Tony Marentis v Gallagher Bassett Services Workers Compensation NSW Pty Limited ABN 83564379(08009)
[2014] NSWDC 10
•14 March 2014
District Court
New South Wales
Medium Neutral Citation: Tony Marentis v Gallagher Bassett Services Workers Compensation NSW Pty Limited ABN 83564379(08009) [2014] NSWDC 10 Hearing dates: 5-6 March 2014 Decision date: 14 March 2014 Before: Mahony SC DCJ Decision: Verdict and judgment for the plaintiff. For orders see [75]
Catchwords: Work injury damages; extension of time for bringing proceedings; increased discount for vicissitudes for future losses caused by onset of unrelated illness Legislation Cited: Civil Procedure Act 2005
Law Reform (Miscellaneous Provisions) Act 1946
Workers Compensation Act 1987
Workplace Injury Management Act 1999Cases Cited: Bankstown Foundry Pty Limited v Braistina (1986) 160 CLR 301
Fox v Wood (1981) 148 CLR 438
Graham v Baker (1961) 106 CLR 340
Heuston v Yore Contractors Pty Limited (Supreme Court of NSW), Hunt CJ at CL, 9 March 1992, unreported
Itek Graphix Pty Limited v Elliott (2002) 54 NSWLR 207
Liftronic Pty Limited v Unver (2001) 75 ALJR 867
Matar v Jones [2011] NSWCA 304
Medlin v State Government Insurance Commission 1995 182 CLR 1
Morvatjou v Moradkhani [2013] NSWCA 157
State of New South Wales v Moss (2000) 54 NSWLR 536
Strasburger Enterprises Pty Limited trading as Quix Food Stores v Serna [2008] NSWCA 354
Stepanovic v GIO (NSW) (1995) 21 MVR 327
Wade v Allsopp (1976) 10 ALR 353Category: Principal judgment Parties: Tony Marentis (Plaintiff)
IMC Pty Limited (Defendant)Representation: M J Cranitch SC with S Blount (Plaintiff)
S L Flett (Defendant)
Guardian Law Pty Limited (Plaintiff)
Sparke Helmore (Defendant)
File Number(s): 12/302046 Publication restriction: Nil
Judgment
Introduction
By Statement of Claim filed on 28 September 2012 the plaintiff seeks damages for injuries suffered by him in an accident at work on 14 August 2002. It was not in issue that, if entitled, those damages were to be assessed pursuant to s 151G of the Workers Compensation Act 1987 ("WCA").
The defendant's Defence denied liability, and pleaded contributory negligence. It further pleaded that the plaintiff had failed to bring proceedings within the time limit proscribed by s 151D of WCA, and raised payments made by it pursuant to the WCA as a defence to the action. Those payments amounted to $65,135.02.
The Limitation
At the commencement of the hearing, Senior Counsel for the plaintiff drew to the Court's attention the limitation issue, and the need for an order pursuant to s 151D(2) WCA for leave to commence the proceedings nunc pro tunc. It was determined that the limitation question should be determined following the trial, given the limited ambit of the dispute between the parties, and the fact that the plaintiff's evidence in respect of that issue would in any event be evidence he relied on at the trial.
Leave was granted to the plaintiff to file during the hearing a Notice of Motion dated 4 March 2014 which contained the following prayers for relief:
(1) Leave for the plaintiff to proceed directly against the insurer pursuant to s 6 of the Law Reform (Miscellaneous Provisions) Act 1946.
(2) Leave for the plaintiff to substitute the Workers Compensation Nominal Insurer as the named defendant pursuant to s 64 of the Civil Procedure Act 2005.
(3) Leave for the plaintiff to proceed pursuant to s 151D(2) of Workers Compensation Act 1987."
The first two orders were made by consent. The determination of the leave issue is dealt with below.
Whether Leave Should be Given to Extend Time for Bringing Proceedings
Section 151D provides relevantly as follows:
"151D Time Limit for Commencement of Court Proceedings against Employer for Damages
(2) A person to whom compensation is payable under this Act is not entitled to commence court proceedings for damages in respect of the injury concern against the employer liable to pay that compensation more than three years after the date on which the injury was received, except with leave of the court in which the proceedings are to be taken.
(3) The Limitation Act 1969 does not apply to or in respect of court proceedings to which this section applies.
