Wyithe v Raslan No. DCCIV-95-911 Judgment No. D3638

[1997] SADC 3638

Court

DISTRICT COURT OF SOUTH AUSTRALIA

Judgment of His Honour Judge Lee

Hearing

07/05/97 to 09/05/97, 12/05/97 to 13/05/97.

Catchwords

DAMAGES - PERSONAL INJURY Motor vehicle accident - 47 year old painting contractor -laceration to right kneee causing permanent damage to internal structures - non-economic loss s35A, scale 12, $13,800 - past loss of earning capacity $64,000 - future loss of earning capactiy $86,000 - total award before reduction for contributory negligence $174,542.80.

Materials Considered

• Wright v Donatelli (1995) 65 SASR 307;
• Graham v Baker (1961) 106 CLR 140;
• Cole v Ellis (1992) 60 SASR 481;
• Cole v Ellis (1993) 170 LSJS 265, referred to.

Representation

Plaintiff GEORGE WYITHE:
Counsel: MR M BIRCHALL - Solicitors: LINDEN FAIRCLOUGH &; CO

Defendant NAWAL RASLAN:
Counsel: MR J COSTELLO - Solicitors: FINLAYSONS

DCCIV-95-911

Judgment No. D3638

1 August 1997

(Civil)

WYITHE V RASLAN

Civil

Judge Lee

On 23 October 1989, the plaintiff was driving his panel van in a northerly direction along Boliver Road, Burton, and the defendant was driving her motor vehicle in a westerly direction along Burton Road, Burton, when the vehicles collided at the intersection of those roads and the plaintiff sustained serious injuries.

The plaintiff claims damages against the defendant.I need say no more about the circumstances of the accident, because liability has been agreed 90:10 in favour of the plaintiff.

The plaintiff's damages fall for assessment under various heads, the most significant being loss of past and future earning capacity.His summons was not issued until 31 July 1995, which was well after the expiry of the three year limitation period.I will deal at the outset with his application for an extension of time pursuant to section 48 of the Limitation of Actions Act 1936.

About four to five weeks after the accident, the plaintiff consulted a solicitor, Mr John Murphy, and gave him the accounts which he had received to that point.Mr Murphy said he would make a claim for damages on the plaintiff's behalf against the defendant.It is difficult to discern from Murphy's file, which is in evidence as exhibit P8, what instructions the plaintiff gave on the initial consultation, but it is reasonable to suppose that he passed on what he knew about the accident and his injuries at that time.He did not know the full name and address of the defendant and he did not know her version of the circumstances.He did not know that the accident had been witnessed by a number of persons.

The plaintiff did not see Murphy again until about eighteen months later, so that would have been in the first half of 1991.The plaintiff said he telephoned Murphy regularly, and on all occasions was told that the matter was in hand. Eventually, after a further delay and after Murphy had broken a number of appointments, the plaintiff went to another solicitor.First he saw Mr Dowd, who was then in partnership with Mr Fairclough.Then he saw Mr Fairclough.Fairclough first took instructions from the plaintiff on 28 October 1993.Fairclough wrote to Murphy on 15 November 1993 and made several unsuccessful attempts to obtain Murphy's file.Eventually, Fairclough was informed by Law Claims at the Law Society that the file had been deposited with them.The plaintiff collected the file and took it to Fairclough on 8 March 1995.Fairclough went through the file with the plaintiff and dictated a statement which was subsequently typed and signed.The statement dealt mainly with the plaintiff's association with Murphy and his failure to obtain from Murphy information about the progress of his claim.Fairclough extracted from the file copies of three documents in particular, namely the police report, a report dated 29 December 1992 of Dr Roger Jansen and a report dated 16 December 1993 of Dr Lehonde Hoare.The plaintiff had not seen the police report before and discovered for the first time that there were witnesses to the collision and that the defendant had admitted to having stopped at a stop sign and to having moved into the intersection without seeing the plaintiff's vehicle. With respect to the medical reports, the plaintiff said he may have seen Dr Jansen's report, but not Dr Hoare's report, before his visit to Fairclough on 8 March 1995.

