Vlado Majetic and Katrina Majetic v Steven Novosel and Megan Rowe No. SCGRG 90/1178 Judgment No. 3881 Number of Pages 9 Appeal Inadequate Damages

[1993] SASC 3881

COURT IN THE SUPREME COURT OF SOUTH AUSTRALIA LEGOE(1) AND MATHESON(2) JJ.

CWDS
Appeal - inadequate damages - Appellants were husband and wife who carried on an electrician business - husband involved in a car accident - liability of respondent undisputed - the Supreme Court Master's decision that the male appellant had no psychiatric condition which would have further prevented him from working at any stage was inconsistent with the evidence presented - the Master erred in making the cut off date 4 years before the assessment date - appeal allowed - the damages awarded by the Master for economic and non economic loss and lump sum interest were manifestly inadequate - damages reassessed. Warren v Coombs and Anor (1979) 53 ALJR 293, applied.

HRNG ADELAIDE, 2 February 1993 #DATE 25:3:1993
Counsel for appellant:        Mr D W Smith
Solicitors for appellant:     White Berman
Counsel for respondent:     Mr R Evans
Solicitors for respondent:    Finlaysons

ORDER
Appeals allowed.

JUDGE1 LEGOE J The appellants are husband and wife. Their claim for damages consequential upon the male appellant's injuries arise out of a motor vehicle collision, which occurred on 7th March 1985. Their claim was assessed by a Master of this Court. Liability was not in dispute. The relevant background, details for the assessment, and findings are set out in the reasons of my brother Matheson J. 2. The issues argued on appeal are conveniently summarised in the grounds of appeal, as follows:-
    1. The awards for pain and suffering and economic loss
    respectively were manifestly inadequate.
    2. The finding that the male appellant had no psychiatric
    condition, which if added to his physical disability, would have
    prevented him from working at any stage, is against the evidence
    and weight of the evidence.
    3. The award of lump sum interest was manifestly inadequate.
    The appellants complained of the rejection by the learned Master
    of the appellant's claim for damages for gratuitous services.
This ground of appeal was not pursued. 3. Counsel for the respondent submitted that the awards for both economic and non-economic losses was dependant on the primary judge's assessment of the character and credit of the male appellant. This submission was based on the passage in His Honour's reasons where he said the male appellant did not appear "to me to give his evidence in a straight forward manner. In cross-examination, I would go so far as to say that he was evasive." Later when commenting on some evidence about the male appellant building his own house the learned Master described the male appellant's evidence as follows:- "But I can make the general comment that this was the height of the male plaintiff's evasiveness. It concluded the showing of the film and Mr Evans' cross-examination in relation to it. The plaintiff readily admitted that he was depicted in the video, but, in my opinion his evidence was far from frank and complete." 4. Nowhere in his reasons did he explain how this lack of credibility affected the evidence of Mr Spitzer, whose evidence as to a permanent loss of working capacity was accepted. This finding or comment about the male appellant's lack of frankness or evasiveness could not possibly justify the "cut off" date of June 1988. I agree with my brother Matheson J that the learned Master was clearly in error in making the "cut off" date over 4 years before the assessment (1988-1992). His Honour's acceptance of Mr Spitzer's opinion alone demonstrate an error on this aspect of the assessment. If $20,000.00 was properly assessable for the period from the accident (March 1985) until June 1988, then that figure must be grossly inadequate for a loss over the 7 1/2 year period from March 1985 until September 1992. 5. I agree with my brother Matheson J that the award for past and future economic loss, as well as the award for non-economic loss was manifestly inadequate. This court should set aside those awards and reassess those damages. 6. The primary facts as to diminution in the male appellant's working capacity are simply not in issue. This Court can interfere for the reasons explained by the High Court of Australia in Warren v Coombs and Another (1979) 53 ALJR 293 at 300 per Gibbs ACJ, Jacobs and Murphy JJ:- "The established principles are, we think, that in general an appellate Court is in as good a position as the trial Judge to decide on the proper inference to be drawn from facts which are undisputed or which, having been disputed, are established by the findings of the trial Judge ...." Here the learned Trial Judge found there was a loss of earning capacity, and on the evidence, particularly that of Mr Spitzer, given in 1991, I can only infer that the loss continued through to the date of assessment (1992). 7. I would reject the submissions of counsel for the respondent that this court should not interfere. In my opinion this assessment cries out as manifestly inadequate for both economic and non-economic loss. HOW SHOULD THIS COURT REASSESS
