State of Tasmania v Clark

[2001] HCATrans 88

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Hobart  No H6 of 2000

B e t w e e n -

THE STATE OF TASMANIA

Applicant

and

DAVID JOHN CLARK

Respondent

Application for special leave to appeal

GAUDRON J
CALLINAN J

TRANSCRIPT OF PROCEEDINGS

AT HOBART ON THURSDAY, 5 APRIL 2001, AT 2.34 PM

Copyright in the High Court of Australia

MR T.J. ELLIS:   May it please the Court, I appear for the applicant.  (instructed by the Director Public Prosecutions (Tasmania))

MR K.E. READ:   May it please the Court, I appear with my learned friend, MS K.A. JAMES, for the respondent.  (instructed by Phillips Taglieri)

GAUDRON J:  Yes, Mr Ellis.

MR ELLIS:   Thank you, your Honour.  Your Honours, on an assessment of damages for personal injuries following the entry of an interlocutory judgment in favour of the plaintiff, his Honour Mr Justice Underwood produced a figure for diminution of earning capacity which worked out to $76,500 for the extent to which such capacity would be productive of economic loss in the future.  In doing so, only two things could be said with any reliability to have been taken as steps in that process of getting to that figure.  Firstly, that some $21,750 of it was referable to work the plaintiff would have done part time as a security guard, and, secondly, of a figure of $90,000 gross, with a 15 per cent reduction for vicissitudes of life was applied.

When the matter came before the Full Court, rather than recognise that the reasons his Honour Mr Justice Underwood had given were deficient as to the steps in the process of reasoning which led him to come from $21,750 to $90,000, before discounting, would ‑ ‑ ‑

GAUDRON J:   But do you not have this difficulty that as the Full Court pointed out, there were other matters not taken into account in the calculation?  No claim made on the basis of promotion or anticipated higher remuneration?  That was not taken into account.

MR ELLIS:   No.  That would go to the 15 per cent for vicissitudes which was arguably wrong applied any way because it was applied to the figure which included $21,750 which his Honour had arrived at by saying it was probable that there would be this part‑ time work for something of 12 years.  But the Full Court attributed to his Honour steps in the process of reasoning which his Honour had never actually set out himself and, moreover, the Full Court said that the absence of reasons in so far as there was an absence, is permissible, pursuant to Malec v Hutton.  In referring to Malec v Hutton, in that context, the Full Court referred only to the minority judgment which, in point of distinction, said that it was undesirable to use percentage figures and so on in calculating or assessing damages for future loss.

GAUDRON J:   But we were in an area of speculation, were we not?

MR ELLIS:   Yes.

GAUDRON J:   We were in an area where there could be no certainty.

MR ELLIS:   Yes.

GAUDRON J:   All one could do was take into account various factors, some of which might yield of mathematical precision and some of which might not.

MR ELLIS:   All of them, in my submission, would have in terms of the probability exercise that Malec v Hutton would have had the court go through.  Now, even if there were several scenarios that had to be gone through in assessing those probabilities they still had to be assessed.  The figure of $90,000 was produced like a rabbit from a hat.  There was just nothing leading up to it by which one could say, “Well, there is $90,000 because of such and such.  It is not $60,000, it is not $150,000, it is $90,000 because of these factors”.

Could I take your Honours to that perhaps in a little more detail because the structure of his Honour Mr Justice Underwood’s judgment as to diminution of earning capacity is easily comprehended.  It begins at page 7 of the application book, at paragraph 42.  At page 8, line 20, his Honour found that:

The plaintiff’s employer –

that is the State of Tasmania –

is so tolerant and caring that the risk of the diminution in his earning capacity being productive of loss of income from the State Service is remote.

His Honour then dealt with, in detail, losses which might arise from part‑time income as a security guard and in dealing with it provided an example of how the greater bulk of the award might have been dealt with.  At page 9, line 15, his Honour made certain findings and expressed them as probability findings, that:

I am satisfied that but for the accident, the plaintiff would have continued to work part time for Mr O’Day for roughly the same number of hours per week.  Mr O’Day said that the present rate of pay is $13.41, plus superannuation.

