Suncorp Insurance and Finance v Farrar-Karko

[1996] QCA 496

IN THE COURT OF APPEAL	[1996] QCA 496
SUPREME COURT OF QUEENSLAND

Appeal No.154 of 1995

Brisbane

[Suncorp Insurance v. Farrar-Karko]

BETWEEN:

SUNCORP INSURANCE AND FINANCE

(Defendant by Election) Appellant

AND:

LOUETTA MARIE FARRAR-KARKO

(Plaintiff) Respondent

Davies J.A.
McPherson J.A.

Shepherdson J.

Judgment delivered 6 December 1996

Joint reasons for judgment of Davies and McPherson JJ.A.; separate dissenting reasons of
Shepherdson J.

APPEAL ALLOWED WITH COSTS. JUDGMENT BELOW SET ASIDE. IN LIEU, JUDGMENT ENTERED FOR THE RESPONDENT FOR THE SUM OF $385,271 WITH COSTS.

CATCHWORDS:	CIVIL - personal injuries - quantum - likelihood of continuation of partnership - mathematical error in calculation - respondent's future earning capacity.
Counsel:	Mr. J. A. Griffin Q.C., with him Mr. R. D. Clarke for the appellant Mr. S. C. Williams Q.C., with him Mr. J. A. Innes for the respondent
Solicitors:	Shine Roche McGowan for the appellant Hede & Byrne for the respondent
Hearing Date:	12 April 1996

IN THE COURT OF APPEAL

SUPREME COURT OF QUEENSLAND

Appeal No.154 of 1995

Brisbane

Before Davies J.A.
McPherson J.A.
Shepherdson J.

[Suncorp Insurance v. Farrar-Karko]

BETWEEN:

SUNCORP INSURANCE AND FINANCE

(Defendant by Election) Appellant

AND:

LOUETTA MARIE FARRAR-KARKO

(Plaintiff) Respondent

JOINT REASONS FOR JUDGMENT - DAVIES AND McPHERSON JJ.A.

Judgment delivered 6 December 1996

The appellant was the defendant by election in a personal injuries action brought by the

respondent in respect of serious injuries suffered by her in a motor vehicle accident on 15 April 1988.

Liability was admitted in the action in which judgment was given for the plaintiff for a total sum of

$579,336 on 7 July 1995. The appellant contests the amount of those damages; in particular the

components of $163,871 for past economic loss and $239,760 for future economic loss.

The plaintiff respondent was born in the United States of America on 7 October 1940. Before

she came to Australia, which was in 1975, she had established a reputation as a singer, having

performed in operas, musicals, concerts and on television and radio including appearances in the Jackie Gleeson Show and the Andy Griffith Show. After she came to Australia she continued her career with

considerable success. She was a lead soprano with the Western Australian Opera Company and later

in Victorian Opera and had solo appearances with a number of the major symphony orchestras in

Australia. She married her present husband in 1977 and they commenced performing together, she as

a singer, he as a pianist. He also arranged some of her music and generally managed their affairs.

Between 1979 and 1983 the plaintiff was a feature artist on a series on the ABC called the

Saturday Show. The learned trial Judge who saw excerpts from a video of some of these shows was

satisfied of the artistry and musicality of the plaintiff and he said that this helped him accept other

evidence which described her as possessing an outstanding musical talent. He also thought that she was

of exceptionally pleasing appearance and that her talents included dancing and the ability to grip the

attention of an audience as well as musicality.

In July 1985 the plaintiff and her husband both suffered serious injuries in a head on collision

in Victoria where they were then living. However they were both back at work within three months and

the plaintiff made a reasonable recovery from it.

They moved to Toowoomba in 1986 and in 1987 the plaintiff appeared in the lead role in the

Queensland Light Opera Company production in the Lyric Theatre of "Kiss Me Kate". Both the

plaintiff and her husband have since 1983 been doing contract work for the Queensland Arts Council,

increasingly so since their move to Queensland. Shortly prior to the accident the subject of this appeal

the plaintiff and her husband had purchased a vehicle, a caravan, a piano, a sound mixer and other

equipment to better enable them to take local work in Queensland. There was also a comparatively

new market opening in what was described as corporate circuit work which involved floor shows to

climax a conference, promotion or other corporate event.

