducted for fees. It is Mr Shankar's case that an agreement arose between him and Vision Valley that he would, for Vision Valley's reward, attend the centre for the purpose of the retreat. No issue was raised about any of these matters in final submissions by Mr Torrington.

What is at issue is the allegation of breach of the warranty implied by s 74. Mr Lidden submitted that both limbs of the section were engaged, that is, the services were not rendered by Vision Valley with due care and skill and the harness supplied in connection with those services was not reasonably fit for the purpose for which it was supplied.

For the reasons I have given, I would not find that the harness was unfit, but I do find that the services were not rendered with due care and skill because of the faulty belaying. The statement of claim also alleges that there was a lack of due care and skill in that Mr Shankar was "exhorted to participate in an activity for which he was obviously medically unsuitable" but, again for the reasons I have given, that allegation is not made out. However, it is also alleged that Mr Shankar's "fall was not promptly arrested but he was allowed to fall a considerable distance before an abrupt stop." That allegation is established.

In arriving at this conclusion, I have had regard to the helpful examination of s 74 by Basten JA, with whom Handley and Tobias JJA agreed, in Action Paintball v Clarke [2005] NSWCA 170, to which Mr Torrington referred me. The focus of that case was whether the materials supplied by the defendant were reasonably fit for the relevant purpose. At [23]-[24], his Honour emphasised the need to establish a causal link between the breach of implied warranty alleged and the damage sustained by the plaintiff. That requirement is met here.

Accordingly, I find that the claim under s 74 of the Trade Practices Act has been made out. That is sufficient to dispose of the question of liability. However, I should add that I would also find the claim in negligence made out for the same reasons. In that context, Mr Torrington submitted that I would decline to find liability on the basis that the Leap of Faith was a dangerous recreational activity within the meaning of s 5L of the Civil Liability Act, and that Mr Shankar's injury was the result of the materialisation of an obvious risk in that activity. I would reject that submission.

Domino's

Realistically, in final submissions Mr Shankar's case against Domino's was only faintly pressed. Mr Lidden acknowledged that the company's culpability would be lessened by the assurance given by Vision Valley staff that the activity was safe. More importantly, he acknowledged that the company would not be liable for a casual act of negligence on the part of Vision Valley employees, that is, faulty belaying. In the light of my finding that it was inadequate belaying that led to Mr Shankar's injury, his claim against Domino's must fail.

Cross-claims

In the event of Mr Shankar succeeding on liability against either defendant, Vision Valley and Domino's have cross-claimed against each other for contribution or indemnity. Given the outcome of Mr Shankar's claim against Domino's, its cross-claim need not be pursued. Vision Valley's cross-claim was founded upon the allegation that Domino's failed to ensure that the activities at the retreat were safe for persons such as Mr Shankar and that its employees could participate in those activities without injuring themselves. The focus of the particulars was that Domino's had required Mr Shankar to participate in the Leap of Faith even though he did not wish to do so, and despite his injured hand. No argument in support of this cross-claim was developed in final submissions. In the light of my findings, Vision Valley's claim against Domino's has not been made out and its cross-claim must fail.

Damages

The evidence relating to damages was fairly lengthy and detailed. I shall refer only to so much of it as is necessary to deal with the competing contentions of Mr Shankar and Vision Valley as they were formulated in final submissions.

Mr Shankar gave evidence that after the accident he sought treatment from his general practitioner, Dr Dhanji, and was off work for about 10 days. When he returned to work he had difficulty in performing his various tasks, experiencing pain in his lower back when lifting or bending. This affected his capacity to prepare the ingredients for making pizzas, as well as cleaning the premises, and sometimes he had to engage another staff member to help him. In this his account was corroborated by fellow employee, Mr Peter High. Nevertheless, he maintained full duties for most of the period up to 25 March 2004.

For reasons which will appear, what occurred on that day is significant to his case and to that of Vision Valley. As I have said, he was working at the Wentworthville store. He was in the cool room, crouched down, moving pans of dough to a rack. In the course of a twisting movement, he felt a locking sensation in his lower back and experienced pain in that area which radiated to his upper spine and down his legs.

He again consulted Dr Dhanji and was off work for about 4 weeks. He claimed workers compensation. During this period he began to experience problems with urination and bowel movements. He felt pain and inhibited flow when urinating. His bowel movements became infrequent but occasionally he experienced incontinence, as he did sometimes with urination. He returned to work on two occasions, but found each time that he could not work for more than a couple of hours. In the event, in July 2004 he resigned from Domino's because he realised that there was no job he could do to an acceptable standard.

In August 2004 he obtained a job delivering mail and parcels for Australia Post. He had another person to help him with the work, and the parcels weighed up to 5 or 6 kilograms. He managed the work, even though the driving and the handling of the parcels was "pretty hard" for him.

A couple of months later, he accepted an offer to undergo training in the finance industry with Caprice Finance. For that purpose he attended their office one day a week. However, one morning in January 2005 he woke experiencing the same locking sensation in his lower back and radiating pain which he had suffered in March 2004. He again sought treatment from Dr Dhanji, who referred him to a neurosurgeon, Professor Dan, but he was unable to return to Caprice Finance for about 4 months.