8. My brother Matheson J has set out the opinion of Dr Goldney, psychiatrist. His evidence was unanswered, although the respondent had the male appellant examined and assessed by an independent psychiatrist, Dr Tottman, who did not give evidence. In my judgment the assessment should be based on a finding consistent with Dr Goldney's assessment - a post traumatic stress disorder, which had an ultimate residual psychiatric disability of the order of ten per cent in terms of loss of enjoyment of life and work ability. The finding made by the learned Master was contrary to Dr Goldney's evidence. Dr Goldney was not disbelieved nor was his evidence rejected except by inference from the learned Master's conclusion that the male appellant did not have a "psychiatric condition, which if added to his physical disability, would have prevented him from working at any stage." This seems inconsistent with the assessment for both past and future economic and non-economic loss. The respondent established a loss of both working capacity as well as pain, suffering and enjoyment of life. The only issue on appeal is the quantification of that loss. 9. For these reasons I consider that the damages should have been assessed upon the footing that there was a clear finding of physical disability causing a loss of work capacity with a 15% ongoing disability at least for the period from the accident, March 1985, until the assessment in September 1992. As an award was made for future economic loss and future loss of enjoyment of life presumably this disability and loss of capacity had an assessable period after September 1992. In addition I am of the opinion that some allowance should be made in the assessment for the ten per cent psychiatric disability and the assessment for loss of working capacity as well as enjoyment of life. 10. To assist the court, counsel for the appellant has submitted a memorandum for the suggested re-assessment by this Court. Counsel for the respondent put nothing to this court to qualify or deny the basic approach in counsel for the appellant's memorandum. Counsel for the respondent did not ask for an adjournment to consider the memorandum. 11. I agree with my brother Matheson J that the non-economic damages should be increased to $30,000.00, and that this sum should be apportioned $20,000.00 for the past and $10,000.00 for the future. I shall deal with interest later. 12. The memorandum of counsel was based on the evidence. The male appellant charges at $24.00 per hour. Further, he claimed that an electrician could be only 60% to 65% productive. The effective hourly rate was then $14.40. Given a 40 hour week the male appellant claimed he could earn $576 gross. It was put, by counsel, that, the edge has come off his capacity in broad terms by about $100.00 per week. This would be nearly 20%. The $100.00 per week is a gross figure. I would consider $60.00 to be closer to the evidence. Furthermore, the assessment should be based on an estimated nett loss of earning capacity i.e. after tax. These figures are only a guide. Perhaps for past loss, the discount to be made for contingencies should be very little on the established facts. On the other hand as counsel for the respondent pointed out the partnership was unlikely to suffer any economic loss after June 1988, and therefore the loss thereafter was a personal loss to the male appellant. As my brother Duggan J pointed out during argument the male appellant has been thereafter (from June 1988) in a fairly difficult position, because while self employed (or in the partnership) he can take all the rests he needs due to his disabilities, but if he has to compete on the open labour market as an employee, he may not be able to do so and the economic loss will be increased. I consider this to be a very important factor to take into account when assessing the period from June 1988 till the assessment in 1992 - over 4 years. 13. In my judgment the broad axe figure, as it is not possible to quantify this amount in all circumstances of the case, would be in the region of $12,500.00 for the past economic loss in addition to the $20,000.00 already allowed up to June 1988, or $32,500.00 in all. 14. For future economic loss I would use the tables referred to in the memorandum as a guide, but use a figure of $50.00 per week as the approximate nett weekly loss. On the annuity figure of $801.00 for a 44 year old male, this results in a figure of $40,050.00. I would discount this figure to arrive at a figure of $25,000.00 instead of the $5,000.00 allowed by the learned Master. 15. Clearly the lump sum for interest was miscalculated and should be set aside. The summons was issued on 1st March 1988. I would not allow interest for the full period as clearly there must have been some delays for a summons issued at the end of the 3 year limitation period. Making a rough estimate I consider that a lump sum, of $6000.00 would be reasonable. For the past non-economic loss (4%) I would award a lump sum of $1,500.00. The total amount for interest would be $7,500.00. 16. In summary I would reassess the damages as follows:-
