Wynn v NSW Insurance Ministerial Corppration

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
Sydney No S53 of 1995

B e t w e e n -
LEONIE MYREE WYNN
Appellant
and
NSW INSURANCE MINISTERIAL CORPORATION
Respondent

BRENNAN CJ

DAWSON J
TOOHEY J
GAUDRON J
GUMMOW J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON THURSDAY, 5 OCTOBER 1995, AT 10.18 AM

MR P.C.B. SEMMLER, QC: May it please the Court, I appear with my learned friend, MR M.J. WARD, for the appellant. (instructed by M.J. Ward Maxwell & Co)

MR C.T. BARRY, QC: May it please the Court, I appear with my learned friend, MR H.G. SHORE, for the respondent. (instructed by R.J. Walters, NSW Insurance Ministerial Corporation)

BRENNAN CJ: Yes, Mr Semmler.

MR SEMMLER: Your Honours, could I hand up some outlines of submissions to which are attached a chronology and some calculations in relation to the damages.

BRENNAN CJ: Thank you. Yes, Mr Semmler.

MR SEMMLER: Your Honours, this case involved a phenomenon which is becoming increasingly common in this country in the late 20th century. It involved a high‑achieving executive with an exceptionally successful work history and excellent career prospects who was a woman. Her executive career was terminated by a motor vehicle accident in 1986. She sued in respect of that accident and the sum allowed by the trial judge for loss of earning capacity was substantially reduced by the New South Wales Court of Appeal. Your Honours, the reasons given by the Court of Appeal for that reduction demonstrate not only a departure from long‑established legal principles so far as the permissible deductions from awards for loss of earning capacity are concerned, those reasons also reflected gender-biased and stereotyped assumptions about women and the ‑ ‑ ‑

DAWSON J: Why is it gender biased? Is it not just wrong?

MR SEMMLER: Well, erroneous and ‑ ‑ ‑

DAWSON J: May I ask you this question: the exercise is to discover what the loss of earning capacity is and looking at the figures is merely indicative of what that loss, which is a physical loss, is.

MR SEMMLER: Yes.

DAWSON J: In that situation what are the figures that you - you would say it has no relevance at all.

MR SEMMLER: Yes.

DAWSON J: That is the problem, is it not?

MR SEMMLER: Yes.

DAWSON J: Not gender bias.

MR SEMMLER: It is assumptions that were not borne out by the evidence.

DAWSON J: But the nature of the exercise is to assess the value and loss of physical capacity, is not it?

MR SEMMLER: Yes, your Honour.

DAWSON J: And projections into the future are only indicative of that.

MR SEMMLER: Yes.

DAWSON J: Whether or not you employ child care cannot be relevant to that, can it?

MR SEMMLER: That is quite correct, your Honour. That is the first two grounds of our appeal, that the cost of child care is not relevant to the question of earning capacity.

DAWSON J: Well, that is it. I do not see that gender bias comes into that, it is just wrong.

MR SEMMLER: Yes, your Honours could I give your Honours a short synopsis of the relevant facts bearing upon the figures arrived at for the loss of earning capacity. The appellant was a 30-year-old person when the accident occurred. She was an executive with the American Express Corporation. She was unmarried but she became engaged in the month of the accident. She married subsequently and she had one child by the time of the trial. She had joined American Express in May 1981 and she had enjoyed a meteoric rise there. From her commencement as a customer service representative she had been promoted to manager of quality assurance in early 1985 and then in late 1985 she was promoted again to the position of manager of customer service and in 1986 was promoted to being manager of authorisations.

In October 1987 at the age of 31 she became director of customer service for American Express and in that position she had three managers reporting directly to her and 120 people indirectly. She resigned from American Express in October 1988 because of the affects of the subject accident. She had thus been promoted four times between the ages of 28 and 31. She was receiving a substantial salary and benefits package at the time of her resignation and the job inevitably involved long hours, stress and a great degree of responsibility.

The trial judge had found that American Express was an organisation which was well and truly oriented, as he put it, to equality of the sexes. There was a ratio of two women to one man within the organisation and evidence was given that the company actively encouraged promotions from within rather than hiring from outside. Her aspiration was to become vice‑president of operations within the organisation. That was the next step up from the position which she held at the time of her forced resignation.

She had what the trial judge described as an extraordinarily supportive husband and the appellant herself had testified that his attitude was: whatever I wanted to do he was with me, so far as her career was concerned. The trial judge was quite satisfied that her gaol of vice president was well within her ability. He had found that she had an obvious high motivation to succeed as a business woman. He found that it was quite probable on the evidence that the plaintiff’s career path, given her early rise to positions of a real responsibility, would have led her, but for the negligence of the respondent to this appeal, to a vice presidential position within American Express, and he comfortably inferred that that probability would bring increased financial rewards.