Upon his return, he continued his training but also assisted the finance consultants in taking applications from clients. For this he was paid on a commission basis. In October 2005 he obtained similar employment with a company known as Finance Werx, where he was paid a retainer and commissions. He remained in that employment until January 2007, but had to leave it because on a number of occasions he was off work with back problems. A few months later he obtained employment as a personal assistant with a real estate agent, Metro Realty. He was still employed there at the time of the hearing, although he had been off work for a month, he said, because of depression and lower back and neck pain.

In 2007 he undertook a finance course at TAFE, and over the years since the accident he had also been involved in some small businesses of his own. I shall return to this evidence, which calls for closer examination.

I have referred to his fiancé with whom he was living at the time of the accident. That relationship came to an end in August 2004, he said, because she could not cope with his injuries. He then moved to his mother's house. In the following year he formed a new relationship, which has endured, and they have two young children. They lived with his mother at Glenwood, and continued to do so when they all moved to a larger home at Liverpool in February 2006. His evidence was that after the accident his capacity to do housework was impaired and that that state of affairs has continued. To this also I shall return.

Medical Evidence

At the heart of the dispute between Mr Shankar and Vision Valley on the question of damages is the incident of 25 March 2004. It is Mr Shankar's case that the injury he sustained that day was an aggravation of the injury suffered during the Leap of Faith, and that his disabilities thereafter can all be traced to that event. It is Vision Valley's case that the incident of March 2004 is the major, if not the sole, source of his disabilities. To the extent that they might be traced to the Leap of Faith, that event would be no more than 25% responsible for them.

Dr Spira explained his conclusion that Mr Shankar's fall would have caused soft tissue injury only by reference to the difference between a hyperflexion injury and a hyperextension injury. He said in evidence that a hyperflexion injury is the result of two vertebrae pushing together on the disc so that the disc protrudes backwards towards the nerve roots. With a hyperextension injury the force is in the opposite direction, tending to protect the back of the disc and pushing material forwards, where there are no important structures. He said that it was in the incident of March 2004 which caused a hyperflexion injury, leading to a disc protrusion, and it was this which was the source of Mr Shankar's continuing disabilities.

Dr Spira was the last witness called, and he gave his evidence after Dr Ellis. Before Dr Ellis gave his opinion about the injury resulting from the fall, Mr Lidden had put it to him briefly Mr Shankar's account, including the fact that he "was flipped over so that he ended upside down a distance above the ground...". However, Dr Spira's opinion as to the mechanism of injury, based upon Mr Delaney's diagram, was not put to Dr Ellis. It was not spelt out in Dr Spira's reports, and was first addressed in his oral evidence. Mr Torrington explained that he had not had Mr Delaney's report until shortly before that evidence was given.

Not only did Dr Ellis see the disc prolapse observed in the CT scan of 11 November 2003 as consistent with the injury caused by the fall, he also described it as "a major contributing factor to the additional effect" of the incident in March 2004. His evidence was that both incidents contributed to Mr Shankar's condition but that the "fall from the trapeze was the major event".

A further CT scan was done on 26 March 2004, the day after the incident at the Wentworthville store. It also showed a disc protrusion at L5/S1. Both Dr Ellis and Dr Spira said that those scans looked much the same. Both doctors also agreed that an MRI scan performed in the following month showed a significant increase in damage to that area.

The divergence of expert opinion on this issue is not easy to resolve, but I find the CT scan of 11 November 2003, only a matter of days after Mr Shankar undertook the Leap of Faith, to be decisive. As I have said, Mr Shankar was 27 years old at the relevant time and I accept that he had no prior history of back trouble. The inference can fairly be drawn that the disc protrusion detected in that scan was the result of the incident at Vision Valley. Mr Shankar's description of his fall is broadly consistent with Mr Delaney's diagram. Nevertheless, it cannot be known precisely how he fell and there is force in Mr Lidden's submission that it cannot be assumed that his back was in hyperextension at the moment his injury was sustained. I accept the evidence of Dr Ellis that the disc protrusion was the result of the fall and that the condition was aggravated by the incident of March 2004.

Mr Shankar gave evidence that after that incident, apart from lower back pain, he felt pain in his neck and also radiating to his leg, primarily the left leg. As to the neck pain, Dr Ellis gave evidence that Mr Shankar first complained of it in 2005. Plainly enough, that was mistaken. The clinical notes of the general practitioner, Dr Dhanji, record his complaining of it in May 2004. In any event, Dr Ellis explained in evidence that it is common for lower back pain to be followed by neck pain as a result of "muscle spasm, loss of alignment and altered weight balance at the lower lumbar level which affects the spinal alignment at higher levels ..." Mr High noticed that Mr Shankar had a "pretty bad limp" between the Leap of Faith incident and the episode of March 2004. Dr Ellis explained that a bad limp affects the back, so that if "the lumbar spine is affected badly it affects the cervical spine." He added that the fall was likely to have affected the cervical spine but that it was possible that he did not experience the symptoms of that injury until later.