The plaintiff would not have worked past 20 years.  He probably would have worked less hours as he went on:

making allowance for tax, the present nett weekly loss is in the order of $48.88.  Application of the 7% discount tables to that weekly sum (without allowance for mortality) for 12 years produces a sum –

and then rounded it up.

CALLINAN J:   Mr Ellis, can you tell me what the loss of $380 for, say, 10 years is, on the tables, approximately?

MR ELLIS:   No, I cannot.

CALLINAN J:   What discount range was used here?

MR ELLIS:   What discount.  We used 7 per cent here, your Honour.

CALLINAN J:   7 per cent.  It would be well over 100 ‑ ‑ ‑

MR ELLIS:   No, it would be too much of a wild guess without the tables, I am afraid.

CALLINAN J:   It would be well over $100,000, would it not?

MR ELLIS:   I would have doubt that, with respect, your Honour, for 10 years.  I would have thought it might be something more in the order of 60.

CALLINAN J:   Well, it is near enough to 18,000 a year, without any discounting.  That is 180,000.  I suspect it is over 100,000 - 10 years is a relative short period, but I do not know.

MR ELLIS:   I think his Honour Mr Justice Slicer might have gone through some of those figures in the Full Court by way of almost attributing them to his Honour at first instance.

CALLINAN J:   Did he?  Where do I find that?

MR ELLIS:   You find that at page 28.

CALLINAN J:   Yes, he said if he went to age 65 which is, what, I think 20 years, is it not, it would be $212,000?

MR ELLIS:   Yes, your Honour, 212, so ‑ ‑ ‑

CALLINAN J:   Yes, I think I am probably right when I say that ‑ ‑ ‑

MR ELLIS:   I think you are right, your Honour, yes.

CALLINAN J:   Well, if you have a look at that and have a look at the amount – what is the amount under this head?  Is it 90 or 70, approximately?

MR ELLIS:   It is 76,500.

CALLINAN J:   Seventy‑six.  If you look at 76 on that basis, even if you brought it back to, say, six or seven years where there would not be much discount at all, you are talking about over 100,000 before discount.

MR ELLIS:   Yes.

CALLINAN J:   You see, when the learned trial judge, on page 8, I think in the paragraph that you were just reading from, set out some reasons, really, his Honour set out everything except, perhaps, the period that he had in mind and when it would start because if the period were postponed the amount would be less.

MR ELLIS:   Yes.

CALLINAN J:   But, it is not difficult to find bases of the kind that I have suggested upon which you might justify 70,000.

MR ELLIS:   Yes, you certainly can and my complaint, I suppose, is that is what the Full Court did.  They worked back from the figure and said it was reasonable when the complaint was we do not know what his Honour did to get to it and he has not set it out.

CALLINAN J:   But in any event, you have to show that the award is manifestly excessive, do you not?

MR ELLIS:   I would submit not.  If it is an error of law to fail to give adequate reasons then it does not matter whether the award might be justified within an admittedly large range.

GAUDRON J:   But there is one reason given, is there not, in the middle of page 8 when his Honour is talking about if he should lose employment with the State service.  He says:

the risk is remote, if it becomes a reality, the loss will be substantial for the plaintiff is unlikely to find alternative employment having regard to his age, limited skills, experience and disabilities.

MR ELLIS:   Yes, your Honour.

GAUDRON J:   So, his Honour had to work – he said:

Upon this basis, damages for diminution of earning capacity cannot be assessed by mathematical calculation.

But, his Honour did have to allow for the risk, did he not?

CALLINAN J:   Plus the risk ‑ ‑ ‑

MR ELLIS:   Yes, but he had to, in my submission – perhaps he did in his own mind but he did not set out what he said the order of that risk was.  Was it a risk that would happen in, say, five years?  Was that likely?

CALLINAN J:   But, Mr Ellis, that is a very conservative figure, $382 because it does not allow, as the Full Court said, for promotions in increased salaries, it does not allow for superannuation which is what, 8 or 9 per cent, now, is it?

