Weatherall v Insurance Commission of Western Australia

[2008] HCATrans 154

[2008] HCATrans 154

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Perth   No P1 of 2008

B e t w e e n -

ALISON HARMIONI WEATHERALL

Applicant

and

INSURANCE COMMISSION OF WESTERN AUSTRALIA

Respondent

Application for special leave to appeal

KIRBY J
HAYNE J
KIEFEL J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON FRIDAY, 18 APRIL 2008, AT 10.00 AM

Copyright in the High Court of Australia

MR B.L. NUGAWELA:   May it please the Court, I appear with MR N.P. LINDSAY for the applicant.  (instructed by S C Nigam & Co)

MS K.R. WOOD:   May it please the Court, I appear for the respondent. (instructed by Lavan Legal)

KIRBY J:   Yes, Mr Nugawela.

MR NUGAWELA:   Your Honours, there are divergences in the common law of Australia in the assessment of damages for future loss of earning capacity in personal injury actions as to the proper approach to be taken where a defendant fails to discharge its burden of proving retained exploitable earning capacity.  Unlike New South Wales, in Western Australia the divergence starts with the premise that, even after proving the total inability to perform pre‑accident work, a plaintiff ought show that no other suitable work is open to her even before any evidentiary burden is said to shift to a defendant to show suitable work in alternative occupations, the state of the labour market and likely earnings to be derived there from.

In this case, your Honours, it is beyond controversy that, as the learned trial judge found, the plaintiff had lost her pre‑accident earning capacity.  The learned trial judge rejected the suggestion of clerical capacity.  The honourable Court of Appeal found that the plaintiff had no relevant clerical skills or experience and could not work in the suggested alternative capacity in an automated suburban photographic laboratory. 

The divergence further widens in WA because, even where a defendant fails to provide evidence of available suitable alternative employment or earnings to be derived from that, a trial judge in WA is regarded as having a much wider range of findings open to her than would otherwise have been the case in assessing the plaintiff’s residual earning capacity.  That has been established by the Full Court in our State in a case called Bowen v Tutte in 1990. 

What in practice, your Honours, this means is that in Western Australia, even where a defendant does not discharge its evidentiary burden, it will almost be beyond challenge if a learned trial judge selects an arbitrary or very high percentage deduction ‑ ‑ ‑

KIRBY J:   You say it is arbitrary, and there is a bit of truth in that criticism, but discounts for contingencies have been around as long as there have been damages in personal injury cases.  It is the nature of peering into the future and trying to work out what is a just award of damages for the injury that is done that is imponderable.  Courts have really been honest when they have faced up to that fact and not pretended that they can do something which is completely mathematical.  They have said therefore that there are general contingencies and that has to be allowed to the trial judge or the Court of Appeal on rehearing to estimate.

MR NUGAWELA:   Yes.  Your Honour Justice Kirby, we do not cavil with the proposition that the exercise is not precise and it is not capable of mathematical certainty and it should not be expected for it to be or portrayed as such.

KIRBY J:   So in your client’s case there was the particular problem that her two children had various problems that, even if there had never been an accident, would have affected her earning capacity and somebody had to try to work out what was a fair discount for those factors and other factors in reaching the actual verdict.

MR NUGAWELA:   That is a point that is put against us by the respondent but it is not actually correct.  This application has nothing to do, as we say in our replying summary, with the impact that the children had on her future earning capacity, and we say that for this reason, your Honour.  If your Honours can go to page 40 of the application book ‑ ‑ ‑

KIRBY J:   It is hard to say it could have nothing to do with it because, you see, as is often pointed out, you are getting a capital sum for the loss of earning capacity, but that is then calculated by reference to what you possibly would have earned and then discounted because you are getting it in a capital sum.  Now, when you have two children who are very time intensive, there is a very high likelihood that your client was going to be pretty preoccupied anyway and that is all that the judges below have sought to take into account.  They have not pretended it is mathematical, they have said it has to be decided by reference to general contingencies.  Now, what is wrong with that?  It is the best that the law can do.

MR NUGAWELA:   Not only is there nothing wrong with that, we do not quarrel with the findings below in that respect.  The finding below by the learned judge – and this is at page 40 of the application book, your Honours, in paragraph 24 at line 30:

The trial judge found that the respondent would not have returned to full time work until 2010 when the children were aged 13 -

because of those obligations to raise the children, and we do not quarrel with that finding.