Dr Dan found Mr Shankar to have a cervical disc lesion. He said that this could possibly be related to the injuries of November 2003 and March 2004, but added that the chronology was such that it was difficult to attribute it to the Leap of Faith incident. This was put to Dr Ellis, but he maintained the opinion he had expressed. Having considered all this evidence, I am satisfied that Mr Shankar's spinal problems are attributable ultimately to the Leap of Faith incident.

As I have said, it is the aetiology of Mr Shankar's spinal problems which was the central area of dispute on damages. Broadly speaking, it is not in dispute that he suffers the disabilities of which he complained in evidence. A large number of other medical reports were admitted without objection, and their authors were not required to give oral evidence. They were not the subject of controversy in final submissions, and need not be analysed. They include reports of specialists dealing with Mr Shankar's urinary and bowel problems, and it is not in contention that they were the product of his spinal injury. They also include psychiatric reports, and it is also not in contention that Mr Shankar's disabilities led to a psychiatric condition requiring treatment.

Non-economic loss

My assertion that, broadly speaking, Mr Shankar's evidence about his disabilities was not in dispute is subject to two qualifications. A significant part of Mr Torrington's cross-examination of Mr Shankar was a challenge to the credibility of his evidence about his financial position in the period leading up to the hearing and his economic prospects, and Mr Torrington submitted that that evidence should cause me to approach the assessment of damages generally with "extreme caution." In addition, Dr Spira expressed the view in his reports that Mr Shankar had exaggerated his symptoms, and the impact of them upon him, in his consultations with him. However, nothing about his conduct during his attendances upon Dr Spira was put to Mr Shankar in cross-examination. Moreover, while Mr Torrington questioned Mr Shankar about the effect of his disabilities on his activities, at no time was it put to him that he was exaggerating his complaints in evidence.

It appeared to me that Mr Shankar was frank about his disabilities and, in cross-examination, prepared to make appropriate concessions about them. His account was generally supported by the evidence of his current partner, Ms Corrine Thibault. The credibility of his evidence of his financial position and prospects is a matter to which I shall return when dealing with the issue of economic loss.

I accept that Mr Shankar has lived with pain in his back, his neck and his left leg. Although there has been some improvement in this condition, it is likely to be enduring. The same is true of his difficulty with urination, and his urinary and faecal incontinence. That incontinence is not as frequent as it was at the outset, but at the time of the hearing it remained a daily problem. He also experienced sexual difficulties. In evidence, Dr Ellis described him as "very significantly disabled in many ways," having "upper limb problems" from his neck, "lower limb problems" from his back, together with "autonomic effects of his bowel and bladder."

In 2005 Dr Dan recommended surgery, but Mr Shankar was "pretty scared" to undergo it. In the same year he was referred by Dr Dhanji to an orthopaedic surgeon, Dr Loefler, who thought that his symptoms were improving, that surgery was not indicated, and that he should engage in regular exercise. Dr Ellis agreed with Dr Dan, saying that it would have been helpful if surgery had been performed when it was recommended. However, asked whether at the time of the hearing or in the near future surgery would help, he said that it was "much less likely now to bring about significant improvement, particularly in the autonomic reflexes of the bladder and sexual functions."

That said, Mr Shankar underwent physiotherapy and undertook a number of exercises recommended by Dr Dhanji. The effect of his evidence, again supported by Ms Thibault, is that this led to no lasting improvement. Unlike Dr Loefler, Dr Ellis's assessment of his prognosis in his first report was gloomy. Asked in evidence whether exercises directed to strengthening his stomach and back muscles would be of assistance, he replied:

"Abdominal strengthening muscles (sic) certainly supports his vertebral discs but when they are ruptured and they have got secondary effects on spinal nerves it's not likely to produce major benefit. It might give some temporary alleviation of pain levels and prevent further deterioration or delay further deterioration. It is not likely to be a significant factor and improvement certainly couldn't be guaranteed."

Not surprisingly, his disabilities had significant emotional effects. He acknowledged that he would become unreasonably angry with his partner, his mother and his older child. Ms Thibault confirmed this, adding that he had been become depressed, unmotivated and unsociable. He was eventually referred to Dr Pusic, psychiatrist, who diagnosed a depressive illness and prescribed a course of medication. At the time of the hearing there had been some improvement in this condition.

Despite all this, Mr Shankar expressed in evidence a reasonably positive attitude to the future. He said that he was keen to return to work as soon as he could and to undertake further education to pursue his business interests. He wished to be able to support his children. He said that he and Ms Thibault planned to marry and he hoped that they would stay together for life. Nevertheless, I am satisfied that his fall during the Leap of Faith was the genesis of several serious and debilitating conditions which have had an enduring effect upon his lifestyle: his day to day life, his leisure activities and his employment. He was a young man when he sustained these injuries and, on the probabilities, I am satisfied that he will suffer their consequences into the indefinite future.