MR ELLIS:   Yes.

CALLINAN J:   And accumulations on that, as well, and it does not allow for free meals that he was getting.

MR ELLIS:   Yes, and I would not try to trouble this Court if all I am talking about was the size of the award.  It is the satisfaction that the disappointed litigant has in the expression of how that award was arrived at.

CALLINAN J:   Well, it is well established that a judge should give reasons, so we would not be deciding any new principle if we said that, but why would this Court send the matter back.  We would not assess damages ourselves.

MR ELLIS:   No.

CALLINAN J:   Well, why would we send it back unless we were convinced that the ultimate result would be, assuming you were right about the absence of reasons, something manifestly different from the award which has been made?

MR ELLIS:   I would submit that you would send it back to correct an error or law, that an error of law would not – of such a fundamental part of judicial technique would not go unremarked on ‑ ‑ ‑

CALLINAN J:   That might be a more substantial argument in the intermediate Court of Appeal but in this Court other considerations may operate.

MR ELLIS:   I understand that, your Honour, but twice now the immediate Court of Appeal, twice in recent times, has said, in effect, that a figure can be almost plucked out of the air by a trial judge, can be intuitively synthesised ‑ ‑ ‑

CALLINAN J:   I would not characterise what the trial judge did here as plucking a figure out of the air.  Reasons may have been easier to ascertain, they might have been differently expressed but I would not describe the reasons as being so deficient as to enable an appeal court to give effect to them and understand the basis upon which such an assessment might have been made.

GAUDRON J:   You see, the only matter of which you can really complain, it seems to me, is that his Honour did not give a percentage risk figure for the total loss of employment with the service and if his Honour had said, “I assess that risk at 10 per cent”.  That would have been perfectly reasonable, would it not, and it would have produced a figure in the order of that which we are now talking about?

MR ELLIS:   There are various ways his Honour could have expressed and could have come to that figure but his reasons for judgment give no indication as to why it is 90,000.

GAUDRON J:   But at the end of the day that really is all that one is concerned about, is it not?  His Honour did not quantify the risk and then work out when the risk might be likely to occur and so on.

MR ELLIS:   Yes.

GAUDRON J:   His Honour said:

cannot be assessed by a mathematical calculation.

It is not an easy calculation, on any view, is it?

MR ELLIS:   That should not be a reason not to have it.  I mean, we go through it in minute detail.

GAUDRON J:   Well, how would you calculate it at 10 per cent?  Say there is a 10 per cent risk, that given the things that have happened he will lose his employment within five years.

MR ELLIS:   I would make an assessment of what his earning capacity would be, had the accident not happened and would assess the probabilities.

GAUDRON J:   We know what it is.  That was 380.

MR ELLIS:   No, his Honour did not actually assess that ever.

GAUDRON J:   It was something greater than that, actually.

MR ELLIS:   That was the claim.  That was the particularised claim of if he had worked in this industry or this job until he was aged 65 his loss was claimed at that, but his Honour never endorsed that figure.  His Honour never made an assessment of the extent to which this plaintiff’s earning capacity would have been put to use, were it not for the accident.  It was never done in relation to his employment with the State service.  So, that would have been the first step.  The second step would have been to make some estimate of the probabilities of how long this person might be working, given that he was getting too fond of alcohol and given that his condition though was a static one and he was on light duties.  That would be the second step.

The third step would be to try to estimate the order of the risk that he would not be able to work at all, but none of those steps were gone through.  There was not even a starting point of looking at his earning capacity, were it not for the accident.

GAUDRON J:   Well, what his Honour said was, he did at least a third of those steps before getting to the sum.  He said if the risk eventuates he is “unlikely” to get any other employment.  He is talking about total loss of earning capacity, at that point.

MR ELLIS:   Yes, but we still do not know the nature that his Honour assessed the risk except to say it was “remote”.  Saying that a risk is remote does not translate suddenly, without any further step, to a $90,000 loss, in my submission.

GAUDRON J:   Well, it is not 90,000, is it?