In Strasburger Enterprises Pty Limited trading as Quix Food Stores v Serna [2008] NSWCA 354 Basten JA (with whom Gyles AJA and Hoeben J agreed) said in relation to the section:
"52. With respect to this and similar provisions, which contain no express indication of the matters to be considered in relation to an application to extend time, 'the limits of the discretion are to be found in the subject matter, and the scope and purpose of the statute': Salido v Nominal Defendant (1993) 32 NSWLR 524 at 430F (Gleeson CJ); see also [535-539] Kirby P and [541] Powell JA. Subsequently, the High Court provided guidance as to the correct approach in Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541, although the majority judgments did not speak in identical language and were concerned with the limitation provision which provided some guidance as to factors to be taken into account. As explained in The Salvation Army (South Australia Property Trust) v Rundle [2008] NSWCA 347 at [96] by McColl JA:
"Brisbane South is authority for the proposition that an application for an extension of time under limitation legislation should be refused if the effect of granting of the extension would result in significant prejudice to the potential defendant ...'Significant prejudice means such prejudice as would make chances of a fair trial unlikely ... For a trial to be fair, it need not be perfect or ideal ...'"
In Itek Graphix Pty Limited v Elliott (2002) 54 NSWLR 207, Ipp AJA (with whom Spigelman CJ and Sheller JA agreed) said the proper approach in respect of an application for leave under s 151D, having reviewed the authorities, was as follows:
"[87] In my opinion, in limitation legislation such as s 151D(2) of the Workers Compensation Act, where a broad discretion to grant leave to sue after expiry of the limitation period, the general question that has to be asked is what is fair and just (per Gleeson CJ in Salido). Or, what does the justice of the case require (per McHugh J in Brisbane South Regional Health Authority). In answering such a question the justice of the case must be evaluated by reference to the rationale of the limitation period that has barred the action, including the four rationales to which McHugh J referred."
The four rationales that his Honour was referring to were set out by Ipp AJA at [78] as follows:
"McHugh J (at [552]) identified four broad rationales for the enactment of limitation periods, generally. These were:
(a) As time goes by relevant evidence is likely to be lost;
(b) It is oppressive to a defendant to allow an action to be brought long after the circumstances that gave rise to it have passed;
(c) It is desirable for people in the community to be able to arrange their affairs and utilise their resources on the basis that claims can no longer be made against them. Many in the community have a significant interest in knowing that they have no liabilities beyond a definite period;
(d) The public interest requires that disputes be settled as quickly as possible."
On the limitation question, the plaintiff relied on the affidavit of Panteli Nicolopoulos sworn on 28 February 2014. The defendant relied on an affidavit of Nicholas James Studdert sworn on 3 March 2014. The evidence established that shortly after his injury in August 2002 a claim was lodged by the plaintiff with the relevant workers compensation insurer. Payments were made in respect of weekly benefits and treatment expenses until sometime in late 2005. In 2004 the plaintiff sought legal advice and an application was made for lump sum payments for entitlements under the WCA. Such payments were made in July 2005 reflecting an assessment of 12% whole person impairment.
As he was assessed below 15% whole person impairment, the plaintiff received advice from his then solicitors that he had no entitlement to bring a work injury damages claim. However, in 2010 the plaintiff sought further legal advice and was referred for medical examination by two further specialists. He was then assessed above 15% whole person impairment and on 20 March 2012 was awarded further lump sum entitlements pursuant to ss66 and 67 WCA on the basis of a further 12% whole person impairment.
It was not made clear on the evidence when the plaintiff filed his prefiling statement and otherwise complied with the relevant provisions of the Workplace Injury Management Act 1999. However, the defendant did not rely on the effluxion of time as amounting to presumptive prejudice in this case. The defendant's case on actual prejudice arose in a specific way as follows.
In his Statement of Particulars the plaintiff claimed that at the time of the injury he was earning approximately $1500 net per week. He claimed he had been totally incapacitated for work for various periods, but at all other times had been partially incapacitated for work and thereby claimed past loss of earnings. The plaintiff claimed that he was unable to continue in any form of employment from November 2011, and as a consequence of the injuries, had suffered a substantial diminution in earning capacity and ability to compete on the open labour market.