    Past non-economic loss   $20,000.00
    Future non-economic loss   $10,000.00
    Past economic loss   $32,500.00
    Future economic loss   $25,000.00
    Special Damages         (not in dispute)     $ 799.20
    Future medical expenses (not in dispute)     $ 1,000.00
    Interest lump sum past economic and
    past non-economic   $ 7,500.00
   Total         $96,799.20 17. The question remains as to how much of the $32,500.00 the female appellant is entitled to under section 34 of the Wrongs Act. I apply the interpretation put on that section in Chorlton v Walker (1982) 35 SASR 47 at 58 and 59, affirmed in Lott v Cameron (1983) 35 SASR 61 at 68 and at 74. It was common ground that the partners did not suffer or continue to suffer any real loss from the operation of the "business" after 1988. In my opinion $12,500 of the $32,500 would be the maximum that Mrs Majetic could prove under section 34 of the Wrongs Act. Mrs Majetic should be allowed $2,000.00 of the $7,500 interest on judgment. I would allow the appeal as to all three grounds and order that the male appellant be paid $82,299.20, and $14,500.00 to Mrs Majetic.

JUDGE2 MATHESON J. The appellants are husband and wife and carry on business in partnership as electrical contractors. Mr. Majetic was born in Croatia in 1949 and is a qualified electrician. He and his wife were married in 1972 and came to Australia in 1974. They have three sons born respectively in 1974, 1976 and 1978. Mrs. Majetic has been in full time employment since early 1984. 2. On 7 March, 1985 Mr. Majetic was injured when his own van in which he was travelling as a passenger was involved in a collision with another car. Liability was admitted by the respondents, and the claims of the appellants came on for assessment of damages only. Mr. Majetic's damages were assessed at $38,049.20 inclusive of interest, and made up as follows:
    "Past Loss of Enjoyment of Life     $15,000.00
    Future Loss of Enjoyment of Life    $ 5,000.00
    Past Economic Loss                 $10,000.00
    Future Economic Loss                $ 5,000.00
    Special Damages   $ 799.20
    Future Medical Expenses             $ 1,000.00
    Interest  $ 1,250.00
    Total   $38,049.20" 3. The learned trial Judge assessed Mrs. Majetic's damages at $10,000, being one half of $20,000, the sum he awarded for past economic loss, (see s.34 of the Wrongs Act 1936). The appellants allege that the assessment was manifestly inadequate in a number of respects. 4. The subject collision was a violent one. His Honour said:
    "Following the collision, the van rolled over, but the plaintiff
    is unable to recall how many times. It came to rest on its
    side. Immediately behind the driver's seat of the van was a
    cross bar, dividing the front of the van from the back. As a
    result of the collision, the plaintiff was thrown forwards,
    hitting the crossbar with his chest, causing the cross bar to
    break. When the vehicle came to rest, the plaintiff was hard
    against the windscreen, which had been cracked through impact
    with his right elbow. There was smoke coming from the vehicle
    and the plaintiff was afraid that, in view of the fact that they
    had just refuelled the vehicle, it could catch on fire. He,
    therefore, broke the windscreen and crawled out." 5. Mr. Majetic found the nature of the collision particularly traumatic because he had been in an earlier collision in 1979 in which his children were involved and in which his uncle was killed instantly. 6. Mr. Majetic's injuries included a bruising injury to his left knee and ankle which resolved within a year, a musculo-ligamentous strain to the cervical and thoracic spine resulting in headaches, chest and arm pains, paraesthesia of the fingers and dizziness, a wedge fracture of the fifth thoracic verterbra, with associated lumbar spinal pain, and a post traumatic stress disorder. 7. A difficulty, but not a fatal one, for Mr. Majetic on appeal is that the learned trial Judge formed an unfavourable view of him. Towards the end of his reasons, his Honour said:
    "The plaintiff would have me believe that since the accident he
    has not been able to work at anything like his previous
    capacity, as a result of the effect of his disabilities arising