Section 48(3)(b)of the Limitation of Actions Act empowers a court to extend a limitation period if it is satisfied

"(i) that facts material to the plaintiff's case were not ascertained by him until some point of time occurring within twelve months before the expiration of the period of limitation or occurring after the expiration of that period and that the action was instituted within twelve months after the ascertainment of those facts by the plaintiff, or

(ii) ....

and that in all the circumstances of the case it is just to grant the extension of time."

I am satisfied that the contents of the police report were not ascertained by the plaintiff until his visit to Fairclough on 8 March 1995.I hold that the contents of the police report meet the description "facts material to the plaintiff's case" and that his action was instituted within twelve months after the ascertainment of those facts by him.It is, of course, unnecessary that the material facts should bear upon the plaintiff's decision to sue: Wright v Donatelli .I am satisfied that it is just to grant the extension of time.I extend the period of limitation to the date of the issue of the summons, namely 31 July 1995.In the result, I need not express a view on whether the plaintiff's evidence in relation to the medical reports in question would also found an extension of time.

I turn to the evidence which is relevant to the plaintiff's damages.

I should say at once that all the witnesses in the case gave their evidence in a straight forward and credible manner, and so no question of credit arises with respect to any of the issues.I will say more about my impression of the plaintiff and some of the other witnesses later in these reasons.

The plaintiff is 47 years of age.He left school after completing third year at high school, and worked for his father as a painter until he turned 21 years of age.He then decided to work in his own business as a painting contractor. Over the ensuing years, he worked mostly with sub-contractors, supplying them with equipment and material and paying them an hourly rate.The work involved using scrapers, brushes, rollers and spray guns, climbing and working on and from ladders and scaffolds, and climbing and working on and from roofs and chimneys.He performed decorative and wall-papering work.He worked a lot in the country.He married in 1983 and from 1984 his wife joined him in the business to take over the books and to share the income.

The main commercial customers of the business were Wedgewood Additions, Telecom and State Bank (now Bank SA).Roughly half of the work was for private customers.A large proportion was maintenance work rather than construction or new work.Maintenance work commonly involves a higher content of labour to materials, and the supply of such work is generally more consistent.The labour to materials content of maintenance work varies according to the nature of the work.Large roofs and exteriors, compared with partitions or small work, require larger volumes of paint over a given period of time.

The plaintiff was extremely fit and healthy before the accident.At various times, he participated in Australian Rules football, weight lifting, jogging, tennis, golf and squash.He competed in fun runs, quarter and half marathons, and two Festival City marathons.

The immediate consequences of the accident were that the plaintiff's right knee struck the dashboard and his body was pinned against the steering wheel. He was trapped for about two hours during which time he lapsed into unconsciousness from time to time.Eventually he was released and transported by ambulance first to the Lyell McEwin Hospital and then to the Royal Adelaide Hospital.Apart from general cuts and bruising, his knee was lacerated in a ring bark fashion and underlying structures were exposed.The wound was treated with swabs and later sutured.A perforation of the small bowel was repaired through a mid-line incision under general anaesthetic.He remained in hospital for twelve days.He then convalesced at home where he progressed from wheel chair to frame to crutches and underwent a short course of physiotherapy. Overall he was absent from his work for some 14 weeks, although after about eight weeks he went out with his wife in the car so that he could quote on several jobs.The subcontrators coped with some of the work that was in hand.

In October 1992, the plaintiff developed an intestinal obstruction which required operative intervention at the Lyell McEwin Hospital.Dr Roger Jansen found that the small bowel was bound down by an adhesion, and that a large volume of food on the proximal side had caused kinking and a consequential obstruction.On that occasion, the plaintiff was in hospital for just over a week and absent from his work for about nine weeks.He thinks he quoted on a few jobs during the latter part of his absence.

The plaintiff has experienced two other episodes of bowel obstruction.Both appeared to be related to his diet at the time, and both resolved without the need for hospitalisation or surgery.

The plaintiff's evidence about his difficulties since the accident is to the following general effect.

Although he was able to return to the physical work of a painting contractor, it was two years before he felt he was doing a good day's work.

He has pain in his right knee after prolonged use.His right knee is not as powerful as before, and so his left leg tends to take over.His back aches if he does repetitious work on lower and higher walls.