In the accident the plaintiff suffered serious injuries mainly to her face and neck. She suffered

concussion which resulted in probable brain damage which occasionally causes her to forget lines, even

in songs or parts which she knows well. She also has a diminution in her ability to produce words easily

and in processing verbal information efficiently. These of course affect her performance as an

entertainer and cause her considerable distress. Anxiety associated with all of these conditions increases

their effect. She underwent extensive neck and facial surgery which, and the consequence of which are

unnecessary to consider in detail in view of the fact that the appeal relates only to the components of

the award for past and future economic loss. However it is important, in view of her occupation, that

the learned trial Judge concluded that her facial damage resulted in a significant destruction of good

looks and that sinusitis which she suffers in consequence of her injuries tends to affect her performance

as a singer.

The plaintiff has nevertheless made a remarkable recovery and although she suffers waves of

depression she has devoted herself once again to her career and makes light of her disabilities. Only

seven months after the accident she and her husband, who was also injured in it, were participating in

an Arts Council tour. The result of the accident, however, has been that the plaintiff and her husband

have become increasingly dependent on Arts Council contracts because of the plaintiff's diminished

ability to secure other engagements. There is a serious risk that this work will diminish in 1996 and

diminish further or possibly disappear entirely in 1997. Despite the plaintiff's courageous return to work

the learned trial Judge concluded that her prospects of re-entering the top stream of entertainment had

been completely destroyed by the accident. The appellant does not contest this.

At the time of her accident the plaintiff had, for many years, been in a business partnership with her husband in which they shared the profits of their entertainment business equally notwithstanding that the capacity of the plaintiff to derive income was much higher than her husband's. The learned trial

Judge found that, if this accident had not occurred, this partnership would have terminated about three

years after 15 April 1988, the date of the accident. This finding was the first basis for the appellant's

challenge to the components allowed for past and future economic loss.

During the course of his evidence the plaintiff's husband was asked whether, if the accident had

not happened, the partnership would have continued until one or both of the partners had retired, to

which he answered yes. The plaintiff was not asked the same question but she was asked whether, at

the time of trial, she intended to continue in partnership with her husband as long as she continued to

work, to which she answered yes. The respondent submitted that her answer was irrelevant to the

question whether, if the accident had not occurred, the partners would have continued in partnership

until retirement of one or both because, it was submitted, after the accident the partners were almost

entirely dependent on work which they could do together whereas, before it, the plaintiff was being

offered and was in fact performing quite a lot of solo work. Nevertheless the evidence of the plaintiff's

husband and, to a lesser extent, her evidence was the only evidence directly bearing on this question.

Other facts relevant to this question were that the marriage was and remains a happy and stable

one and that, notwithstanding the plaintiff's solo work and consequently that she, over many years,

contributed substantially more to the partnership than her husband, the partnership continued until the

accident and, for that matter, thereafter.

The basis upon which, it appears, the learned trial Judge concluded that the partnership would

have continued to regulate the rights of the parties for a further three years after the accident but no

longer was that the plaintiff's increasingly superior earning ability in the future, and consequently her

disproportionately greater contribution to the partnership would, by then, induce her to terminate it. But that, it seems to me, is not a sufficient basis for concluding, in the face of evidence to which we have

already referred, that the partnership would not have continued for more than another three years after

the accident. In considering the obvious tax advantage to them of a partnership the parties, of course,

did not contemplate the possibility that the plaintiff would be involved in proceedings such as this. And

a schedule of a typical income year for the plaintiff and her husband, if the accident had not occurred,

showed that the amount of income which the husband would be likely to generate, when the amount

attributable to his expenses is deducted, is likely to be so low as to justify income splitting of the kind

which would be involved in a partnership such as this.

We would therefore conclude that the learned trial Judge was wrong in acting on the footing that

the partnership would have continued for only three years after the accident and that he should have

assessed damages for the plaintiff on the basis that the partnership would have continued for the balance

of their joint careers.

The appellant's second basis for its challenge to the components allowed for past and future

economic loss was that too little was allowed by the learned trial Judge for the plaintiff's, or alternatively

the partnership's expenses. The learned trial Judge said that these did not appear to have varied in the

partnership whether the income was very high or very low. The range of expenses for the partnership

between 1986 and 1994 was $20,805 to $32,865. His Honour said that the average annual expenses

over that period was $26,000. The appellant says that the average was in fact $27,500 and that, in

this respect, the learned trial Judge made a mathematical error. His Honour then decreased this amount

to $20,000 after the first three years because of the plaintiff's increased involvement in her separate

career. The appellant criticizes this approach on two grounds.