Assessing general damages at common law for the purpose of the Trade Practices Act claim, I would award him $325,000. If it were necessary to assess an award for non-economic loss under the Civil Liability Act, I would award 65% of a most extreme case, producing the same figure.

Domestic assistance

Prior to his injury Mr Shankar had shared household chores equally with his then fiancé and, but for the injury, that would have been the arrangement with his current partner. Between the Leap of Faith incident and the aggravation of March 2004 he was able to maintain that routine. Since March 2004, however, his capacity for household work has been significantly limited. He cannot do anything which involves bending or lifting anything of appreciable weight. He could not do gardening, or wield a broom or mop. He can cook, although bending to obtain ingredients or cooking implements would be difficult for him. He could do light household tasks, such as dusting, provided that it did not involve bending or stretching. He could feed clothes into a washing machine if it were at bench height. He can make sandwiches and feed the baby. He has been able to push his daughter to a park in a pram.

While living with his mother and his partner, it has been the women who have shouldered the burden of cleaning and other household chores, internal and external. I must say that, when asked to estimate how long they spent on those tasks, he described a punishing regime which would put most of us to shame. A more realistic picture was painted by Ms Thibault. She and Mr Shankar intend to find their own accommodation, with the children, when they can. The effect of her evidence was that, without the assistance of his mother, she would spend roughly 2 to 3 hours a day on household work.

Given that Mr Shankar retains some limited capacity for household work, I think it fair to allow 6 hours per week for past domestic assistance, and the same amount for future domestic assistance for the period of his life expectancy. The agreed rate is $35 per hour. The award for future assistance should be discounted by 10%, given that he might in any event have required a level of domestic care in his old age.

Past out of pocket expenses/Fox v Wood

Amounts for past out of pocket expenses and for the Fox v Wood component have been agreed.

Future out of pocket expenses/economic loss

Unfortunately, I do not believe that I can decide the issues of future out of pocket expenses and economic loss without the assistance of further submissions from the parties. I have determined that the matter must be approached in this way only after careful consideration, because I am conscious of the delay since final submissions.

The position of the parties on these heads of damage is polarised, and they are a long way apart. They were dealt with in written submissions, which were not expanded in oral argument. As to future out of pocket expenses, Mr Torrington argued that only a modest allowance should be made, consistently with his client's case that the Leap of Faith incident was no more than the minor contributor to Mr Shankar's ills. Mr Lidden argued for an allowance of $180,000, but his submissions do not disclose how that figure was arrived at.

More important is the issue of economic loss, past and present. Again, Mr Torrington submitted that both should be compensated by a relatively modest buffer. It was in this area that Mr Shankar's credibility was strongly challenged, based upon the deposit of various sums of money into different accounts held by him and the transfer of money between those accounts. This material emerged in cross-examination. This, Mr Torrington argued, demonstrated that he had not been honest in his evidence about his earnings from the businesses he ran, so that his loss of earnings to date and his future loss of earnings could not be reliably assessed.

For most of the past wage loss and the whole of future wage loss, Mr Lidden relied upon evidence that Mr Shankar might have become the franchisee of a Domino's store. Mr Shankar gave evidence that he had been informed by a franchise consultant for Domino's that such a store could earn between $2,500 and $10,000 per week after expenses. That evidence was not challenged by Mr Torrington and no other evidence on that question was led. Obviously that figure for potential earnings is substantial and the range is very wide.

Mr Lidden submitted that I should assess the greater part of Mr Shankar's past earning loss and the whole of his future economic loss on the basis that he might have earned $5,000 per week. Again, Mr Torrington did not challenge that figure specifically, his case being that Mr Shankar's economic loss, past and future, could not be quantified. Mr Lidden approached the issue on the basis that, but for his injuries, the prospect of Mr Shankar obtaining a franchise was a virtual certainty. An alternative view is that the matter should be approached as the loss of a chance, a question not addressed by either party. As to future economic loss, Mr Lidden's submissions do not deal with the evidence that Mr Shankar is intelligent, willing to undertake further professional training, and capable of sedentary work, whether as an employee or in his own business.

The claim for future out of pocket expenses is substantial and the claim for economic loss, past and future, is very large indeed. I am concerned that I may not be able to do justice between the parties without further assistance from counsel on these matters. I would invite supplementary submissions in writing within 3 weeks, or such time as may be agreed upon by counsel.

When I have delivered my decision on those matters, I would appreciate it if the parties would prepare short minutes giving effect to my findings. It may be that some figures will need to be adjusted because of the delay since final submissions.

Thursday 13 December 2012

Further submissions

I have had the benefit of further submissions for Mr Shankar by his counsel, Mr Lidden and Ms Fraser, and for Vision Valley by its solicitor, Ms Gillian Davidson. Ms Davidson included further submissions on the Trade Practices Act claim and on the issue of domestic assistance, but I did not invite further argument on either of those matters and I do not propose to revisit them.