His right knee condition limits his capacity to kneel to paint low down and to climb and work from ladders and scaffolds.He changes his position from time to time to avoid pain.He bends down for a while, but then his back aches and he drops to one knee.Sometimes he says to sub-contractors "My leg is sore.I will start something else.Do you mind carrying on?".His sub-contractors are all very understanding.

Sometimes he reneges on using a roller from a ladder because of the strain on his right leg.He does not like to work on roofs anymore, but still does so. It took two years before he felt comfortable climbing anything high and he is not as confident as he was.He has problems bending down or kneeling to paint large decorative skirtings.

He has given country work away almost completely, because country work nearly always involves a lot of climbing.

He gets very tired after about eight hours of work.He works less hours and his rate of work is slower.He thinks he worked 60 to 65 hours per week before the accident.Now he works 40 to 45 hours per week.He only works on Saturdays if he really has to.Work is available were he able to do more.He has not thought about retiring.

He is careful about his diet, and ensures that his intake of fibre at breakfast is high.His abdominal surgery has left him with a vertical scar in the centre of his abdomen of about twelve inches.The knee has a horizontal scar which extends either side by about three inches.

He no longer jogs and runs as he did before the accident.He still plays tennis, albeit at a restricted level, and golf.

The medical evidence is to the following general effect.

The blow to the right knee damaged the internal structures of the knee and caused a roughening of the pattelo-femoral articular surface.This in turn has caused crepitus, and clicking and catching on movement.The articular surface may deteriorate further in time, especially given that the plaintiff is big and heavy and his work imposes a load on his knee.There may be some laxity of the cruciate ligaments.Further treatment will not have any effect.In general the knee condition can be regarded as stable, although earlier than normal degenerative changes may progressively increase the symptoms.

The plaintiff's low back pain stems from the greater use of his back in consequence of the injury to his knee and in the presence of degenerative changes.Manipulation and exercise may help to alleviate the problem.

The development of adhesions in the plaintiff's abdomen have left him with an increased risk of intestinal obstruction.If the obstruction does not resolve spontaneously or respond to conservative measures in hospital, surgery will become necessary.Dr Hoare said that the risks are in the order of the following percentages: further attacks 50 per cent, hospitalisation five per cent, and surgery one per cent.

Dr Hoare noted a bulge or slight divarication in the abdominal wall at the site of the scar, and thought that the plaintiff may need an operative repair if a hernia eventuates.He described the chance of herniation as "Not great, but it will depend upon the severity of the work in which he engages from this point on".

None of the doctors saw any reason why the plaintiff would be unable to work as a painting contractor in the future.

Earlier I said that all the witnesses in the case gave their evidence in a straight forward and credible manner.I should add that I was especially impressed by the plaintiff's motivation before the accident to work hard and productively, and by his efforts after the accident to compensate for his injuries and to minimise his losses.

This impression was reinforced by the evidence of two of the plaintiff's sub-contractors, John Martin and Jim Bibus

Bibus worked for the plaintiff between 1986 and 1993.He said the plaintiff was a hard worker and led by example.After the accident, the plaintiff's wife rang and asked him to carry on with the work.She gave him a list of jobs that were ongoing.He remembers doing a job for the State Bank on a charge out basis without the usual quote.

Martin began with the plaintiff in 1985 and has worked full time for him for the last seven years.He said the plaintiff was a good and hard-working tradesman.The plaintiff set the pace, and the subcontractors followed his instructions.During the plaintiff's absence following the accident, the State Bank and Telecom provided work at an hourly rate.

Both witnesses confirmed that, since the accident, the plaintiff has been slower in his work and restricted in the things that he can do.