The defendant had sought the plaintiff's wage records and taxation history. The wage records were not available as a result of the company which employed the plaintiff, IMC Pty Limited, going into liquidation soon after his injury. The taxation records that were available however, confirm that in the relevant financial year, i.e. the year ending 30 June 2003, the plaintiff's assessable income was $31,809.00. For the 2002 tax year his assessable income was $25,602.00. On the claim form for workers compensation benefits completed by an employee of the workers compensation insurer, but signed by the plaintiff, his weekly income at the time of injury was stated to be the sum of $550. This equated to an annual gross salary of $28,600, similar to that shown in the notices of assessment issued by the ATO.
The defendant asserted that it had been inhibited in its investigations in determining whether the plaintiff had in fact been paid by his employer more than that shown in the taxation returns. It had been unable to locate the principal or director of the company, although it had located a fellow worker who had provided a statement as to the circumstances of the injury. That witness was not called by the plaintiff and therefore the defendant had no opportunity to explore whether he was paid a comparable wage.
It was submitted by counsel for the defendant that there would be no prejudice if the Court's starting point in determining past wage loss was a wage of $550 gross per week. However, as the plaintiff was asserting a greater wage than that, the defendant was not in a position to answer such a claim because of the liquidation of the defendant corporation. Had the proceedings been brought within time, that is, before the three year period expired in August 2005, the defendant would have been in a better position to investigate that claim.
The plaintiff could not have brought his proceedings in 2005 as he did not exceed the threshold set out in s 151H WCA. Learned Senior Counsel for the plaintiff submitted that the plaintiff was in fact prejudiced by the absence of the employer's wage records, more so than the defendant.
No matter what the plaintiff was asserting were his earnings, he faced the difficulty that his income tax returns, as reflected in the notices of assessment, reflected a gross weekly wage of approximately $550, as did his workers compensation claim form. This leaves the question of the plaintiff's earning capacity to be determined in the usual way, with these documents as a necessary reference point (see the authorities referred to in [58] to [60] below). In assessing the plaintiff's losses here, the availability of the notices of assessment together with the plaintiff's postinjury employment are relevant. In my view, a fair trial could, and did take place on this issue. For that reason, the defendant's submission as to actual prejudice falls away. As there was no other matter relied on by the defendant, I exercise my discretion pursuant to s 151D(2) to grant leave to the plaintiff to commence the proceedings by Statement of Claim filed on 28 September 2012.
Circumstances of the Accident and Liability
The plaintiff suffered a severe injury to his right hand when he was cutting timber on a circular saw. The timber jammed, and his right hand slipped towards the saw which was protected by a guard. Unfortunately, the guard did not prevent his hand coming into contact with the saw. The effect of the blade rotating at very high revolutions in a direction towards the plaintiff had the effect of pulling his hand into further contact with the saw blade. There was no doubt that the plaintiff suffered a very severe injury and photographs of it taken shortly thereafter at hospital, are contained in exhibit A.2.2 of the plaintiff's tender bundle.
Unsurprisingly, liability was not in issue.
Contributory Negligence
The defendant's submissions on contributory negligence were that the plaintiff was a highly trained and qualified cabinet maker, experienced in using such machinery. When the timber became jammed in the saw, the plaintiff ought to have turned it off, and his failure to do so thereby contributed to his own injury. When that proposition was put to the plaintiff in cross-examination, his answer was:
"It happened so quick. I was pushing the timber, and then my hand was in there."
In my view, this is not a case where the injured worker contributed to his own injury. It was not even a case of inattention or inadvertence as referred to in the authorities - see Bankstown Foundry Pty Limited v Braistina (1986) 160 CLR 301 and Liftronic Pty Limited v Unver (2001) 75 ALJR 867. I therefore find that the plaintiff did not contribute to his injuries, and there will be no finding of contributory negligence.
The Plaintiff's Claim for Damages
Section 151G of WCA provides as follows:
"151G Only damages for past and future loss of earnings may be awarded
(1) The only damages that may be awarded are:
(a) damages for past economic loss due to loss of earnings, and
(b) damages for future economic loss due to the deprivation or impairment of earning capacity."
In determining what damages are to be awarded to the plaintiff, an assessment must be made of his past economic loss "due to loss of earnings" and, damages for "future economic loss due to the deprivation or impairment of earning capacity" of the plaintiff are to be assessed.
The evidence established the following history, which are to be recorded as my findings of fact unless otherwise stated. This judgment was written without the benefit of a transcript.