The first is that it submits that while future income loss is based on estimates of current incomes,
expenses are based on average expenditures between 1986 and 1994. Secondly it was submitted that,

as the plaintiff embarked more on a separate career, her costs would increase rather than decrease

presumably because her costumes would become more expensive and she would be staying in more

expensive accommodation. One of the experts who gave evidence on this question said that solo

performers, particularly if they are principals, are likely to have all of their expenses paid as well as

receive a substantial salary. If this is correct then the plaintiff's expenses would have decreased as her

solo career expanded. However another expert, to whom the former deferred in this respect, said that

in some cases accommodation and travelling is paid and in others it is not. It seems unlikely from this

that partnership expenses will decrease. Accepting, as we do, that his Honour made a mathematical

error in concluding that $26,000 rather than $27,500 was the average annual expenses between 1986

and 1994, and that it is necessary to bring the sum of $27,500 up to the money of today, we therefore

think that a sounder basis for fixing past and future expenses would have been the sum of $30,000.

The final basis for attacking the component for future economic loss was to say that the

estimate of likely income to be earned by the plaintiff in the future was too generous. However, as the

respondent has pointed out, his Honour's estimate of $60,000 per year nett which, because his Honour

allowed expenses of $20,000, meant a gross income of $80,000 was, although very generous, within

the estimates of each of the experts who gave evidence on this question. And, somewhat surprisingly,

both those experts have thought her capable of continuing to earn this income until age 65. This

contention must therefore be rejected.

The result is that the damages awarded to the plaintiff must be reduced on both the first and

second bases argued by the appellant; the plaintiff's loss must be calculated on the basis that she was

entitled to 50% of the nett income of the partnership with her husband during her future working life;

and the expenses of the partnership over the whole of the period since the date of the accident should,
for the purpose of calculating damages, be fixed at $30,000 per year.

There was no clear evidence of what the plaintiff's husband's financial contribution to the

partnership would have been likely to be in the future. What does seem clear is that as, on the

assumption which was made in order to reach the estimate of the plaintiff's earning capacity, her solo

career would have blossomed, his contribution would have declined. Doing the best we can on very

limited evidence, we would estimate his future gross earnings at $10,000 per year. This would result

in a gross partnership income of $90,000, a nett partnership income of $60,000 and a nett income for

the plaintiff of $30,000.

For the plaintiff's past loss of earning capacity for the three years following the accident we

would adopt the amounts assessed by the trial Judge. The total of those is $44,583. In 1992, the

plaintiff's damages on a nett income of $30,000 less tax, less her actual income from the partnership

yields $16,490. We adopt this figure as the amount lost by the plaintiff in 1992 and also 1993, 1994

and 1995. The total damages for the plaintiff's past loss of earning capacity is therefore assessed at

$110,543. Interest on this sum calculated at 5% per annum over seven years yields $38,691.

For future loss of earning capacity, a nett annual income of $30,000 yields a weekly sum after

tax of $457, from which $192 must be deducted to reflect the residual earning capacity found by the

trial Judge. A weekly sum of $265 calculated over 11 years on the 5% tables produces a sum of

$117,687.

The damages should therefore be as follows:

Damages for pain, suffering and loss of amenity	$ 75,000
Interest on the above	5,600

Griffiths v. Kerkemeyer 4,000

Interest on the above	800
Special damages 20,900
Interest on the above	4,780

Future medical expenses 7,270

Past loss of earning capacity	110,543
Interest on the above	38,691
Future loss of earning capacity	117,687
TOTAL $385,271

We would therefore allow the appeal with costs, set aside the judgment below and, in lieu, give

judgment for the plaintiff for the sum of $385,271.

REASONS FOR JUDGMENT - SHEPHERDSON J.

Judgment delivered 6 December, 1996

I have read the joint reasons for judgment prepared by Davies and McPherson JJA. I disagree

as to the outcome of this appeal and I shall state my reasons for my decision. In so doing I am grateful

to accept the facts as stated by Davies and McPherson JJA. There are several other facts to which I

shall refer in the course of these reasons.

1.         The Partnership Agreement and its Effect on the Respondent's Damages

The two components of the respondent's damages attacked by the appellant are concerned with

impairment of the respondent's earning capacity - past and future. The well known dictum in

Graham v. Baker (1961) 106 CLR 340 at 347 that "an injured plaintiff recovers not merely

because his earning capacity has been diminished but because the diminution of his earning

capacity is or may be productive of financial loss" applies.

In the present case, the respondent had, as the learned trial judge said, a talent which was "not

replaceable by hired labour. It is a case of direct loss of income that cannot be retrieved by paying

someone else".

Before the 1988 accident the respondent used her earning capacity to its fullest extent; it is

therefore fair to say that her damages for impairment of that capacity caused by the appellant's insured's

tortious act should reflect proper compensation therefor unless by reason of the partnership agreement

such damages must be reduced by 50 per cent.

That the respondent's earning capacity produced by far the greater part of the partnership income

is not in dispute.