Future out of pocket expenses

In relation to future out of pockets, Mr Lidden relied upon the report of Dr Ellis of 29 October 2009. The doctor wrote that Mr Shankar was "in need of continued and constant medication, consultations, continuing medical supervision, conservative treatment for pain relief, intermittent physiotherapy, these items are likely to cost at least $3,000 annually and the need is likely to continue." He added that referral to a pain management clinic service "would be helpful." Mr Lidden estimated that the cost of these treatments would be about $60 per week.

Dr Ellis also wrote that it was likely that he would require "surgical intervention on his back and neck, laminectomy and discectomy in his lumbar spine, and spinal fusion and discectomy in the cervical spine." The cost of the surgery he estimated at $20,000, including "surgical, ancillary services and hospitalisation at each level."

In relation to his urinary problems, Dr E I Korbel wrote in a report of 10 January 2007 that he may "in the future need to be considered for an artificial sphincter if his bladder leakage worsens." The doctor estimated the cost of the procedure "in the realm of $20,000 - $25,000." Professor E L Bokey, in a report of 14 June 2006, suggested that he "may be a candidate for sacral nerve stimulation." There is no evidence as to the cost of that procedure.

His treating psychiatrist, Dr Pusic, reported on 7 April 2010 that he would require "ongoing monthly treatment for at least a period of 12 - 24 months." The doctor added that any expected gains would be "slow to achieve" and highly dependent on his "ongoing difficulties with pain and limitation of function." In a medico-legal report of 15 March 2010, Dr Julian Parmegiani expressed the view that allowance should be made for 25 sessions with Dr Pusic over an 18 month period. The doctor estimated the cost of treatment at $160 - $330 per session. He added that Mr Shankar would need anti-depressant medication for the next 3 - 5 years, at a cost of $33 per month.

Mr Lidden submitted that future out of pocket expenses should be assessed at $150,000, which would be the equivalent of about $130 per week on the 3% discount tables for the remainder of Mr Shankar's life expectancy. He noted that the agreed amount of past out of pocket expenses to the date of the hearing, $37,506, translated to about $110 per week over that period, and did not include the cost of surgery and recovery thereafter.

In response, Ms Davidson referred to relevant aspects of Mr Shankar's evidence. At the time of the trial he was not undergoing any treatment for his back or neck other than medication prescribed by Dr Dhanji. He was also taking medication for urinary and faecal incontinence, and was wearing incontinence pads. He said that he had discussed sacral nerve stimulation with Professor Bokey, but did not say whether he wished to undergo that procedure. As to spinal surgery, he said that he would like to have it "in the near future if it gets any worse." He confirmed that he had been undergoing treatment by Dr Pusic for depression, including a course of medication.

Ms Davidson submitted that the evidence established no more than that he would need ongoing consultations with his general practitioner, if only for the purpose of obtaining medication, together with some further psychiatric consultations. The surgical procedures, she argued, should be the subject of a contingency allowance as they might or might not be required.

She proposed an allowance for general practitioner attendances, "miscellaneous special attendances" and medication (including incontinence pads) of $30 per week, amounting in round figures to $1,500 per annum. She argued that the estimated cost of the various surgical procedures, totalling $65,000, should be reduced by 50% to $32,500. She proposed a further allowance of $2,500 for post-surgery care and rehabilitation, producing a total sum of $35,000. As to psychiatric treatment, she noted Dr Parmegiani's estimated requirement of 25 consultations at a rate of up to $330 each, and proposed a round figure of $7,500 for these.

It is true, as Ms Davidson pointed out, that the cost of future treatment referred to by Dr Ellis could have been estimated in greater detail. However, I see no reason not to accept Dr Ellis's estimate, which was not challenged in cross-examination. The cost of that treatment should be assessed at $60 per week for the remainder of Mr Shankar's life expectancy. Ms Davidson's assessment of the cost of future psychiatric treatment, based upon Dr Parmegiani's opinion, is reasonable. However, in the light of the opinion of Dr Pusic that Mr Shankar's gains from treatment would be slow to achieve, and to make some allowance for the cost of anti-depressant medication referred to by Dr Parmegiani, I would allow $10,000 for this treatment.

I am also persuaded by Ms Davidson's submission that the estimated cost of surgery should be reduced by 50%. Indeed, as I recorded at [77] above, the effect of Dr Ellis's oral evidence was that it might now be too late for spinal surgery. The figure of $35,000 proposed by Ms Davidson is appropriate. I would not make any allowance for sacral nerve stimulation. It was expressed by Professor Bokey as no more than a possibility, and there is no evidence of its cost.

Economic loss

It seems that prior to the accident Mr Shankar had been progressing well, and was well regarded, at Domino's. His ambition had been to run a store as a franchisee, and I accept that he had the capacity to do so. I have referred (at [89]) to his evidence of what he was told about the range of earnings from a franchise. It was Mr Peter Bisha, the franchise consultant at Domino's, who told him late in 2001 that he could earn between $2,500 and $10,000 per week after expenses. This was the major component of the claim for economic loss, both past and future. Mr Lidden submitted that Mr Shankar's past wage loss, and the loss of his earning capacity, should be assessed upon the basis of earnings as a franchisee of $5,000 per week after expenses and tax.

