Thompson v Agius File No. SCGRG 92/462 Judgment No. 3657 Number of Pages 6 Damages General Principles

[1992] SASC 3657

COURT IN THE SUPREME COURT OF SOUTH AUSTRALIA FULL COURT Mullighan J.(1), King C.J.(2) and Olsson(3) J.

CWDS
Damages - general principles - married woman injured in road accident - fractures to right ulna and left patella - lacerations in left knee, right elbow and upper lip and multiple abrasions and cuts - post traumatic stress disorder - significant recovery from most of injuries at time of trial - appeal against various components of award of damages - not in employment at time of accident but about to commence work at family business - earning capacity diminished - unable to work as extensively as intended - voluntarily ceased employment to live with family in Western Australia - did not seek employment in that State for about a year and then employed less extensively than would have been the case but for her incapacity - appeal allowed - damages for past economic loss manifestly excessive - reduced form $30,000 to $19,000 - award of $30,000 for future economic loss confirmed - award for interest reduced from $7,000 to $3,200 - judgment sum reduced by $14,800 to $68,328.
Graham v Baker (1961) 106 CLR 340 at 347 and Griffiths v Kerkemeyer (1977) 139 CLR 161 per Gibbs J. p 165, applied.

HRNG ADELAIDE, 8 September 1992 #DATE 16:10:1992
Counsel for appellant:             Mr R.G. Steele
Solicitors:   Ward and Partners
Counsel for respondent:             Mr G.A. Britton
Solicitors:   Voumard Bell and Co.

ORDER
Appeal allowed.