    from the accident. In fact, the general impression one gathered
    from the whole of his evidence was that he has probably been
    unable to work anything more (than) 50 per cent of an ordinary
    working week, at any time since the accident. I simply do not
    accept either part of this. I think that he has worked and is
    capable of working for much greater periods of time and I do not
    consider that he suffers anything like the incapacity from the
    accident that he claims to do." 8. Later, he said: "I was not favourably impressed by the plaintiff as a witness. He did not appear to me to give his evidence in a straightforward manner. In cross examination, I would go so far as to say that he was evasive." 9. Later again, after discussing the cross examination of Mr. Majetic about the building of his own house, his Honour said:
    "But I can make the general comment that this was the height of
    the plaintiff's evasiveness. It concluded the showing of the
    film and Mr. Evans' cross examination in relation to it. The
    plaintiff readily admitted that he was depicted in the video,
    but, in my opinion, his evidence was far from frank and
    complete." 10. A further complicating factor was Mr. Majetic's fall whilst working on his house in 1987 as a result of which he fractured his left wrist which was treated in plaster for six to seven weeks. However, it seems to have had (and to have merited) little bearing on the assessment. 11. Mr. Smith, counsel for the appellants, acknowledged that the trial Judge had painstakingly set out Mr. Majetic's injuries and their treatment in his lengthy judgment. However, he drew attention to further background facts, including the fact that Mr. Majetic had twenty-six contracts on hand at the date of the accident, that he had plans to obtain a general builder's licence prior to the accident which could have increased the range of his contracts, that he had started to build his own house in 1984, and that prior to the accident he had been merely a social drinker, but now he had a drinking problem. 12. The appellant's witnesses included his general practitioner Dr. Ivan Siklich, an orthopaedic surgeon, Mr. A. G. Spitzer and a psychiatrist, Dr. R. D. Goldney. The respondent's medical witnesses were two orthopaedic surgeons, Messrs. E. T. Eriksen and P. L. Fry. 13. The learned trial Judge accepted the evidence of Mr. Spitzer, and I regard that acceptance as important. His Honour said: "I accept Mr. Spitzer's evidence with regard to the plaintiff's physical condition and work capacity. In so far as there is any conflict between the evidence of Mr. Spitzer and Dr. Siklich, or, for that matter, any of the other medical practitioners whose reports were tendered, or who gave evidence before me, I prefer the evidence of Mr. Spitzer." 14. Mr. Spitzer adhered in his evidence to the opinion he had earlier expressed that Mr. Majetic had a 15 percent disability. He said:
    "I think he could remain at work, and work at 85 per cent of his
    capacity. I can't imagine that many of us or hardly any of us,
    ever need to work at 100 per cent of what can be called normal
    capacity. Most of us, even in physical situations, excepting in
    the competitive situation of sport, function at 60 or 70 per
    cent. Therefore, maybe 85 per cent capacity should allow him to
    be continuously at work albeit at his own pace, with breaks, and
    not having to persist with a sustained situation where it starts
    hurting. By this way controlling his symptoms, and do a
    reasonable full day's work. It does not mean that he is as
    capable as he was prior to the reputed accident." 15. He added that he thought Mr. Majetic could dig trenches for cabling, providing the ground was not too rocky and providing he could dig at his own pace with rest breaks. He said that any activity involving the arms or a posture that could not be abandoned would cause pain. He could do overhead work on a ladder and crawl through a confined space, but such activities, if sustained, would cause pain, and "the less often he can stop and take a break the greater the pain will be and longer it will last." Mr. Spitzer's opinions were not affected by what he was told about the video. 16. Dr. Goldney was the only psychiatrist called, although it was established that Mr. Majetic was examined by Dr. Tottman on behalf of the respondents. Dr. Goldney diagnosed a post traumatic stress disorder. He said in his first report dated 6 June, 1988:
    "1. ... This post traumatic stress disorder is certainly
    consistent with the frightening nature of the accident, and also
    with the fact that Mr. Majetic was sensitised too such
    frightening motor vehicle accidents by the fact that he had
    previously been in a motor vehicle accident in which an uncle
    was killed.