The plaintiff was born on 3 July 1972 in Sydney. He attained his Higher School Certificate at aged 16 years and in 1989 commenced an apprenticeship as a shopfitter and joiner with B & M Kitchens with whom he worked for four years. He completed a course at TAFE in which, in addition to shopfitting and joinery, he obtained certificates which gave him the highest qualification in carpentry. When he completed his apprenticeship he spent nine months on holiday in Greece, and then returned to commence employment as a cabinetmaker. He worked for a firm making kitchen cabinets for four years until 1998 when he commenced employment with a business owned by his brotherinlaw, known as AEK Property Maintenance. That business was involved in renovating rental properties and the plaintiff gave evidence that he was paid $300 per day gross. He did that work for three years until 2001 and was then off work for a period of 6-8 months before he commenced with another firm, C & C Wardrobes, making kitchens and built-in wardrobes. That business shared premises with IMC Pty Limited and in July 2002 when C & C Wardrobes went into liquidation, he was offered employment by IMC Pty Limited straight away. The plaintiff gave evidence that he was paid the same wage he received from C & C, although he expected to do better with IMC Pty Limited. He commenced employment with that company in August 2002. Shortly after his commencement, on 14 August 2002, he suffered the injury to his right hand.
Following the injury the plaintiff was admitted to Royal Prince Alfred Hospital under the care of Dr Cope and underwent an operation to his right hand to stabilise the injury. On 17 June 2003 he underwent further surgery which involved the amputation of the distal part of his right middle finger. On 14 October 2003 he underwent further surgery for the removal of a neuroma from the stump of that finger.
In 2004 the plaintiff commenced work as a tradesman in property maintenance. He is right-hand dominant, and suffered a lot of pain in his right hand. He did that work for a period of one year and noticed pain in his shoulder.
The plaintiff did not work during 2005, but in 2006 obtained work with APM Employment, as a building supervisor at Stockland House. That work was highly suitable to him. It involved identifying maintenance problems in the building and then directing others to fix those problems. As such it required him to do no work with tools. He had a particular difficulty with working with power tools which gave rise to flashbacks about his accident.
In 2010 the building was sold, and the plaintiff was asked by the new owner to stay on in his role, but also to work with tools. As he could not do so, his employment was terminated.
In 2010 the plaintiff obtained employment with Take Notice Manufacturing doing school maintenance work. The duties involved him being a delivery driver. At first he was given a manual truck to drive with which he had difficulty. He was then provided with an automatic truck which he could drive more easily. After six months he was asked to work with tools which again caused his employment to be terminated.
In 2011 the plaintiff became employed by Sheet Metal Industries driving a utility and an automatic truck. He left that employment in November 2011. Again, the reason for his termination was that he was again required to work with tools.
The plaintiff has not worked since November 2011. Unfortunately, in December 2012 he was diagnosed with non-Hodgkins lymphoma and has been undergoing treatment for that illness.
In cross-examination it was put to the plaintiff that he had regained full flexion and extension of the remaining fingers on his right hand and that he suffered no sensitivity of the scarring on his hand. He denied that he regained full flexion and extension, and said that there was sensitivity, that he lacked grip strength in the hand, and that the hand was deformed.
It was put to the plaintiff that he had been certified as fit to return to work by Dr Cope with a limitation of lifting no more than between 10 and 20 kilograms. The plaintiff did accept that he was so certified at that time. It was put to the plaintiff that he had been in almost continuous employment during the period 2004 to 2011. He said that there had been times when there were three to four months between jobs, and that he had attended many interviews for work where he had been unsuccessful.
The plaintiff was shown his workers compensation claim form and identified his signature. He said the entry relating to his wage at the time of the accident of $550 gross was not correct.
The plaintiff agreed that he had been assessed by rehabilitation providers in 2003 who had suggested that appropriate work for him was to be a truck driver (with which he agreed, provided it was an automatic vehicle and he could drive for short periods), or a security guard (which he denied he could do). A forklift driver was another option which the plaintiff denied he could do as it involved too much movement of his right hand.
It was then put to the plaintiff that he could work in a production line or do factory work, neither of which he accepted he could do.
The plaintiff was cross-examined on the basis of a report of Earning Capacity Assessments ("ECA") which contained an entry of a history recorded by Dr Keller as follows:
"Not motivated to return to work. Waiting for court proceedings to be concluded."
The plaintiff had no recollection of saying that to Dr Keller, and Dr Keller was not called to give evidence about it.
Counsel for the defendant put to the plaintiff that he had been able to use power tools other than an electric saw, to which the plaintiff said he had used such tools for a minimum time, if he had to.