JUDGE1 MULLIGHAN J. The respondent was extensively injured in a road accident on 22nd October 1987. She brought an action in the District Court for damages for the injuries sustained and loss suffered by her as a result of the accident. The appellant admitted negligence and the trial proceeded in February 1992, only as to damages. The learned Trial Judge assessed the respondent's damages at $83,128.00 which included awards for past and future economic loss and interest. The appellant appeals against the assessment on the grounds that the awards for economic loss are manifestly excessive and contrary to the evidence and that the learned Trial Judge erred in the calculation of interest on the award for past economic loss. 2. At the time of the trial, the respondent was aged 35 years and was married with three children aged 16, 13 and 7 years. In consequence of the accident she suffered a fracture of the right ulna with some displacement, a fracture of the left patella, lacerations on the left knee, right elbow and upper lip and multiple abrasions and cuts. She underwent surgery on six occasions with respect to her right arm and left knee. By the time of the trial she had recovered substantially from most of her injuries. The learned Trial Judge correctly summarized the position at that time as follows:-
    "The surgeon in charge of her care reviewed her in February
    of this year and he was of the view that, firstly, her right forearm
    was in reasonably good condition and there was no significant problem
    except for perhaps a mild impairment of grip, and, secondly, she has
    a residual impairment to her left knee caused, no doubt, because of
    the patella related injury and scarring. Consequently there was this
    loss, to some extent, of flexion of the knee. Coupled with this, of
    course, he noted the quite significant scarring to her forearm and
    knee." 3. These findings are not challenged and appear to be based upon the evidence of Dr. Sandow, who, on 18th February 1992, assessed the permanent residual disability of the right arm as "5% of upper limb function as a consequence of mild decreased grip strength and aching on activity as well as the associated appearance of the scar". He assessed the residual disability of the left knee at 15% of "lower limb function as a consequence of abnormality of the patella-femoral articulation, mild muscle wasting and slight loss of motion with a small possibility of long term degenerative disease". After the accident the respondent developed a post traumatic stress disorder which was diagnosed by Dr. Seidel, a psychiatrist, in late 1989. However, it appears that this condition had largely resolved by the time of the trial. The learned Trial Judge found that in time she would recover from this condition. Another psychiatrist, Dr. Scanlon, saw her in late 1991 and expressed the view that she was not then suffering from any psychiatric condition. 4. At the time of the accident the plaintiff was not in employment. She lived with her husband and children, apparently at Port Pirie. Her husband worked as a gardener with the Port Pirie Council and they jointly owned a parcel of land which they used as a small market garden. There was no evidence that they earned any income from the garden and that activity played no part in the assessment of economic loss. Her parents owned a poultry farm. The appellant had worked occasionally at the poultry farm some years before the accident and intended to again work there commencing in November 1987 to the extent of 25 hours each week. Her brother, who held a senior position in the business, confirmed that she was due to start work at that time and thought that her hours would have varied between 25 and 30 hours each week. She did not commence work at that time due to her injuries. Had she done so, her rate of pay would have been $7.30 per hour. By the time of the trial it would have been $9.31 per hour, presumably steadily increasing to that amount over the years. 5. The appellant was unable to commence work at the farm, due to her injuries, until September 1988. She was unable to work to the extent which she had intended. According to her she worked eight hours a week. Her brother recalled that she worked eight to ten hours a week and that her hours increased to about 16 hours a week. 6. In late 1989 the appellant gave up the work and travelled with her husband and children to Western Australia. He had taken long service leave. Whilst they were in Western Australia, he obtained employment with the Narembeen Shire Council in December 1989. They have since lived in Narembeen. The appellant did not seek employment in Western Australia for about twelve months and then she obtained work as a cleaner at the Council for about 16 hours a week. There is no suggestion in the evidence that her ceasing to work at the poultry farm, the move to Western Australia or her not seeking work for a year are related to her injuries and resultant disability. 7. The appellant continued to work as a cleaner at the Council until the trial and also worked for brief periods in a complex for aged persons in the kitchen and at a hospital. She had no difficulty in performing the kitchen duties but has experienced some problems with heavy work as a cleaner which the learned Trial Judge found was likely to continue. 8. The learned Trial Judge found the respondent to be a very impressive woman who did not exaggerate her problems. He accepted her evidence in its entirety. 9. In assessing damages for past economic loss the learned Trial Judge took the view that he should use the broad axe approach. A schedule was put before him by the respondent's counsel which set out the total amount which the respondent would have earned, but for the accident, had she commenced work at the poultry farm as she intended and continued to work 25 hours a week and 30 hours a week at $7.50 per hour. In accordance with the evidence the correct rate should have been $7.30 per hour, however that is a matter of little significance. The calculation at 25 hours per week was $41,250 and at 30 hours per week, $49,500. The schedule also showed earnings of the plaintiff from her employment at the poultry farm from September 1988 to January 1990 at $6,213.93 and her earnings in Western Australia, which amounted to $3,783.51 from the Council, hospital and complex for aged persons. There was an issue on the appeal as to the status of this schedule at the trial. Mr. Steel, for the appellant, contended that it was merely used by the respondent's counsel as part of his address. Mr. Britton submitted that it was a document which was prepared after negotiations between the legal advisers of the parties and was therefore to be regarded as evidence of the matters contained in it. Although the schedule was not admitted into evidence, the learned Trial Judge did have regard to it as proof of the likely earnings of the respondent had she not been injured and of her actual pre-trial earnings. As Mr. Steel did not request that a report be obtained from the learned Trial Judge or to adduce evidence as to the basis upon which the schedule was placed before the learned Trial Judge, it should, on this appeal, be treated as being properly before him and as evidence of the matters set out in it. 10. The learned Trial Judge assessed damages for past economic loss on the basis of the contents of the schedule, that is to say that, but for the accident she would have earned pre-trial a gross total income of between $41,000 and $49,000 and that she in fact earned a total income of about $9,800. He concluded that, but for the accident, she would have earned a total sum of at least $45,000 and after making a deduction for income taxation and presumably for her actual earnings, he awarded $30,000. 11. In my view he was in error in that approach. The evidence justified a finding that the respondent voluntarily gave up her work at the poultry farm, for reasons unrelated to the accident, so that she could accompany her husband and children to Western Australia. The respondent is entitled to damages for her loss of earning capacity. The true measure of that loss pre-trial is often the wages which an injured person would have received but for the incapacity. The learned Trial Judge was correct, in my view, in adopting that approach. However, an injured person is to be compensated "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": Graham v. Baker