HAYNE J:   What exactly is the principle that you would have this Court state that is new or different?

MR NUGAWELA:   In New South Wales the approach is very different to the practice in Western Australia concerning the two divergences that I submitted to your Honours; firstly, the shifting of the evidentiary burden and, secondly, even where the evidentiary burden is shifted a trial judge is said to have a wider range of options that is open to him or her.  Now, in New South Wales in a recent decision in Kallouf v Middis ‑ ‑ ‑

HAYNE J:   Just before you come to that, I do not yet understand what the principle is you say that this Court should establish.

MR NUGAWELA:   Your Honour Justice Hayne, the divergences are twofold.  Firstly, we say it is not incumbent upon a plaintiff to disprove theoretical earning capacity.  If a plaintiff shows that he or she has lost his or her pre‑accident earning capacity, any burden in relation to the mitigation of the award belongs to a defendant.  The position in Western Australia is contrary to that proposition.  The second divergence in Western Australia, unlike the Court of Appeal in New South Wales, is that even where a defendant has failed to show what suitable alternative occupations are available, the state of the labour market and likely earnings, even where it has failed to do that, it is open to a trial judge in Western Australia to select a wider range of options for discount and this led his Honour Justice McHugh in granting special leave in 1998 to remark “Is it common in Western Australia?  I have never struck it before”.

KIRBY J:   But in the end the trial judge and the Court of Appeal have to get down to money, figures and attempting to impose on it too mechanical an approach is really like attempting to impose that on sentencing of criminal prisoners.  It is self‑deception to believe that you can do it mathematically.

MR NUGAWELA:   We do not argue for mathematical approach.  No doubt ‑ ‑ ‑

KIRBY J:   It sounds as though you want to sort of lock people into a – Australia has rejected the shifting of onuses.  It allows for evidentiary burdens in the course of running a trial but we do not have, as the English do, the shifting onuses of proof.  It sounds to me as though you are wanting to get us to state a principle that would introduce that into our law and this Court has rejected that for 40 years.

MR NUGAWELA:   Yes, it is a principle which has found favour in the Court of Appeal in New South Wales in that recent decision which I have drawn to your Honours’ attention.  It is a principle which is ‑ ‑ ‑

KIRBY J:   That may need a little bit of attention by us in an appeal from application from New South Wales.

MR NUGAWELA:   May it please your Honour.  We are not arguing for the shifting of any ultimate burdens, except in relation to, for instance, a failure to mitigate, which is not this case.  That has been accepted in cases by this Court in Watts v Rake and Purkess v Crittenden.  In practice, the shifting of the evidentiary burden in cases where retained earning capacity is alleged by the defendant in mitigation of the award would place otherwise an unrealistic burden on all plaintiffs to canvass the whole gamut of possible alternative occupations and explain to a court why these are not suitable for him and her.

KIRBY J:   Correct me if I am wrong, you had a bit of a win in the Court of Appeal, did you not?

MR NUGAWELA:   Yes.

KIRBY J:   I mean, the trial judge had discounted 81 per cent for various reasons, including general contingencies, and that was significantly cut back by Justices McLure and Pullin; is that correct?

MR NUGAWELA:   It was, but we say arbitrarily because ‑ ‑ ‑

KIRBY J:   And in the end, the question that is in our mind is, is the net final consequence – are the orders of the Court of Appeal wrong?  Can you demonstrate error in the orders of the Court of Appeal, because that is what you are seeking to appeal to this Court from.

MR NUGAWELA:   I understand that the ‑ ‑ ‑

KIRBY J:   I must say, when I looked at them, it seemed to me that the majority in the Court of Appeal had done a pretty good job, really.  They adjusted upwards the amount that your client received and the net result did not strike me as erroneous, when I read the papers.  That is a problem you have to get over because we do not give special leave to appeal against reasons; we have got to look at what the judgment or order is.

MR NUGAWELA:   I do not shy from the observation, no doubt, that the result is not unsatisfactory in this case, but it is in the making of the sausage, your Honours, where errors of principle have been made, that is unsavoury and, as I recall, your Honour and Justice McHugh, in granting special leave in the matter of De Sales, made the same observation.

KIRBY J:   I think you visited us in De Sales?