The plaintiff was cross-examined as to his bank records which demonstrated that during the period July and August 2012 there were a number of deposits of sums of money between $500 and $8,750 on approximately 16 occasions and then further deposits in November 2012. The plaintiff gave evidence which was not challenged, that those payments were from a number of friends. The payments constituted loans made to him to enable him to complete renovating a granny flat at his mother's home where he lived in Sydney. Notwithstanding that he was qualified to do so, he was unable to build a kitchen for that structure, and purchased it from All Smart Kitchens. The plaintiff gave evidence that he understood that whilst he was in remission from his non-Hodgkins lymphoma, he was having maintenance treatment which he understood he would require for the rest of his life. This was subsequently clarified by the tender of a further report of Dr Larsen, to be for a period of two years (exhibit A.1.6, report dated 30 May 2013). For that reason, if he were to obtain work, he would require three to four days off for treatment every eight weeks or so. He gave evidence that he was looking for work but not for a full-time position.
The plaintiff called Ms Despina Peters who was the office manager employed by All Smart Kitchens to give comparable wage evidence for employed cabinet makers. Evidence was adduced over objection that that firm currently pays skilled cabinet makers between $1300 and $1600 gross per week. The upper end of the range indicated a supervisory position.
The Medical Evidence
There was little dispute on the medical evidence relied upon by the parties, having regard to the fact that the plaintiff suffered a very serious injury to his dominant right hand. Not only had he had the distal part of his middle finger amputated, but he was left with a grossly deformed hand where the fingers overlapped. In addition to the problems with his right hand, the plaintiff had suffered an impingement in his right shoulder, limiting the use of his right upper limb as well as a psychological reaction to his injuries and disability. It was common ground that he was not fit to work as a carpenter.
Complicating the plaintiff's medical picture was the fact that he had contracted non-Hodgkins lymphoma which had been diagnosed in December 2012. He was presently in remission from that illness, however, he was undergoing maintenance treatment by way of chemotherapy. It was common ground, based on the opinion of Dr Flecknoe-Brown, that his estimated life expectancy is in the order of 20 years. Dr Flecknoe-Brown gave the following further opinion:
"Thus it is likely that Mr Marentis' ability to work will be interrupted by symptoms of the lymphoma and the demands of treatment during the period that I have suggested remains to him. These periods of symptoms and treatment effects will become more frequent and more debilitating over the years. In the last six months of life, I would expect him to be totally unable to work."
The plaintiff relied on the opinion of Dr Terry Kwong in a report dated 20 February 2014 to the effect that he was permanently unfit to work as a carpenter and that he was not fit to work with tools. His treating GP, Dr Peter Voutos, was of the opinion that his injuries would prevent him from returning to any occupation that involved work involving repetitive use of his right hand and arm. He had lost the power and fine motor skills in his right hand. In addition to chronic pain and physical impairment, the plaintiff also suffered permanent anxiety and depression. He was also a candidate for further surgery on his shoulder according to the report of Dr Alan Young dated 6 December 2011 (exhibit E). I accept those opinions as being consistent with the severity of the injury and the plaintiff's evidence.
The defendant relied on the reports of ECA and Dr Keller referred to above. The plaintiff was assessed by Dr Keller as being suitable for employment in the positions of caretaker, handy-person and meter reader. That opinion was adopted by Dr Alan Meares in a report dated 20 February 2014 as being jobs for which the plaintiff was physically capable of performing. Dr Meares was not aware of any other jobs that the plaintiff would be able to perform. In an earlier report dated 19 February 2014, Dr Meares had given the following opinion:
"He's not fit for his pre-injury duties. He has sensitivity in the amputation stump of his right middle finger and stiffness in his right index finger. He is fit for clerical and office duties only in my opinion. He's not fit for labouring or process work."
The Defendant's Submissions
The defendant submitted that the plaintiff had demonstrated a loss of earnings in the first two years following the accident. For the first year that was a loss of $550 gross per week, and by the second year that had diminished to $200 net per week.
For the period 2004 to 2006 the defendant submitted that the tax records demonstrated that the plaintiff was earning approximately $20,000 gross per annum and therefore was suffering a loss of $200 net per week in the first year, diminishing to $100 per week thereafter.
For 2007 the defendant submitted that it was unclear when the plaintiff had commenced with APM and that his loss for that year was $100 net per week.