Mr Lidden argued that the assessment of past economic loss should be based upon the following assumptions:

(a) Mr Shankar would have continued to work for Domino's at an agreed net salary of $500 per week until the end of 2004, those earnings totalling $30,000.

(b) From January 2005 he would have obtained a Domino's franchise business and, at a net rate of $5,000 per week, would have earned $1,885,000 by the time at which the supplementary submissions were furnished.

This would produce a total figure of $1,915,000. From this, Mr Lidden's argument continued, there should be deducted the salary he earned over the 16 weeks he continued to work for Domino's until March 2004, a figure of $8,000. There should also be deducted his earnings as a personal assistant with the real estate agent until close to the hearing (referred to at [62]). This was a net salary of about $270 per week over a period of about 4 ½ years, producing a figure of $63,180. The total amount to be deducted, then, would be $71,180. Mr Shankar's tax returns disclose that he did not make any money after expenses from his work for Australia Post, Caprice Finance and Finance Werx (referred to at [60]-[63]), this work having been performed as a sub-contractor.

As to future economic loss, Mr Lidden submitted that the assessment should be based upon Mr Shankar's projected net earnings of $5,000 per week as a franchisee for Domino's or some other fast food business until normal retirement age. From that figure should be deducted $270 per week, his earnings as a personal assistant in the real estate business, which was said to be the limit of his earning capacity because of his disabilities. His net wage loss, then, would be $4,700 per week. Assessment of that wage loss over the remainder of his working life, applying the 3% tables and a discount of 15% for vicissitudes, produces a figure of a little over $4,200,000.

Ms Davidson's submissions in response challenged a number of aspects of this claim. As to Mr Shankar having gained a franchise, she did not dispute that he wished to do so and had been led by Domino's to believe that he would achieve that aim. It was also not disputed that he had lost such an opportunity because of his injuries. She submitted, however, that it was by no means certain that he would have become a franchisee and, even if he had, I could not be satisfied that he would have earned net income of the order of $5,000 per week or, indeed, any figure within the range suggested by Mr Bisha. She also challenged the evidence as to his actual earnings between the injury and the trial, as well as the extent of his post-injury earning capacity.

I shall deal first with the issue of a franchise. Mr Shankar's evidence was that he applied for a franchise early in 2001. In due course he was informed by Mr Bisha that the application had been approved, but that he would require 1 year's training to achieve that position. As I understand it, it was on this occasion that Mr Bisha told him about the range of potential income from a franchised store. Nevertheless, he had not obtained a franchise by the time of the accident some 2 years later, notwithstanding the training and experience he had acquired over that period. At that time he had been sent to manage the store at Rooty Hill, which had been performing badly, with a brief to lift its standards.

Some time after he had completed his training he made enquiries about the process of gaining a franchise, understanding that he was qualified for that position. Not long before the accident he met with Mr Wayne Mann, a regional manager at Domino's, who told him that he had to undergo further training but who, as I understand it, did not explain what that was. Ms Davidson argued that this course of events suggests that Domino's was in no hurry to offer him a franchise and may have preferred to employ him as a trouble-shooter at underperforming stores.

Prior to going to the Rooty Hill store he had been managing a store at Fairfield Heights where, among other things, he had been training prospective franchisees. His evidence was that around that time there were 8 to 10 stores available for franchise. Ms Davidson argued that the inference might be drawn that there were more potential franchisees than there were franchising operations. Moreover, it emerged from the evidence of the plaintiff that some stores were more profitable than others, and competition between potential franchisees for stores with good sales records would be higher than those which were not faring as well.

In the light of all this, Ms Davidson submitted that past economic loss should be assessed upon the basis that Mr Shankar had no more than a 50% chance of obtaining a franchise between January 2005 and the date of trial. Her approach to his possible earnings as a franchisee on the issue of future economic loss was different, and I shall turn to that later.

The evidence of the potential earnings of a franchisee was, to say the least, spare. It was no more than that which I have recounted, that is, the estimate given to Mr Shankar by Mr Bisha in 2001. Mr Shankar acknowledged that he had never been shown any figures from franchised stores to support that estimate. Although his evidence that he was given that estimate by Mr Bisha was not challenged, Ms Davidson submitted that it provided "the most tenuous of evidentiary foundations" for the figure of $5,000 per week proposed by Mr Lidden. A realistic figure, she contended, would be $1,500 per week.

Mr Lidden pointed out that Mr Bisha was not called by either of the defendants, nor was any evidence led by either of them about the potential earnings of a franchisee. Mr Bisha, of course, was an employee of Domino's and, as a witness, might be seen to be in that company's camp. However, Mr Lidden argued, on this issue Vision Valley and Domino's were in the same interest and might be expected to co-operate. In these circumstances, he submitted, a "powerful Jones v Dunkel inference" should be drawn against Vision Valley. Mr Lidden referred to the analysis of that principle by Hodgson JA, with whom Allsop P and Macfarlan JA agreed, in Galea v Bagtrans Pty Ltd [2010] NSWCA 350 at [51] ff, particularly [61]-[62].