MR ELLIS:   No, it is 68,500.

GAUDRON J:   50,000, at most.

MR ELLIS:   68,500, I would submit to your Honour.

GAUDRON J:   Well, there is 21,000 of it for ‑ ‑ ‑

CALLINAN J:   No, he has taken that off.

GAUDRON J:   He has taken that off, has he?

MR ELLIS:   So that a remote risk just does not suddenly translate to a figure of that order, in my submission, without some other steps being applied to it.  Now, the point is, not whether those steps could have been applied to have produced the same result or a result within range but whether his Honour had a duty to set out those steps in a way which was able to be examined.  As I say, in the Full Court, the judgment of the Full Court delivered by his Honour Mr Justice Slicer purported to attribute calculations to his Honour that he never performed.

Moreover, he said that that was a reasoning process which is susceptible to examination and challenge and that it was a disclosed reasoning process, but in my submission it clearly was not, and in my submission it was fallacious to rely on the minority judgment in Malec v Hutton, as the court did in this case, and as it seems it will do in future cases, having regard to the case of Wilson which I have supplied to the Court – State of Tasmania v Wilson – where the Full Court endorsed an approach of intuitive synthesis to the question of calculation of the value of ‑ ‑ ‑

CALLINAN J:   Mr Ellis, I will say it again.  If everything you say is right, you still have to persuade us, or certainly you would have to persuade me that there is real utility in this because there is at least an arguable case for a reduction in the damages because they are manifestly excessive, if the matter goes back.

MR ELLIS:   Yes, your Honour, there is that case, in my submission.  To start with a finding of fact that a risk of losing employment is remote would then be to invite argument as to when that risk might be said be likely to crystallise or there might be a further a risk of it.  It might involve argument as to the permanency of State Service employment and so on and what benefits accrue to those who retire early by way of illness.  All those things could well add up to a significant reduction in this so far lumpy figure for economic loss, a very significant reduction depending on the assessment of how remote the risk is that this man would lose his job because of his accident-related disabilities, or now propensities, including alcohol consumption.  That might well result in a figure of something like 20,000 to be sufficient consolation for that risk which would be a significant reduction.

CALLINAN J:   Well, I must say – for myself – looking at the extent to which he cannot do the work and the risks, a discount of only 15 per cent –

or put it the other way, 15 per cent does not do you any injustice, I do not think.

MR ELLIS:   No.

CALLINAN J:   It looks to me as if he is very much at risk.

MR ELLIS:   Well, as I said, your Honour, if it is just about excessive damages, then we would not try to trouble the Court but it is about the Full Court in this State endorsing, in reliance on the minority decision in Malec v Hutton, a process of so‑called intuitive synthesis to come up with figures in damages for economic loss.

GAUDRON J:   For future economic.

MR ELLIS:   Future economic loss.

GAUDRON J:   Where one is calculating risks.

MR ELLIS:   Without calculation of risks, the ‑ ‑ ‑

GAUDRON J:   But when one has to acknowledge a risk and there was apparently no basis on which – there was no actuarial basis on which the risk could be calculated, was there?

MR ELLIS:   No, your Honour.

GAUDRON J:   No, well, do you see ‑ ‑ ‑

MR ELLIS:   No, but it was still his Honour’s task to calculate the magnitude of the risk and to express it – and to express it and to express what other factors have led him to translate the findings into dollar terms, to translate it to a $90,000 figure, allowing for – or actually a $67,250 figure.  The structure of the judgment was it leapt from the one – “the risk is remote” – to the other, $68,000, with no step in between.  My time is up, if it please.

GAUDRON J:   Yes, thank you, Mr Ellis.  We need not trouble you, Mr Read.

The principles for the award of damages for diminution of earning capacity are well settled.  That being so and given the finding of the Full Court that it was not shown that the overall award of damages in this case was manifestly excessive, this is not an appropriate case for the grant of special leave.  Accordingly, special leave is refused with costs.

The Court will again adjourn to reconstitute.

AT 2.57 PM THE MATTER WAS CONCLUDED