    2. At present I believe the post traumatic stress disorder in
    itself would disable Mr. Majetic some 20 per cent in terms of
    loss of enjoyment of life and workability and I strongly suspect
    that even in the long term, following the settlement of
    litigation, there is likely to be a residual disability which
    would be of the order of some 10 per cent in terms of loss of
    enjoyment of life and work ability. These percentages of
    disability would not in themselves totally preclude him from
    working, but they would significantly affect his ability to
    interact in a tolerant manner with potential employers and he is
    likely to have a lesser degree of tolerance to frustration than
    if he had not had the experience of this motor vehicle accident.

    It is also pertinent to observe that his concentration has been
    disturbed and this also would limit his ability to focus on his
    employment as an electrician.
    3. In summary, I believe that it should be possible for Mr.
    Majetic to return to his pre-accident occupation as an
    electrician, but he is likely to be compromised in the extent to
    which he can be employed and, as noted above, this degree of
    compromise would be some ten per cent in terms of loss of
    enjoyment of life and work ability in the longer term.
    4. The prognosis is referred to above in the sense that there
    should be the residual disability of some ten per cent. The
    natural history of a post traumatic stress disorder is for there
    to be an amelioration of symptoms with the passage of time.
    However, not all symptoms disappear and the ten per cent
    referred to above is an indication of this. It should be noted
    that as Mr. Majetic was sensitised to experiencing stress in
    accidents, this ten per cent disability is probably a little
    greater than for a person who had not had such previous
    experience. This ten per cent disability is certainly
    significant in a person's every day life and there is no doubt
    in my mind that the subject motor vehicle accident has been a
    significant impediment to Mr. Majetic's life in the last three
    years, and it is likely to be so, albeit to a lesser extent, for
    the foreseeable future." 17. In his last report dated 19 November, 1990, Dr. Goldney said:
    "I still believe that his ultimate residual psychiatric
    disability will be of the order of ten per cent in terms of the
    loss of enjoyment of life and work ability. I believe that
    level of disability will be reached some two years after the
finalisation of litigation." 18. His Honour said very little about Dr. Goldney's opinion, apparently contenting himself with the following observation: "I do not consider that (Mr. Majetic) had a psychiatric condition, which if added to his physical disability, would have prevented him from working at any stage." (My underlining.) It is convenient here to say that I agree with Mr. Smith that an award of damages for loss of earning capacity is made by reference not to whether or not the appellant is "prevented from working". The correct test is whether the impairment or diminution of the appellant's capacity will occasion him economic loss, (see Mann v. Ellbourne (1974) 8 SASR 298 per Bright J. at pp 308-309). I propose to consider first the appeal against the adequacy of what his Honour called "economic loss", namely $20,000 for the past (which he apportioned equally between Mr. and Mrs. Majetic), and $5,000 for the future, which he awarded to Mr. Majetic. His Honour said:
    "The plaintiff's tax returns and the accounts of the
    partnership, for the period from the financial year ended 30th
    June 1981 up to the financial year ended 30th June, 1990, were
    tendered. These records show that the net profit of the
    partnership was as follows:-
    30/6/80   $ 2,143.00
    30/6/81   $ l,533.40