(1961) 106 CLR 340 at 347; see also Griffiths v. Kerkemeyer (1977) 139 CLR 161 per Gibbs J. at p 165. The loss of earning capacity of the respondent was not productive of financial loss during the period that she chose not to work for reasons unrelated to the accident. Consequently, the learned Trial Judge was incorrect in basing the award for past economic loss upon the whole period between the accident and the trial. 12. The correct approach is to assess damages for past loss of earning capacity during the period before she went to Western Australia and also when she was living in that State and had decided to commence work. During the first period a reasonable method of assessing that loss was the total amount which she would have earned at the poultry farm less her actual earnings. The evidence does not admit of precise calculations but it is reasonable to accept that, but for the accident, she would have worked at the poultry farm for a period of about 110 weeks until she went to Western Australia. If she had worked for 25 hours each week at a rate of $7.30 she would have earned about $20,000. Deducting her actual earnings results in loss of earnings of a little under $14,400. As it is likely that the hourly rate increased over that period and it is possible that she may have worked more hours, I would allow $15,000 as her loss of earnings during that period. 13. It appears that she commenced to work in early 1991 and prior to the trial earned about $3,800 during a period of about 58 weeks. She worked less hours each week than she would have worked at the poultry farm had she not been injured. The respondent's evidence was that she could not work longer hours after the move to Western Australia because of tiredness and soreness in her leg. She was able to do the work at the complex for aged persons as it did not involve any heavy work, however she did have difficulty with some of the work at the hospital. Her evidence falls short of establishing that, but for her incapacity, she would have worked more extensively than was her intention before the accident. She had three children to supervise and it is likely that she would not have worked more than about 25 hours each week if she had not been injured. Also the evidence does not establish that additional work was readily available to her, but as she was prepared to work as a cleaner it may be accepted that she could have worked more extensively, perhaps in domestic cleaning, but for her injuries. Some allowance must be made for her diminished earning capacity during this period. The evidence does not permit a precise calculation but it is reasonable to accept that if she had not been injured she would probably have worked about 25 to 30 hours each week at a rate of about $12 per hour, which she was receiving from the Council. On that basis a reasonable allowance for this period is $6,500. There was no evidence upon which a calculation may be made as to the income tax which would have been payable by the respondent had she earned this amount. Some income tax would have been payable but it is likely that it would not have been a large sum. I would assess damages for past economic loss at $19,000. I do not think any reduction should be made on account of adverse contingencies because they must be balanced against the favourable contingencies that she may have worked more extensively and at higher rates of pay or she may have obtained permanent employment with consequential benefits. Also the damages have not been assessed in current money value which results in a detriment to the respondent which is not entirely compensated by an award of interest. 14. The appellant also complains about the award of $30,000 for future economic loss. The learned Trial Judge expressed his reasons for the award as follows:-
    "I have mentioned the nature of the lady. She is reasonably
    young with a long period of her working life ahead of her. She now
    has a permanent restriction with her knee. There is that area of
    capacity which she cannot now exercise in the heavier aspects of her
    working life. 15. Using the base as Mr Johnson's evidence, the weekly loss may well be in the range of $87 a week. I have been urged to use the multiplier for a woman of her age, 35. I am unwilling to do this. I have to bear in mind many contingencies in this lady's life. I propose, in all the circumstances, to fix a lump sum of $30,000 for her future economic loss." 16. Mr. Steel contended that there was no basis in the evidence for such an award. He argued that the evidence established that she was working to the full capacity of the work which was available to her. She readily undertook the additional work at the complex for aged persons and at the hospital when it was available. The evidence to which I have referred does not establish that the respondent was working all of the hours which were available to her. True it is that she is living in a country town and opportunities for further employment are limited, but the learned Trial Judge was obliged to assess damages for her loss of earning capacity which, on the evidence, was significant and permanent. She is a relatively young woman with many years of working life ahead of her. No doubt the need to care for her children is a limitation upon her opportunity for work, but those obligations will resolve and it may be expected that, if her earning capacity had not been diminished by her injuries, she may have sought additional employment. Also she may not have continued to live at Narembeen. She may have returned to work at the poultry farm or have moved to a place where employment opportunities were more extensive. The learned Trial Judge was correct, in my view, in rejecting the approach of measuring the loss by recourse to an actuarial calculation. His assessment was justified by the evidence. Far from being a totally erroneous assessment, it was a reasonable assessment and fully justified by the evidence. 17. The appellant challenged the award of $7,000 for interest on the award for past economic loss. The learned Trial Judge did not disclose the basis of the calculation in his reasons for judgment. The action was commenced on 19th October 1990. Interest at the rate of 12.5% on the total amount of past economic loss, which he assessed from that time until trial, would have resulted in an award of $4,800. It would appear that the learned Trial Judge made his calculation for a longer period or at a substantially higher rate of interest. S.35g of the Local and District Criminal Courts Act, which was in operation at the relevant time, provides that interest shall be calculated at such a rate as may be fixed by the Court from the date of commencement of the proceedings to the date of judgment or such other period as may be fixed by the Court. A reasonable rate of interest is 12.5%. There is no reason to award interst for any period prior to the commencement of the action. It follows that the learned Trial Judge must have made an error in his calculation. Also, the award cannot stand as the damages for past economic loss are manifestly excessive. I would award interest at 12.5% from the date of the commencement of the action which I would round off at $3,200. Mr. Steel contended that interest should not be awarded on the full amount of the damages for past economic loss as part of the loss accrued after the commencement of the action and progressively. No doubt that is the correct approach in cases where a significant part of the loss accrued after the proceedings commenced. Such is not the case here. It is within the proper exercize of the discretion under s.35g to award interest on the total loss for the whole of the relevant period. 18. The appeal should be allowed and the judgment sum reduced by $14,800 to $68,328.

JUDGE2 KING C.J. I concur.

JUDGE3 OLSSON J. I have had the advantage of reading the reasons for decision of Mullighan J. in this matter in draft. 2. I agree with his reasoning and the orders which he proposes.