The following table contains information taken from the income tax returns of the business (exhibit P6):-

YEARENDED30 JUNE TURNOVER PERCENTAGE OF MATERIALS TO TURNOVER PERCENTAGE OF SUB FEES TO TURNOVER PROFIT PERCENTAGE OF PROFIT TO TURNOVER

198454,672 19.84% 25.46%18,947 34.66%

198560,624 2454% 28.97%17,12428.25%

198698,215 23.36% 21.85%39,982 40.71%

1987 108,000 18.52% 32.41%41,000 37.96%

1988 119,518 14.80% 39.63%44,004 36.82%

1989 226,964 17.92% 37.84%75,823 33.41%

1990 178,568 14.32% 34.33%68,735* 38.49%

1991 173,536 15.75% 39.17%53,881 31.05%

1992 218,5009.94% 37.81%90,528 41.43%

1993 185,6488.93% 38.60%79,630 42.89%

1994 245,9289.73% 37.16% 106,173 43.17%

1995 215,0789.58% 42.89%81,420 37.86%

1996 196,1559.64% 37.03%87,801 44.76%

* Excludes insurance received on sickness and accident and motor vehicle policies.

The table shows that changes in turnover have not produced corresponding changes in profit.The most striking example was in 1990, the financial year of the accident, when profit was only marginally down despite a substantial fall in turnover.The profit in 1990 resulted from substantial reductions in material costs and subcontractor fees.Another example is provided by the 1996 year when turnover dropped approximately $19,000 on the preceding year, yet profit increased by approximately $6,000.

The table also confirms the impression left by the evidence overall that, notwithstanding the impact the accident has had on his physical working capacity, the plaintiff has managed his business well in terms of the nature of work performed, the use of subcontractors, and the costing of jobs to achieve satisfactory profit margins.

Accountants called by both parties drew widely differing conclusions from the income tax returns.

Mr Norton for the plaintiff projected the loss of turnover of the business by selecting the turnover for the year before the accident and by applying to that figure an inflation factor, based on CPI figures from the Bureau of Statistics, for each of the years since the accident.He calculated the difference between actual turnover and adjusted turnover at $427,809 (exhibit P14).He then deducted an estimate of tax, and arrived at a net loss of $223,694 (exhibit P15).He described his calculation as a tax affected loss in gross turnover.

Mr Norton's approach was unduly theoretical, because it assumed that, but for the accident, the business would have improved on the abnormally high turnover in 1989 by the rate of inflation, and that the additional turnover would have been achieved without any increase in material costs and subcontractor fees.

Mr Kennedy for the defendant pointed to the only two years after the year preceding the accident in which the profit was less, namely the years ended 30 June 1990 and 30 June 1991, and concluded that the plaintiff's loss was confined to those years.Mr Kennedy prepared graphs (appendix 3 to exhibit D3 and page 2 of exhibit D5) which purported to show that the plaintiff's business out performed the industry in at least the years 1992 to 1995.His estimate of the loss between 1990 and 1996 was $29,030 before tax.

Mr Kennedy's approach was unduly theoretical, because it compared the plaintiff's work with construction or new work and ignored the impact that the plaintiff's injuries must have had on his rate and hours of work, and therefore on the profitability of the business, in each of the years since the accident.

Obviously the figures disclosed by the tax returns, which are all the accountants had to work with, must be examined and analysed.Nevertheless, what falls to be compensated in the end is loss of earning capacity, at least insofar as loss of earning capacity is productive of financial loss:Graham v Baker .It seems to me that a further approach which is less theoretical than either of the approaches already discussed would be to focus primarily upon the hours of manual labour that the plaintiff lost per week, and to make allowance for his ability to increase the return on his input of manual labour by skilful

management of his business.

I should say at this point that, although the partnership tax returns show that the income of the business was shared equally by the plaintiff and his wife, I am satisfied that the plaintiff did all the productive work of the business save for three to four hours per month that his wife spent on the books and accounts.The relevant principles are discussed by Mullighan J in Cole v Ellis .

When preparing his quotes, the plaintiff charged labour at a rate which increased from about $20 per hour in 1989by single dollar amounts to about $25 per hour in each of the last three years.He paid his subcontractors $5 per hour less than the charge rate over the period.So the approximate return to the business on labour ranged between $20 and $25 per hour for his own time and $5 per hour for his subcontractors' time.Sometimes his quote for materials would include a margin for profit.Sometimes he would load the quote by adding a lump sum at the bottom as he did in exhibit P7.Sometimes all the work on a small job would be done by subcontractors, although more often he would work with subcontractors and they would be under his supervision.I am satisfied on the evidence that his own input of manual labour and his ability to lead by example were important to the success ofthe business.I note from the industry benchmarks for painting contractors in 1995 (exhibit P16) that the average charge rate for labour over all groups in that year was in the order of $30 per hour.