I do not find this argument persuasive. Factually, Galea v Bagtrans was significantly different from the present case. Of course, Mr Shankar bore the onus of proof on this issue. In Galea v Bagtrans, in the context in which the Jones v Dunkel inference was being examined in that case, Hodgson JA referred to the well known principle that there is no property in a witness: at [61]. Notwithstanding Mr Bisha's status as an employee of Domino's, I see no reason why he could not have been called in Mr Shankar's case. Nor can I see why it would not have been open to Mr Shankar's legal representatives to undertake their own research into the probable earnings of a franchisee and to produce satisfactory evidence of them. The range of figures expressed by Mr Bisha was very wide and, in the context in which he was speaking to Mr Shankar at the time, it is hardly likely that it was intended to be a sober estimate for forensic purposes.

In Galea v Bagtrans at [59], Hodgson JA referred to the following observation of Little J in Earle v Castlemaine District Community Hospital [1974] VR722 at 729:

"The silence of one party cannot, of course, fill the place of actual evidence on an issue, but it may serve to resolve a doubt or an ambiguity, especially where the facts are peculiarly within the knowledge of the silent party."

Allsop P at [2] said of the Jones v Dunkel inference that it "cannot be used to draw a positive inference if the evidence does not otherwise admit of a rationally drawn inference ... ."

This is not to say that Mr Shankar's evidence of what Mr Bisha told him is devoid of any evidentiary value. What it does mean is that such value as the evidence has cannot be enhanced by a Jones v Dunkel inference. The evidence may have been admissible against Domino's as an admission but, strictly speaking, it was not admissible as such against Vision Valley. However, that point was not taken. Submissions on behalf of Vision Valley focused upon the weight of the evidence, not its admissibility.

I have referred ([63] above) to the fact that Mr Shankar undertook a finance course at TAFE and that he conducted some small businesses of his own. In the finance area these were R1 Financial Services, commenced in 2005, and Australian Mortgage First, commenced in 2006. Neither of them was operating at the time this matter came to trial. However, also in 2006 he began a new business venture, Smart Tech Computers, which he was still running at the time of the trial.

It was Mr Shankar's case at trial that these businesses had not earned him any income after expenses. This was challenged in cross-examination by Mr Torrington, by reference to financial records supplied by Mr Shankar during the hearing, and it was this material which led to the challenge to his credibility to which I have earlier referred ([74]). It is unnecessary to go to this material in any detail. It is sufficient to say that the records revealed in 2009 and 2010 deposits or transfers into the Smart Tech account and Mr Shankar's personal account of significant sums of money, some of them in five figures, for which his explanation was questionable.

Some of them, he claimed, were from his mother and later in his evidence, when he was recalled, he said that they were repayments by his mother of money he had lent her. His mother is a pensioner. Some of them he attributed to gambling winnings, even though he acknowledged that he mainly lost at gambling. I should add that he also admitted that in his 2008 - 2009 tax return he had falsely claimed an amount of $4,400 as telephone expenses relating to Australian Mortgage First.

It was Mr Torrington's submission, reiterated by Ms Davidson, that these deposits and transfers were in fact earnings from Smart Tech, and Mr Shankar was not being frank about the profitability of that business. To that extent the true measure of his past economic loss could not be calculated.

It is not in dispute that Mr Shankar is entitled to an allowance for wage loss for an early period of 8 weeks when he was incapacitated for work, at the agreed rate of $500 net per week: an amount of $4,000. An annual salary at that rate would be, in round figures, $25,000. Ms Davidson submitted that past economic loss should be predicated upon a rising residual earning capacity quantified at $15,000 per annum. On that basis she proposed a further allowance of $10,000 for the period to the end of 2004.

Her argument then proceeded upon the assumption that Mr Shankar might have obtained a franchise at the beginning of 2005 which, at the postulated net income of $1,500 per week, would produce an annual salary of $78,000. This she would reduce by 50% on the basis that his obtaining such a franchise was by no means guaranteed, producing a sum of $39,000 per annum. Having subtracted from that figure the residual capacity of $15,000 per annum, the result would be $24,000 per annum. An allowance of that sum over the period of about 5 ½ years to the date of trial would lead to a total of $129,600. With the addition of the $14,000 attributable to the period to the end of 2004, the total would be $143,600.

As to future economic loss, Ms Davidson submitted that the evidence of the progress of the Smart Tech business established that Mr Shankar has an earning capacity in business on his own account roughly equal to his probable earnings as a fast food industry franchisee. That being so, she maintained the submission of Mr Torrington that, at best, there should be awarded no more than a buffer of the order of $50,000.

Mr Shankar described the function of Smart Tech as providing "support" for computers in the offices of a small number of clients, commercial and professional. As I understand it, it was a troubleshooting service providing advice about problems with the operation of computers, together with a callout service for repairs and installations. In 2007 he undertook a computer course, but did not complete it. In the conduct of the business he sometimes sought the assistance of his friend and former workmate, Mr High, to whom I referred earlier ([57]) and who, apparently, had considerable skills in this area. Asked in cross-examination whether he could do the Smart Tech job "quite easily", he replied "Yes and no." He gave the same answer when it was put to him that he was able "to do fairly well with this Smart Tech business ... ."