For the period 2008 to 2011 the defendant submitted that there was no loss as the plaintiff was earning $1000 per week gross. His last wage payment was made on 10 November 2011 in the sum of $1400.
The defendant relied on a report of ECA dated 6 March 2014 (exhibit 5) to demonstrate that the plaintiff's earning capacity was in the order of $1030 per week gross, or $790 per week net. It was submitted that he did not work in 2012 because he was spending time in Queensland with his then girlfriend, and building the granny flat at his mother's house. Events thereafter overtook him in that he was diagnosed with non-Hodgkins lymphoma in December 2012 and underwent treatment for that illness in 2013.
For the future, the defendant submitted that as he was now 41, and relying on the opinion as to his life expectancy given by Dr Flecknoe-Brown, there were 19 years left of his working life. Of that, he would not be able to work for at least the last six months. Further, because of his illness, his ability to work would be interrupted more frequently as he got older and had to undergo further maintenance. It was submitted that the appropriate way to properly assess his diminished earning capacity into the future was to either decrease the number of years for which an award of damages was made, or to increase the discount for vicissitudes from the conventional 15% to 30%.
The Plaintiff's Submissions
The plaintiff had submitted that he had suffered prejudice by being unable to access documents which demonstrated an earning capacity prior to his injury of greater than demonstrated by his tax returns. However, it was submitted that at the time of the injury the plaintiff was not earning in accordance with his qualifications as he had only just commenced with the defendant.
For the past, the plaintiff's claim for economic loss was couched in terms of the difference between his actual earnings and the average male wages in his industry as published by Messrs Furzer Crestani. The claim for economic loss was tabulated in the following schedule:
Period
Approx
Gross
Net
Gross
Average
Net
Diff
Gross
Diff
Net
2003
$31,809
$26,208
$53,404
$42,640
$21,595
$16,432
2004
$19,933.00
$19,933
$54,392
$43,586
$34,459
$23,653
2005
$17,103
$17,103
$59,852
$46,904
$42,709
$29,801
2006
$22,948
$22,948
$60,372
$47,050
$37,424
$24,102
2007
$20,198
$20,198
$63,024
$48,670
$42,826
$28,472
2008
$47,117
$38,557
$63,232
$48,800
$16,115
$10,243
2009
$50,875
$41,910
$66,924
$51,480
$16,049
$9,570
2010
$53,090
$42,172
$69,836
$53,040
$16,746
$10,868
2011
$54,420
$44,488
$73,788
$57,200
$24,323
$12,712
2012
0
0
$77,532
$59,696
$77,532
$59,696
2013
0
0
$78,832
$59,903
$78,832
$59,903
2014
0
0
$83,361
$63,128
$83,361
$63,128
Total
$348,580
For the future, the plaintiff relied on the evidence of Ms Peters as to what comparable cabinetmakers could earn, and claimed a net sum of $1,020 per week for a period of 20 years. Having regard to the plaintiff's illness, it was advocated that the appropriate approach was to increase the vicissitudes discount to 25%.
Further claims were made for past and future superannuation calculated for the past at 11% and 14% for the future. The rates of calculation were not in issue.
Determination
Damages for past and future economic loss are awarded to an injured plaintiff "because the diminution of his earning capacity is or may be productive of financial loss" - Graham v Baker (1961) 106 CLR 340 at 347 per Dixon CJ; see also Medlin v State Government Insurance Commission 1995 182 CLR 1. Usually, past economic loss can be more or less precisely ascertained in regard to the wages the plaintiff received at the time of injury. For that reason the plaintiff's pre-accident earnings are relevant. However, in State of New South Wales v Moss (2000) 54 NSWLR 536, Heydon JA (Mason P and Handley JA agreeing) said:
"[71] Strictly the issue does not turn on a comparison between what money the plaintiff would have earned apart from the injury and what money the plaintiff will earn after the injury. The compensable loss is not a loss of income but the loss of capacity to earn income in a manner productive of financial loss ... The income earned before the injury is relevant, but only as an evidentiary aide in assessing damages for the loss of capacity to earn income ... A valuation of the worth of a loss of capacity to earn - of a lost chance to earn - is of its nature a more imprecise enquiry than calculation of a lost income. It rests on the hypothesis - that the plaintiff will have undiminished capacity - which has been rendered false by events. It does not depend on calculating the income from a particular career which is no longer possible, but in calculating the damage to a capacity to carry on various careers. It is an exercise in estimation of possibilities, not proof of probabilities."