    30/6/82   $ 7,713.53
    30/6/83   $ 13,333.84
    30/6/84   $ 20,353.85
    30/6/85   $ 17,348.21
    30/6/86   $ 22,435.88
    30/6/87   $ 6,379.44
    30/6/88   $ 4,428.52
    30/6/89   $ 12,171.99
    30/6/90   $ 3,060.00" 19. After referring to the evidence of the three accountants who gave evidence, his Honour said: "I do not believe that it is possible, or even appropriate, to attempt to make precise calculations in relation to the effect of the plaintiff's accident on the income earned by his business." 20. The fact remains that the earnings of the business did appear to be growing, and the very high figure for the year ended 30 June, 1986 was explained by late payments of accounts, many of which were rendered before the accident. 21. Later his Honour said:
    "I accept that the plaintiff was affected in his ability to
    attend to his normal business, for some time immediately
    following the accident, and that over the two years following
    the accident he was undergoing medical and physiotherapeutic
    treatment. During those years, however, I do not consider that
    the accounts demonstrate, in themselves, a loss of income by the
    partnership. I consider, however, that some allowance should be
    made for the period from the date of the accident to June 1988.
    I allow an amount of $20,000.00 for past economic loss, based on
    this period. The plaintiffs were of course in partnership and
    such loss would be shared equally between them." 22. His Honour did not explain why his calculations for past loss of earning capacity stopped at June, 1988, and Mr. Smith has argued that there should be an allowance for the period from June, 1988 to ll September, 1992, namely, the date of the assessment. I do not consider the fact that Mr. Majetic stopped having physiotherapy in April 1987 or the fact that he did not consult his general practitioner in 1988 justified his Honour's "cut-off" date. 23. I have reached the conclusion, principally upon the evidence of Mr. Spitzer, that this Court should increase the amount for past loss of earning capacity. The period involved is seven and half years. However, his Honour's findings on Mr. Majetic's credibility do not encourage a large increase. I would increase the amount by $5,000 to $25,000 and apportion it equally between Mr. and Mrs. Majetic. 24. I think that the award for future loss of earning capacity was also manifestly inadequate. His Honour said:
    "Mr. Majetic has a substantial period of his working life still
    to go. The residual disability, from which he suffers, may
    affect him in the future. In my opinion, therefore, he is
    entitled to some small allowance in respect of future economic
    loss. I assess this at $5,000.00." 25. My mind has vacillated about the amount this Court should substitute. Mr Majetic is still only 44 years of age and his disabilities are not insubstantial. I am prepared to accept the figure of $25,000 suggested by Legoe J. I would award that sum to Mr. Majetic, as it does not appear to be truly a partnership loss. 26. For much the same reasons, I consider a total award of $20,000 for what his Honour described as "loss of enjoyment of life" as manifestly inadequate. I would increase the award to $30,000, and apportion it as to $20,000 to the past and $10,000 to the future. 27. His Honour allowed $1,250 as a lump sum for interest, apparently without hearing any argument. Be that as it may, the figure can not stand in view of the increased award. Having considered all that has been put to us, I would allow a lump sum of $7,500 for interest, an increase of $6,250. I would apportion $2,000 to Mrs. Majetic. 28. I would therefore allow the appeals to increase the amount to be awarded to Mrs. Majetic by $4,500 ($2,500 plus $2,000), and the amount to be awarded to Mr. Majetic by $36,750, ($2,500 plus $20,000 plus $10,000 plus $4,250).