Cases such as Seymour v. Gough (1996) 1 Qd.R 89 do not in my view provide any real

assistance as to the manner in which the damages for impairment of this respondent's earning capacity

are to be assessed. I say that primarily because in that case, which concerned a husband and wife

partnership in which the husband had been injured, the partnership employed additional labour and the

damages sought and recovered were based on the cost of that labour; by comparison with the present

case there never could be any such employment of any person to substitute for the respondent - her

talents were unique to her and it was her exercise of these talents which produced most of the

partnership income.

Seymour v. Gough does provide some guidance in that it recognises that a reason for a trading

partnership such as the present may be the saving of income tax and that that fact may be relevant when

assessing damages for impairment of an injured partner's earning capacity.

In the present case there was some scanty evidence from each of the partners as to the length

of time for which the partnership might have been expected to continue after the 1988 accident, had the

respondent remained uninjured. That evidence appears in the reasons of Davies and McPherson JJA.

I would not, with due respect, have placed the same emphasis on that evidence as their Honours have

done. In my view the answers given by the respondent and her husband were such that in the

circumstances, they should be given little weight. Had there been before the learned trial judge evidence

as to each having taken independent advice concerning the likely effect on their respective damages

claims of the continuation of the partnership for an indefinite time and had they then given the same

answers, then the answers might well have been entitled to considerable weight. I should also say that,

with due respect, I regard the fact that the marriage of the respondent and her husband had and continues to be a happy one as not necessarily indicating that, had the respondent not been injured, the

partnership would have continued indefinitely. I shall later return to those matters.

I turn now to the approach taken by the learned trial judge and I find it best to quote from his

reasons:-

"They are both plaintiffs in the one action, and were it necessary, even at this stage, I would permit them to sue as a firm. However it is not a partnership claim - the rights that are asserted are personal. The partnership is only relevant as the vehicle by which George and Louetta have regulated their rights in relation to one another and to third parties. But there is no legal relationship between the partnership and the defendant.

The partnership loss of income is however a source of evidence demonstrating the combined loss of these two plaintiffs. All partnership losses flowing from this accident are shared by Louetta and George, no-one else. It might be thought that at least for the period over which the partnership would have continued to govern their activities the total of their damages for economic loss should be the same as the total of the partnership losses, whether the partnership arrangements are for the division of profits fifty/fifty, eighty/twenty or in any other proportion. Unfortunately it is not true. Some of George's loss, especially that after his own recovery, is attributable to the partnership's failure to earn in consequence of Louetta's injuries. If she had been an employee, or if they had formed a company that employed them, all such damages would be recoverable. But there is a gap in the law that I am not allowed to fill. A partner is not a servant, and no per quod claim is available (Dahm v. Harmer [1955] S.A.S.R. 250; cf. Mankin v. Scala Theodrome Co Ltd [1947] 1 K.B. 257). To the extent that the partnership arrangement causes part of the loss attributable to Louetta's injury to be his loss that loss is recoverable neither by her nor by him. This is a surprising conclusion, and I have resisted reaching it. It highlights the strange results that follow from the absence of any right of action per quod in favour of partners as distinct from companies, and from the absence of any legislative remedy such as s.34 of the Wrongs Act 1936 (South Australia). Under that section a spouse may recover for his or her loss due to an injury to the other spouse impairing the participation of the latter in a business in which they are both engaged. The need for some such provision should be drawn to the attention of the authorities concerned with law reform.

The reasoning in Seymour v. Gough constrains me to give effect, so far as reasonably necessary, to partnership entitlements (in this case fifty/fifty) in assessing the individual losses of each plaintiff.

It is necessary to consider over what period, but for the accident, the partnership would have continued to govern the parties' individual rights. It is also necessary to address the actual exercise of the respective earning capacities since the accident, and take into account their individual earnings. It seems correct, as was submitted, that damages for George's lost capacity can be assessed only during the period when his personal injuries produced disability, namely the first six months. Once he was able to return to work he could perform as well as before, and he could organise business as well as before. The problem was that the main partnership source of income, Louetta, was damaged. One way of looking at the matter might be to identify a substantial loss of good will but the evidence was not so directed, and one would not expect books to be kept in this way. The reality was that after George overcame his physical disability, the vast majority if not all of the partnership losses were in fact attributable to the continuing inability of Louetta to perform and to bring in higher paid contracts. In my view the vast majority of partnership loss over and above that which can be identified as George's loss is prima facie Louetta's loss. I must however allow for a period during which the partnership would have continued to divert some of Louetta's earning capacity to the benefit of George.