Here, the plaintiff invites the Court to accept his evidence that his tax returns did not disclose the full extent of his pre-accident earning capacity and that his damages for past economic loss should reflect a component referrable to income not disclosed in his tax returns. Implicit in the plaintiff's evidence was that he had not disclosed all his income in his tax returns, although it was not put to him that he had put in false returns. The plaintiff gave evidence that he relied on his accountants, who were reputable, to prepare the returns and he merely signed them. A similar situation arose in Morvatjou v Moradkhani [2013] NSWCA 157. McColl JA (with whom Hoeben JA and Tobias AJA agreed) referred to the following passage of Macfarlan JA in Matar v Jones [2011] NSWCA 304 where Macfarlan JA said of a case where the plaintiff gave evidence, and objective evidence confirmed, that his tax returns did not disclose all of his income:
"[16] This is to the appellant's discredit but it does not preclude him from recovering damages upon what he truly earned, as distinct from what he disclosed. The following observations made by Von Doussa J in Gioginis v Kastrati ... and approved by this court in AMP General Insurance Limited v Kull are in point:
"Where the plaintiff gives evidence that his income tax returns do not disclose the full extent of his earnings, a court will scrutinise the plaintiff's evidence with special care. The want of honest compliance with the taxation laws is a matter that will reflect adversely on the plaintiff's credit and may lead to the rejection of his evidence as untrustworthy, at least about his earnings. In such a case the plaintiff has only himself to blame if damages are assessed in line with his pre-accident income actually disclosed to the relevant authority. However, where the fact of the receipt of other income is proved, then in my view, the plaintiff is entitled to have that exercise of his own capacity brought to account, although subject to reduction for the income tax which should have been paid, and subject to the question whether the plaintiff would have continued to exercise that capacity had he been required to pay tax on the additional income - see Macintosh v Williams (1976) 2 NSWLR 237 at 244, 252."
McColl JA went on to say as follows:
"[84] In my view the authorities do not mandate that a plaintiff must admit to tax evasion before the court can determine on all the evidence how to quantify the plaintiff's lost earning capacity. To require such an express admission would be a triumph of form over substance. Rather, as Husher v Husher, Conley v Minehan and Cohen v Ninkovic make plain, the tax treatment of a plaintiff's income is not conclusive. The court must determine what the plaintiff could have done in the workforce and what sum of money the plaintiff would have had at his or her disposal; Husher v Husher at [23]."
Also relevant here is that her Honour went on to conclude (at [85]) that the payment of workers compensation payments do not represent the plaintiff's income foregone as a result of an accident. Evidence of such payments is merely admissible against the defendant as an admission that the worker is still incapacitated at the time of such payments as a result of the injury he received in the course of his employment, referring to Heuston v Yore Contractors Pty Limited (Supreme Court of NSW), Hunt CJ at CL, 9 March 1992, unreported.
The plaintiff impressed me as a witness who gave his evidence candidly, and who somewhat downplayed what was a very severe injury to his right hand. Not only had the distal part of his middle finger been amputated, but his hand had become quite deformed, and he was prone to carrying it in his left hand. Despite incisive cross-examination, his credit was not successfully impugned.
Notwithstanding that he had worked for a number of years following the accident, I accept that his earning capacity was substantially diminished by his injury. He was fortunate enough to obtain employment with APM Employment as a building supervisor at Stockland House in 2006. That work did not involve him using tools and in particular, power tools. It was, given his disability, an ideal position for him, and one which would be hard to replicate in the open market place for labour. It is to his credit that he sought further employment after his employment at Stockland House was terminated and I accept that on each occasion that he was employed thereafter, his employment was terminated as he was required to work with tools.
The defendant relied on the opinion of Dr Keller, adopted by Dr Meares, that the plaintiff could work as a caretaker, handy-man or meter reader. Prior to his diagnosis with non-Hodgkins lymphoma in December 2012, the only work that the plaintiff could have undertaken as either a caretaker, handy person and meter reader would have been work that did not require tools, or did not require use of the right hand, and in particular, use of that hand involving fine motor skills. Without that qualification, in my view, the opinion of Dr Keller is entirely optimistic. It also ignores the problems that the plaintiff would have competing with able-bodied persons on the open market place for labour, and in particular, skilled labour. In Wade v Allsopp (1976) 10 ALR 353, Stephen J said at 361:
"The process of selecting one from a number of applicants for employment is, on each occasion, an all or nothing affair in which the applicant with diminished capacity may each time be wholly unsuccessful."