MR NUGAWELA:   We did have the honour of doing so, but your Honour made ‑ ‑ ‑

KIRBY J:   I know when we see you, we have to keep our wits open for these issues of principle.

MR NUGAWELA:   Indeed.  The result in De Sales was very satisfactory but the way the Court has approached and reached that result ‑ ‑ ‑

KIRBY J:   We will not go into the facts of De Sales and what we learned after the case.  We will just stick to this case for the moment.

MR NUGAWELA:   May it please your Honours.  The point remains, your Honour, notwithstanding the ‑ ‑ ‑

KIRBY J:   There is nothing in De Sales that is inconsistent with what the Court of Appeal has done.

MR NUGAWELA:   Certainly not.  A different case.

KIRBY J:   And, on the contrary, De Sales recognised that these are imponderables and you have to have allowances for general contingencies.

MR NUGAWELA:   Yes.  The difficulty with this case is using the general contingencies device to obviate the need on a defendant to show what alternative occupations there are by real evidence.  The propositions advanced by the defendant were rejected by the trial judge.  It should not fall upon a plaintiff to disprove other theoretical retained earning capacities.  The correct approach, an approach which was described by Justice McHugh 10 years ago is to adopt a comparative evaluative wage, not to pluck some arbitrary figure, with respect, by reference to undefined contingencies.  In Mills, as I recall, the discount of the Court of Appeal was 25 per cent.  Here we have a discount, your Honours, of 35 per cent.

KIRBY J:   Yes, but you have very special facts in this case of two children who have different types of medical conditions and they are very time consuming conditions.

MR NUGAWELA:   Yes.

KIRBY J:   What is wrong with the Court of Appeal saying that that would have preoccupied your client anyway so that her loss of earning capacity is not going to be visited in as much money as it otherwise might have been?

MR NUGAWELA:   On the contrary, the Court of Appeal – and I take your Honours back to pages 40 and 41 of the application book.  We do not quarrel with that finding because the starting point for the assessment of future economic loss, both by the learned trial judge and the Court of Appeal, which we do not seek to disturb in this Court, is that from the year 2010 onwards the respondent would have returned to full‑time work.  In other words, prior to 2010, because of the obligations in relation to the children, she would not have worked full time.

We do not seek to disturb that.  We accept that and we run with that and it is a point, as I said, that my learned friend sought to make against us in the respondent’s summary and we have dealt with it in our reply.  The issue of the children in this special leave application is wholly irrelevant to the question of what is the correct principle that a court should approach in Western Australia in relation to reducing an award of future loss – in this case beyond 2010 or 2010 and onwards – on account of a presumed retained earning capacity?

HAYNE J:   But you would have the defendant in the suit identify the likely occupations available in the year 2010, is that right?

MR NUGAWELA:   Or even at the time of trial.

HAYNE J:   The two are radically different, are they not?  The labour market, for example, over the last five years, I would have thought, has changed to the point where about a third of the employed workforce is engaged in jobs which did not exist five years ago.

MR NUGAWELA:   It may be, yes.

HAYNE J:   What would you have the defendant do?

MR NUGAWELA:   We would have the defendant at trial look at the vocational aptitude of the plaintiff, and it is not beyond the wit of a defendant to have a rehabilitation expert do that, to look at the educational attainment of the plaintiff, to order a work trial ‑ ‑ ‑

HAYNE J:   All of that is available to the trial judge, what then does the trial judge do except a broad, if you like, arbitrary discount?

MR NUGAWELA:   What a learned trial judge ought do is decide, by reference to the evidence, what particular alternative occupation or occupations would suit the plaintiff, not to forget about that anterior step and effectively transfer the burden on a plaintiff in Western Australia to disprove a theoretical retained earning capacity, and one cannot forget that in this case, having regard to the antecedents of this plaintiff.  She left school in the United Kingdom in 1981 at aged 16, worked in manual jobs to aged 20 and from aged 20 right through to aged 33, when she had her accident, worked full time as a photo lab technician, the only occupation she knew.

KIRBY J:   They sound to me like matters of argument at a trial.  They do not sound to me like arguments of general principle that should engage this Court, especially in the declining years of the law of negligence.