Applying what I regard as the most realistic view of this case, for the first six months when both were unable to work, the loss should be shared equally in accordance with the partnership agreement so that each will recover fifty percent of the lost profits for that period."

The learned trial judge then considered authorities more particularly Seymour v. Gough (supra) and

Taroporewalla v. Berkery (1983) 3 NSWLR 28.

His Honour then continued:-

"In the present case there is no evidence of the terms of the partnership other than that it is a fifty/fifty partnership between two cooperative people. I am prepared to infer that it was easily dissoluble and that if one wanted to dissolve it, the other would have been likely to agree. Without any rift between them at all, it could easily have eventuated that Louetta's successful career left so little place for cooperative activities that separate careers would have become the reality and the partnership no longer relevant. The prospect of Louetta's career taking off and George becoming in effect her manager was by no means an unrealistic one but for the accident. One way of viewing such a situation, mentioned in some of the cases, is that the excess contribution of the partner of superior earning ability is in effect a gift to the other partner which that partner can by one means or another take back at any time. I shall act on the footing that the partnership would have continued to regulate the rights of the parties for a further three years after the accident but no longer.

In the circumstances of this case damages will be assessed for the first six months after the accident on the footing that both Louetta and George are entitled to fifty percent of the reduced income of the partnership. For the next two and a half years, on the footing that the partnership would have continued, Louetta's loss must be assessed at only fifty percent of the lost partnership income. George cannot recover any partnership loss for this period because he has no right to sue for loss caused by injury to a partner.

Thereafter up to the date of trial there will be no damages for the male plaintiff, and Louetta's loss will be assessed at what I regard as the likely level of her own earnings, discounted by ten percent for the contingency that the partnership had continued to reduce her personal entitlements.

For future economic loss I shall do the best I can to assess the reduced value in economic terms of Louetta's career. There will be no assessment in favour of George.

Because of this accident, the plaintiffs have actually been forced to be dependent upon each other commercially, and function as a unit instead of as solo personalities. The partnership has therefore become more necessary to them. Without the accident their respective careers would probably have been very different."

It is apparent from the above extract from His Honour's reasons that he was performing the type

of exercise required of him by the High Court in Malec v. J C Hutton Pty Ltd (1990) 169 CLR 638.

His Honour was concerned with conjecturing a hypothetical situation of the past (see pages 639 and

642-3) and, when it came to the component of future impairment of the respondent's earning capacity,

with predicting the future.

If this appeal succeeds because of the considerable weight placed on the partnership agreement

by which profits were to be shared equally between the respondent and her husband, then the appellant

will receive a windfall - and an undeserved windfall. I resist a result flowing from the provision of the

partnership agreement that profits be shared equally, being applied with rigour to reduce the

respondent's damages and yet that same provision of the partnership agreement cannot be used to

increase the respondent's husband's share of profits.

The learned trial judge relied on the judgment of Napier C.J. in Dahm and Anor. v. Harmer

(1955) SASR 250 in concluding that no per quod claim was available in the present case. The final

result in Dahm and Anor. v. Harmer is instructive. The headnote to the unreported case shows that a

husband and wife carried on in partnership in equal shares the business of a hairdresser and tobacconist.

The husband was injured in a road accident by the negligent driving of another person and was

incapacitated by his injuries from working in his business. During his incapacity, hairdressers were

employed by the partnership to take his place. The husband sued the negligent driver for damages for his personal injuries and a joint claim was made by the husband and wife for reimbursement of the

wages paid by the partnership to the hairdresser so employed. Napier C.J., applying Best v. Samuel

Fox & Co. Ltd (1952) AC 716 held that the amount which the wife contributed as her share of the 941

pounds and 3 shillings paid to hairdressers to take the place of her husband while incapacitated was not

recoverable by her from the negligent driver. When Napier C.J.came to consider the injured husband's

claims he said (at p.252):-

"I agree that the amount which the plaintiff wife contributed, as her share of the cost of finding a substitute for her husband, is not recoverable by her from the defendant, but the question that remains is whether the plaintiff husband's claim on this account is limited to his contribution. I have not been referred to any authority directly in point, but while I appreciate Mr Brazel's contention that the wife has no cause of action for her contribution, I cannot agree that the husband is debarred from recovering, in one way or another, for the loss of earning power during the period of his incapacity. It seems to me that the expense incurred by the partnership was met by both partners, and the fact that, in the adjustment of the accounts of the partnership, one-half of the outlay is chargeable to the wife, ought not to absolve the wrongdoer from the responsibility to "recompense the injured party for all the damage which naturally flows from the wrongdoing" (Liffen v. Watson (1940) 1KB 556 at p. 557). The wrongdoer should not get the benefit of the fortuitous circumstance that the plaintiff's husband was entitled to this adjustment (see Payne v. Railway Executive (1952) 1KB 26 at p.36). As Lord Goddard has pointed out in Liffen v. Watson what the plaintiff husband does with the compensation when he receives it is a matter for him and nobody else."