He acknowledged that he was a "fairly intelligent" man, which was my own impression of him. His evidence was that he was willing to attend courses and obtain further training, and that he had the intellectual ability to do so. Generally, he presented as a person motivated to pursue gainful employment. He agreed in cross-examination that he wished to increase the hours he could work, as far as he could physically and mentally. Plainly enough, his physical disabilities do not inhibit his pursuit of the Smart Tech business. He said that he can undertake clerical work and could work at a computer. Dr Ellis agreed in cross-examination that he could manage employment where he could sit or stand as needed, which would present no difficulty being self-employed.

I have to say that I did not find Mr Shankar's evidence about the deposits and transfers to which he was taken in cross-examination to be convincing, and I do not believe that he has been frank about the extent of his earnings from Smart Tech. I accept Ms Davidson's submission that, over much of the period since his injury, he has enjoyed a rising residual earning capacity, although I have no way of quantifying it.

Past economic loss

However, I do not consider it appropriate to recognise that residual earning capacity by a reduction of the award for past economic loss by $15,000 per year, as Ms Davidson argued. I shall do so by reducing the claim in respect of the period to the end of 2004, and by discounting the amount to be awarded thereafter. For the period to the end of 2004, in addition to the acknowledged award of $4,000 for the early period of incapacity, I will allow $20,000.

The appropriate award for the period thereafter, from the beginning of 2005 to the day of judgment, is not easy to determine. After careful consideration, I have decided that it is appropriate to base that award on the figure for the earnings of a franchisee at the bottom of the range propounded by Mr Bisha, that is, $2,500 per week. That figure must then be discounted to recognise that Mr Shankar was by no means assured of obtaining a franchise and to reflect his residual earning capacity.

In my view, Mr Shankar's chance of obtaining a franchise was better than 50.50. I would discount the award on that account by 25%. I would reflect his residual earning capacity by a further discount of 15%. I would express that as a global discount, so that the sum assessed for past economic loss since the beginning of 2005, on the basis of $2,500 per week, should be reduced by 40%. Of course, there must also be deducted Mr Shankar's actual earnings over this period identified in Mr Lidden's supplementary submissions. That figure may require to be updated because of the time which has elapsed since, but I trust that this is a matter about which the parties can reach agreement.

Future economic loss

The assessment of future economic loss is even more difficult. This issue also must be approached on the basis that there is no certainty that Mr Shankar would have obtained a franchise. On the other hand, the evidence leads me to the conclusion that the Smart Tech business is likely to expand and become more profitable but, again, I have no evidence from which I could attempt to quantify its returns. Generally, his intelligence and motivation point to a promising earning capacity in any endeavour he might undertake.

Mr Lidden's approach, based upon projected earnings as a franchisee less his current earnings at the real estate agency, is untenable. I can see no basis upon which a fair assessment could be made by reference to a postulated loss of weekly income. In my view, this is an appropriate case for the award of a buffer, although I am satisfied that it should be a substantial one. I would award $100,000.

I request the parties to bring in short minutes to give effect to my findings and, if necessary, I shall hear argument on costs.

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Decision last updated: 18 December 2012

Medium Neutral Citation:	Shankar v The Uniting Church in Australia; Shankar v Domino's Pizza Enterprises Limited [2012] NSWSC 1552
Hearing dates:	12.04.2010 - 16.04.2010, 19.04.2010 - 20.04.2010, 12.05.2010 - 13.12.2010
Decision date:	13 December 2012
Jurisdiction:	Common Law
Before:	Hidden J
Decision:	Judgment for plaintiff against first defendant
Catchwords:	PROCEEDINGS FOR DAMAGES - personal injury - accident at retreat conducted by first defendant in course of plaintiff's employment by second defendant - claims under Trade Practices Act, alternatively Civil Liability Act - claim under Trade Practices Act successful.
Legislation Cited:	Civil Liability Act 2002 Trade Practices Act 1974 (C'th)
Cases Cited:	- Action Paintball v Clarke [2005] NSWCA 170 - Galea v Bagtrans Pty Ltd [2010] NSWCA 350 - Earle v Castlemaine District Community Hospital [1974] VR722
Category:	Principal judgment
Parties:	Vinay Shankar (plaintiff) The Uniting Church in Australia Property Trust (NSW) trading as Vision Valley Conference & Recreation Centre (first defendant); Domino's Pizza Enterprises Limited t/as Domino's Pizza (second defendant)
Representation:	A J Lidden SC with J M Fraser (plaintiff) S Torrington (first defendant) P N Khandhar (second defendant) Robert Brydon, Bryden's Law Office (plaintiff) Gillian Davidson, Sparke Helmore (first defendant) Samuel Kennedy (Turks Legal) (second defendant)
File Number(s):	2009/29762; 2009/29760