MR NUGAWELA:   Yes, your Honour.  Lurking within the factual interstices are points of principle and the facts are strong and they demonstrate that in this case.  As a point of principle, there should not have been effectively cast upon this plaintiff some burden to disprove a theoretical retained earning capacity of 55 per cent.  This is effectively what the Court of Appeal did.  The findings that there is a greater than one in two chance that from the year 2010 onwards, as opposed to the date of trial which is conventionally the situation, this plaintiff would return to the workforce and perform 100 per cent of her pre‑accident earning capacity, despite her antecedents, despite the fact that the alternative occupations suggested by the defendant were negated both at trial and by the honourable Court of Appeal and the percentage of 55 per cent is so large in this case, far larger than in Mills v Shire of Mundaring.

KIRBY J:   Not really.  It is a discount of about half for the contingency that in this particular case there is a very special and highly time‑consuming reason why your client would not in any case have been exercising her earning capacity.

MR NUGAWELA:   The finding in relation to the children, your Honour Justice Kirby, we emphasise has been inoculated from the challenge to the award for future loss because of the finding both at first instance in the Court of Appeal that in the year 2010 she would return to full‑time work.  We do not quarrel with that.  The calculation that we challenge is from the year 2010 onwards.  Your Honours, we say that this case is an ideal vehicle for the resolution of the disparate approaches.  I was going to take your Honours to Kallouf v Middis in those paragraphs at 50, 72 and 73.

HAYNE J:   To demonstrate what proposition?

MR NUGAWELA:   To demonstrate the divergences in the approach taken in Western Australia compared with New South Wales where there is real consideration of this notion of retained earning capacity by reference to a legitimate expectation that a Court will try and define a particular occupation which is said to be within the exploitable retained earning capacity of a plaintiff.  It is covered in 50.

KIRBY J:   Justice Buss’ dissent, my understanding is that he was not with you on this point?  He was harder on you.

MR NUGAWELA:   His Honour Justice Buss made a finding ‑ ‑ ‑

KIRBY J:   He would not really have disturbed very much Judge Yeats’ approach.

MR NUGAWELA:   His Honour was the only judicial officer who made the finding that this plaintiff had a suitable alternative clerical capacity.  Both the trial judge and a majority in the Court of Appeal made the finding that she has no relevant skills or experience in the area, findings which are not surprising having regard to her antecedents.

KIRBY J:   I just wanted to get it clear that he was not dissenting because he agreed with your view, he was dissenting because basically he was in favour of the orders of the primary judge.  He varied them very slightly.

MR NUGAWELA:   Not quite.  He disagreed with the finding of the learned trial judge.

KIRBY J:   He came to much the same outcome at the end, I think.

MR NUGAWELA:   The nominal figure appeared to be slightly higher but it was the nominal result.

KIRBY J:   There is only a tiny difference.  I notice that the red lights are on now.  Is there anything you need to say that has not been already said?

MR NUGAWELA:   Thank you for the accommodation, your Honour.  The only two points is that this case is an ideal vehicle for the resolution of the different approaches across the country, that because it is beyond factual controversy that the plaintiff had loss of pre‑accident earning capacity.  The second point is that there was no challenge to her credibility and no adverse credibility findings made by the trial judge.  May it please the Court, those are our submissions.

KIRBY J:   Thank you, Mr Nugawela.  The Court does not need the assistance of the respondent in this application.

Following a motor vehicle accident the applicant sued the respondent in negligence.  She was successful and the trial judge in the District Court of Western Australia, Judge Yates, awarded her damages including a component for future loss of earning capacity.  The trial judge discounted that component by 81 per cent by reference to retained capacity, possible improvements in her capacity and general contingencies.  The evidence revealed that the applicant’s two young children had various health problems that might have affected her earning capacity, even if there had been no accident.

The Court of Appeal of the Supreme Court of Western Australia by majority, Justices McLure and Pullin, with Justice Buss dissenting, reduced the discount from 81 per cent to 55 per cent.  The applicant contests both the approach and the resulting orders of the Court of Appeal.  However, there can be no scientific precision in the calculation of such damages or in the approach to such calculation.  The resort to general estimates of contingencies is well‑established in the law.  It was recently recognised by this Court in De Sales v Ingrilli (2002) 212 CLR 338.

We are not convinced that error has been shown in the outcome reached by the Court of Appeal or that an appeal to this Court would enjoy reasonable prospects of success if special leave were granted.  Special leave is therefore refused and the applicant must pay the respondent’s costs.

AT 10.25 AM THE MATTER WAS CONCLUDED