Although the test in Liffen v. Watson no longer applies, His Honour's sentiments are clear.

His Honour went on to allow the general damages in a fixed sum which included the round figure of 940

Pounds on account of the plaintiff's loss of earning power during the period of incapacity.

Effectively then, despite the provisions of the partnership, His Honour permitted recovery by the

injured husband of virtually the whole of the wages paid to substitute hairdressers. The judgment thus

negated the effect of his ruling in respect of the joint claim by the husband and wife as members of the

partnership.

I come now to the decision of Taroporewalla v. Berkery (supra). This was a case in which the plaintiff, who was a partner, had been injured in a motor accident on 6 March 1979. He was a silkscreen printer. The plaintiff claimed for economic loss to the date of judgment under two headings

- loss of wages and loss of profits from what was called a "backyard business" conducted by him at the

time of the accident. As to the first there was little contest. As to the second there was considerable

dispute. The plaintiff had set up a silkscreen business in a tin shed situated a short distance from his

home; in this business he made decals which were apparently transfers for use in relation to cycles and

other things. His best customer had been a former employer described as General Accessories. He

had worked hard in that business, before and after his ordinary hours of employment and with the work

from General Accessories and other persons had developed a significant business. The profits which

he would have made from this business between the accident and judgment were lost to him. During

the period of about 2 years before the injury the plaintiff's business had derived about 80 per cent of

its gross income from General Accessories and the remaining 20 per cent from other persons. He was

assisted in the business by his wife, and during the year ended 30 June 1978 they were equal partners

in the business. The wife did some work e.g. writing up the books, taking orders and making some

deliveries. However the greater part of the work and in particular the physical work of the business was

done by the plaintiff. The plaintiff had a good connection with General Accessories and had a reputation

for producing orders as required on time and of good quality. To do this he worked both before and

after his ordinary hours of employment and in consequence very long hours.

A Master had assessed the plaintiff's damages on the basis that in calculating the loss suffered

by him to the date of judgment there should be attributed to the plaintiff 80 per cent of the business

income. The defendant submitted that this was wrong and that the plaintiff's loss should be calculated

by reference only to 50 per cent of that income. This was because under the partnership arrangements

existing during the year 1978 and until the accident the plaintiff received only 50 per cent of the profits

from the business. The submission was that his loss should be calculated upon that basis.

Mahoney J.A. (as he then was) with whose reasons Glass J.A. expressly agreed and Hutley J.A.

agreed substantially, said, in reference to the position of a plaintiff who was or would have been deriving

income from a partnership (at p.35):-

"There is in my opinion no single rule which determines the quantification of damages for a plaintiff in such a case. The damages to be awarded will depend on, inter alia, the nature of the partnership and the plaintiff's relationship to the income which would have been derived from it.

There are, of course, two principles which are fundamental: first, that the plaintiff is to be compensated only for the loss which he has actually suffered, in the past or prospectively; and, second, that that for which the plaintiff is to be compensated, in this regard, is loss of his capacity to derive reward from his efforts."

He went on to say that the first principle was not in issue and continued:-

"In relation to the second, it is to be borne in mind that, in assessing the compensation to be awarded for the plaintiff's loss of capacity, the court must take account of what use he, uninjured, would have made of it. If the plaintiff would have put his capacity to a particular or limited use then, prima facie, his loss is to be calculated by reference to the income or profit that he would have derived from that particular or limited use. Thus, if the court be satisfied that his capacity would not have been used to derive income because, for example, he had determined to remain at leisure, then ordinarily no loss will be seen to have resulted."

At pp.35 and 36 His Honour said:-

"In applying these general principles in the partnership context, there are, inter alia, three questions which may arise: (1) whether the plaintiff's loss is to be calculated by reference to what he would have derived from the partnership business; (2) (if it is) how that loss is to be calculated; and (3) (if the loss is not to be measured merely by the entitlement to the partnership profits) how the plaintiff's lost capacity is to be measured.

In determining what losses resulted from his incapacity, the court will look to two things: what, uninjured, he would have done with his capacity and what accordingly he would have derived from it; and what, in his injured condition, he can and will do with it. In practice, it is the difference between these two which will be the measure of this aspect of his compensation. (As I have said, I have put aside for this purpose compensation he is to receive for the loss of his capacity as such.)