That had already been the experience of the plaintiff here in that he had applied for many jobs for which he had been an unsuccessful applicant, in the years before and after his employment with APM.
Following the onset of non-Hodgkins lymphoma, the plaintiff's prospects of employment became even more problematical.
In assessing damages for past economic loss in accordance with s 151G(1)(a), I accept that the starting point for the assessment is the income reflected in the plaintiff's income tax assessments for the year 2003 and that $550 per week gross reflected his actual earnings at the time. He in fact gave evidence that he was prepared to work for less money than he had previously earned because there was a prospect that his wages would be increased. To that extent, his earning capacity was somewhat larger than his actual earnings at the time. I am of the view that the approach advocated by the defendant and outlined in paragraphs [48] [52] above would substantially undercompensate the plaintiff for his diminished earning capacity during those years as a result of his injury. However, the approach adopted by the plaintiff and referred to in [55] above, which resulted in a loss just under $350,000 for those years, would substantially over-compensate the plaintiff for that loss. What that table does indicate is that in the financial years ending 30 June 2008 through to 30 June 2011, the plaintiff was earning in the vicinity of $1000 gross. That was the period of time when he was employed by Stockland House, doing supervisory work. This is indicative of an earning capacity that was increasing over time.
I find the plaintiff's past economic loss is made up as follows: Of the first nine years following his accident, for four of those years he was employed by APM and sustained no loss. For the first two years, his loss was total, i.e. $400 net per week. Thereafter, it was partial, and I have assessed that loss as $250 per week as he was in and out of employment. His earning capacity would have increased over that time. After November 2011, his capacity was diminished as a result of the onset of his illness. I therefore award:
2 years at a loss of $400 net per week
$41,600.00
3 years at a loss of $250 net per week
$39,000.00
Loss since November 2011 to 5 March 2014 at $1000 net per week, less 50% as a result of the onset of the plaintiff's illness
$62,400.00
Total
$143,000.00
The plaintiff's loss of past super entitlements is 11% of the total above = $15,730.00.
Damages for Future Economic Loss
I am satisfied that the plaintiff's injury has rendered him with a total incapacity for work for which he is qualified by training and experience. I do not accept the opinion of Dr Keller which was adopted by Dr Meares. It is entirely unrealistic to expect the plaintiff to be employed as a handyman given his inability to work with tools. Nor is it realistic to expect that a man who has lost the substantial use of his dominant hand would obtain work as a caretaker or meter reader. Any residual earning capacity that he has is fairly minimal and his prospects of obtaining employment, and retaining it, are modest. This has been borne out by his post-accident employment history. I accept that the plaintiff will continue to look for work but will be hampered in that endeavour both by his disability and by the need for maintenance treatment for his illness over the next two years, and then later, his need for treatment if the illness recurs.
I allow a net loss for the plaintiff of $1000 per week over the next 19 years, however, having regard to his need for maintenance treatment and the prospects of further onset of the disease as outlined by Dr Flecknoe-Brown and Dr Larsen, the appropriate way to take that into account is to increase the percentage discount for vicissitudes to the sum of 25% - see Stepanovic v GIO (NSW) (1995) 21 MVR 327.
The plaintiff's future loss of earning capacity is therefore calculated as follows:
$1000 x 646.2 x .75 =
$484,650.00
Loss of future superannuation at 14%
$67,850.00
Total
$552,500.00
Summary of Damages
I therefore award the following damages:
Past economic loss
$143,000.00
Past loss of superannuation entitlements
$15,730.00
Future economic loss
$484,650.00
Future loss of superannuation entitlements
$67,850.00
Total
$711,230.00
The defendant is entitled to a credit for workers compensation benefits paid to the plaintiff in the sum of $65,135.02. The parties agree that the plaintiff is entitled to receive the sum of $10,180.00 pursuant to the principle in Fox v Wood (1981) 148 CLR 438.
Orders
I make the following orders:
(1) There will be a verdict and judgment for the plaintiff against the defendant in the sum of $656,275.00.
(2) I order that the defendant pay the plaintiff's costs unless an application for a special costs order is made within 28 days.
(3) The exhibits are to be returned
(4) Grant liberty to the parties to make any application for special costs order within 28 days.
Decision last updated: 14 March 2014
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