As mentioned earlier, the plaintiff said that he thinks he worked 60 to 65 hours per week before the accident, and that he has worked 40 to 45 hours per week since the accident.Both Martin and Bibus said that hours of actual painting work before the accident were in the order of 50 per week.Obviously the plaintiff would have spent further time in costing, quoting and coordinating.

I will make the following assumptions for the purposes of this further approach. I will measure the plaintiff's loss in hours and rate of manual labour at the equivalent of ten hours per week over a 50 week working year, and at a value increasing by dollar amounts from $20 per hour in 1990 to $25 per hour over the last three years.This would effectively allow a return to the plaintiff net of all expenses of $5 per hour more than he paid to his subcontractors.I will allow 700 hours for the absence following the accident (fourteen weeks at 50 hours per week) and 450 hours for the absence in 1993 (nine weeks at 50 hours per week).I will assume that the loss would have been taxed at an average marginal rate of 46 per cent.Finally, as an additional exercise in brackets, I will measure the plaintiff's loss at ten hours per week over a 50 week working year as before, but at a value increasing by dollar amounts from $25 per hour in 1990 to $30 per hour over the last three years.

On my arithmetic, this further approach produces the following results:-

YEAR ENDED 30 JUNE HOURS LOST VALUE OF EACH HOUR LOST VALUE OF TOTAL HOURS LOST TAX NET LOSS-

1990700 220920 20(25) 18,400(23,000)8,460 (10,580) 9,940(12,420)

1991500 21(26) 10,500(13,000)4,830(5,890)5,670(7,020)

1992500 22(27) 11,000(13,500)5,060(6,210)5,940(7,290)

1993450410 860 23(28) 19,780(24,080)9,099(11,077) 10,681(13,003)

1994500 24(29) 12,000(14,500)5,520(6,670)6,480(7,830)

1995500 25(30) 12,500(15,000)5,750(6,900)6,750(8,100)

1996500 25(30) 12,500(15,000)5,750(6,900)6,750(8,100)

1997500 25(30) 12,500(15,000)5,750(6,900)6,750 (8,100)58,961(71,863)

As for future economic loss, I take as a starting point the plaintiff's loss over the last three years.According to the above figures, the loss lies between $6,750 or $130 per week and $8,100 or $156 per week.According to Table 3B in the Appendix of Luntz on Assessment of Damages (Third Edition), the present value at 5 per cent (being the prescribed rate pursuant to s35A(1)(e) of the Wrongs Act 1936) of payments of $1 per week to a 47 year old male until age 65 or earlier death is $587.The present values of $130 per week and $156 per week are $76,310 and $91,572 respectively.

I do not mean to elevate these various assumptions and the figures based upon them to concrete findings of fact.At best they provide a rough and ready guide.In the end, it is the overall picture that matters .As for the future, I allow for the risk that further time will be lost from intestinal obstruction.Doubtless the future holds other contingencies, both favourable and unfavourable.The plaintiff's pre-accident health and work history were both excellent, and there is no reason in the evidence to suggest that a balancing of contingencies should result in a deduction.On the credit side at least is the contingency that the plaintiff will choose, or but for the accident would have chosen, to work beyond the age of 65.

I assess the plaintiff's past economic loss at $64,000 and his future economic loss at $86,000.

I assign the numerical value of 12 to the plaintiff's non-economic loss.The prescribed amount is 1150.So the award under s35A of the Wrongs Act 1936 for non economic loss is $13,800.

I allow the sum of $750 to represent the present value of possible future medical expense.

Special damages have been agreed at $9,992.80.

In the result, the plaintiff is entitled to 90 per cent of the following:-

Loss of earning capacity

past$64,000.00

future$86,000.00

non economic loss$13,800.00

future medical expense$750.00

special damages$9,992.80

$174,542.80

========

There will be judgment for the plaintiff against the defendant in the sum of $157,088.52.

I will hear the parties concerning interest and costs.