In determining what, uninjured, he would have done, the court may conclude that he would have committed his capacity (or the relevant part of it) completely to the partnership activities. It may so conclude because, for example, he was legally committed to do so during the whole of the relevant period or because there are other reasons, such as family ties, personal preferences or the like, which would lead to his doing so.

In such a case, what he would have derived from his capacity is what he would have derived from the partnership. For this purpose, it is prima facie irrelevant that, had he employed his capacity otherwise, he would have derived something in excess of what he would have derived from the partnership. The plaintiff is entitled to recover no more than the loss he has suffered and, if because he would have committed himself to the partnership or because he would have remained idle, he would have derived less than might have been derived from a different employment of that capacity, prima facie such will be the limit upon the loss which he has suffered.

But what the plaintiff would have done with his capacity may not be so clear. The court may, for example, conclude that it is probable that the plaintiff would have devoted his capacity to the partnership but that there is a real possibility that he would have used his capacity in a different way. As the court is, in a sense, compensating the plaintiff for the loss of the opportunity to derive reward from the use of his capacity, it might therefore take into account the possibility that he would have derived the reward appropriate to the use of it in that different way. In such a case, the court, in assessing the compensation, will not be confined to what the plaintiff would have derived from the partnership."

In my view, what the learned trial judge has done in the instant case is to conclude that what the

respondent would have done with her capacity was not clear and that her damages are not limited to

what she would have derived from the partnership.

In adopting the approach which he did His Honour has not been confined to what the respondent

would have earned from the partnership during the whole of the period from the date of the accident

up to the date of judgment and thereafter into the future.

The question is whether he was wrong to do so. I have already stated my views as to the way

in which the sparse evidence of the partners' future intentions should be interpreted. Davies and

McPherson JJA. appears to have treated that evidence as showing a clear case that, uninjured, the

respondent would have committed her capacity completely to the partnership activities.

To return to the decision in Taroporewalla, Mahoney J.A. said (at p.36):-

"In deciding how the plaintiff, uninjured, would have used his capacity the court will, as I have said, have regard to his relationship or commitment to the partnership. In doing this, it may take into account not merely what the plaintiff has said about his intentions but also whether the partnership was informal and subject to rearrangement and whether it was at will and otherwise readily terminable: ... It will also be relevant to consider whether, by the terms of partnership or by a variation of them, the partner would during the relevant period have been able to increase and would have increased his return from it."

Mahoney J.A. considered the following matters in reaching the conclusions that first, regard

should not be had only to the 50 per cent of the potential partnership profits and secondly that the

plaintiff's access to the rest of the partnership profits should be taken into account; - the business had

been his, the partnership had, as he inferred, been formed for reasons going to his convenience such as

a reduction in the tax payable in respect of the business income, he could have rearranged the terms of

the partnership and in a practical sense he could have appropriated to himself such portion of the

partnership profits as he saw fit.

In the result, the Court of Appeal concluded that the amount of past economic loss attributable

to the partnership profits namely 80 per cent was not excessive.

In summary then the New South Wale Court of Appeal concluded that in the case where an

injured plaintiff was or would have been deriving income from a partnership, it was for the court

assessing damages for loss suffered by the partner's impairment of earning capacity to decide on the

evidence before it which of the following two situations would have applied:-

1.        where the injured partner would have committed himself to the partnership, or

2.        where what the injured partner would have done with his capacity is not so clear.

As to the first, his loss will be limited by the provisions of the partnership agreement as to division

of profits. As to the second, the court, in assessing the loss is not confined to what the injured partner

would have derived from the partnership.

If it is the second situation, then the court will take into account various matters - examples are

given in judgment of Mahoney J.A. in the passage from p.36 which I have set out above. The partner's

intentions are but one of the matters.

In my view, before this court sets aside the approach taken by the learned trial judge the

appellant must satisfy this court that the trial judge was wrong. In Zuvela & Cosmarnan Pty Ltd (an

unreported judgment of the High Court of Australia delivered on 8 November, 1996) the High Court

said:-

"When a Court of Appeal is reviewing by way of rehearing the findings of fact made by a trial judge who has had the advantage of hearing and observing the witnesses, the Court of Appeal should not treat the appeal as a hearing de novo. As Barwick CJ said in Whiteley Muir & Zwanenberg Ltd v Kerr, ((1966) 39 ALJR 505 at 506) followed in Warren v Coombes ((1979) 142 CLR 531at 542-543):-

"The trial judge, although not depending in any respect on the credibility of any witness, may have preferred one possible view of the primary facts to another as being in his opinion the more probable. Such a finding may, in my opinion, be disturbed by an appellate court but this should only be done if other probabilities so outweigh that chosen by the primary judge that it can be said that his conclusion was wrong. Again, the trial judge, having found the primary facts, may decide that a particular inference should be drawn from them. Here no doubt the appellate court has more room for setting aside that conclusion. But, even in that case, the fact of the trial judge's decision must be displaced. It is not enough that the appellate court would itself, if trying the matter initially, have drawn a different inference. It must be shown that the trial judge was wrong. This may be achieved by showing that material facts have been overlooked, or given undue or too little weight in deciding the inference to be drawn: or the available inference in the opposite sense to that chosen by the trial judge is so preponderant in the opinion of the appellate court that the trial judge's decision is wrong."

Of course, if the relevant fact is an inference to be drawn from the established facts, the Court of Appeal may be in as good a position as the judge at trial: see Warren v Coombes."

The case before this court is one where the evidence, although sparse, is not disputed. In that

event, this court has more room for setting aside His Honour's conclusions but before it can do so the

court must be satisfied the trial judge was wrong in the attitude he took as to the length of time for which

the partnership would have continued had the respondent not been injured. I do not see that the learned

trial judge overlooked facts or gave undue or too little weight to material facts in deciding as he did. His

Honour treated the respondent and her husband as two cooperative people and in my opinion this view was open to His Honour considering that the marriage of these two people was and continued to be a

happy one. It may be fairly said that in finding that the respondent and her husband were two co-

operative people, His Honour relied on his observations and credibility of each in the witness box. In

that event, His Honour enjoyed an advantage over this court and it is thus more difficult for this court

to overturn that finding. (Devries v. Australian National Railways Commission (1993) 177 CLR 472).

I have already set out in the extract from His Honour's reasons, the other matters which His Honour

took into account and the route by which His Honour ultimately decided when the partnership would

have ceased to operate. The learned trial judge's attitude to the fact that the partnership profits were

divided equally was properly taken into account. I am not satisfied that the learned trial judge was

wrong in deciding that at the end of 3 years the partnership would no longer operate.

I consider the decision of Taroporewalla of much greater assistance to this court than any other

decision of which I am aware or which has been cited to us. It is a decision which states principles

relevant to the present case. Cases where an injured partner's damages are assessed by reference to

the cost of hiring a replacement or replacements do not, in my respectful view touch on the present case.

In the result I would not set aside the trial judge's approach to the assessment of the respondent's

damages. This leaves the matter of the arithmetical assessment.

2.         Calculation of the Damages

The appellant has contested the amounts of the components for past economic loss and future economic

loss in the assessment of damages by the learned trial judge.

I agree with Davies and McPherson JJA. that the learned trial judge made a mathematical error

in stating that the average of annual expenses of the partnership over the period between 1986 and

1994 was about $26,000.

Immediately before making that statement His Honour said:-
"... between 1986 and 1994 the range of total expenses for the partnership never fell
below $20,805 nor rose above $32,865."

It seems that His Honour probably omitted the expenses for 1993 which on the evidence were

$33,954. Thus the range should have been $20,805 to $33,954. On my calculations the average then

for the period 1986 to 1994 was $27,669 and I agree with Davies and McPherson JJA. that the

average of annual expenses in this period should be $27,550.

Does this alteration in the expenses affect the assessment by the learned trial judge of the

components of damages which have been attacked?

Davies and McPherson JJA. would not interfere with the assessment by the learned trial judge

for the three years following the accident - $44,583. I agree.

For the fourth, fifth, sixth and seventh years following the accident the learned trial judge assumed

that the respondent's annual business expenses would not exceed $20,000. In these years he was

treating her as solo self-employed.

This $20,000 was His Honour's estimate of her expenses. I am unable to see that the mistake

in averaging the partnership's annual expenses at about $26,000 instead of about $27,500 indicates that

the choice of $20,000 for the respondent's own expenses was wrong.

And so, in my view, the appellant has failed to demonstrate that the assessment by the learned

trial judge of the respondent's damages for impairment of earning capacity in these four years is an

erroneous estimate and more particularly is an over estimate which has a substantial effect on the learned

trial judge's award such that this court should substitute a different figure for this component (Elford v.

FAI General Insurance Company Limited (1994) 1Qd.R 258).

As for the component for the future, for reasons which I have given, the partnership agreement

no longer operated and the appellant has failed to demonstrate any error in the learned trial judge's

assessment of this component at $239,760. I should add that I agree with Davies and McPherson JJA. as to rejection of the appellant's contention that the estimate of likely income to be earned by the

respondent in the future was too generous.

Thus, for reasons I have given I would dismiss the appeal with costs to be taxed.