By the time of the trial the appellant was 36 years of age; she had had, as I have said, one child; she had discussed the possibility of having another child, although no firm decision had been made. She had testified that had she remained at American Express she would have taken advantage of the unpaid maternity leave which was available, and then would have returned to her former position, and she had discussed arrangements which could have been made, using her mother in law and a part‑time nanny, to look after the child while she continued with her full‑time work at American Express, although those arrangements would have only been necessary, as she testified, until the child was old enough to attend a child‑minding centre.

On 26 November 1992 his Honour Judge Kirkham in the New South Wales District Court assessed her damages in the sum of $990,000‑odd, including an allowance of nearly $706,000 for lost earning capacity in the future. On 11 August 1994 the New South Wales Court of Appeal set aside the trial judge’s judgment, except as to liability and costs, and substituted in lieu a judgment of $678,000-odd. In relation to loss of future earning capacity they substituted an amount of $411,000 for the $706,000‑odd allowed by the trial judge.

The first two grounds of appeal, your Honours, relate to the question of offsetting child care and domestic expenses against projected earnings. Your Honours, the genesis of the error, which the appellant contends is apparent from the judgment of the Court of Appeal, can be found in the transcript of what transpired in the hearing of the appeal, and if I could take your Honours to volume 2 of the appeal books at page 322 starting at line S, and your Honours, I readily concede this is only a transcript of what occurred and not the judgment itself, but it, I believe, identifies the error that was about to be made. Justice Clarke said at line S on page 322:

So far as I am concerned it is the view that worries me, an assessment of future earning loss borders on fairytale. It does not take any real regard to the uncertainties of life. It seems to treat things as almost certain. I am afraid there is no allowance for care for the child or children. They are the areas.

And, at the bottom of that page, I said:

There was no suggestion some allowance ought to be made.

As indeed, there was not. The issue of deducting the cost of child care was never raised at the trial. Justice Clarke, at the top of page 323 said:

If she is going to work these ridiculous hours she would have to have child care, she would not be able to do it with part time child care, particularly if she had more than one child.

I said:

That does not relieve the tort feasor -

I believe I said “of the liability” -

to pay the appropriate loss.
HANDLEY JA: Uninjured she earned these very high salaries for long hours but the price of that uninjured is that she has to have a high level of domestic assistance for housework and a high level of child care assistance, she cannot be in two places at once.

And Justice Clarke at line 8 said:

She cannot get those net earnings without cost. The loss to her is the net loss, one has to allow some measure for the cost of getting those earnings. There is nothing new about that. It does not seem to have happened here.

And I said:

It was not suggested to her in cross-examination that this was to be a factor she would have to take into account.

DAWSON J: Now, the error in that is that to make deductions for expenses says nothing about loss of earning capacity, does it?

MR SEMMLER: That is correct, your Honour.

DAWSON J: And that is what you are assessing, a physical disability. Maybe you have regard to figures in the future which would be of assistance, but what you pay for child care cannot indicate for one moment what your loss of capacity is.

MR SEMMLER: Yes. The issue of child care goes to the disposition of income, not the earning capacity.

DAWSON J: And the error is to look at future earnings and try and assess what the net loss will be but that does not indicate necessarily what the loss of earning capacity is.

MR SEMMLER: Yes, your Honour, with respect. I think, with the greatest respect to their Honour, the ‑ ‑ ‑

DAWSON J: But the cases which point this out are not there.

MR SEMMLER: Yes. Your Honours, the error seems to have arisen because they assume that the deduction for child care and domestic assistance was one of the recognised deductions which can be made from an award for lost earning capacity. Having arrived at ‑ ‑ ‑

DAWSON J: It has nothing to do with capacity.

MR SEMMLER: No. Well, your Honours, there is authority to suggest that one can deduct amounts if there is a question of double compensation in the evidence. For instance, in the case of catastrophically injured plaintiffs who are required to spend the rest of their lives in hospital, there is authority to suggest that the allowance must be made for the fact that they are being cared for in hospital, they have accommodation and food and such like.

There is also a recognised category of deduction where the deduction in question is necessary for the realisation of earning capacity. For instance, it has been suggested in some of the authorities that the costs necessarily involved in earning the income, such as the cost of special clothing for the work or the cost of transport to and from work, in an appropriate case can be taken into account as a deduction. The error which the appellant contends their Honours made in this case was that they assumed that the cost of child care and domestic assistance fell within one of these recognised categories of deduction when in fact it was a private expenditure; it was an expenditure on amenities of life, if one wanted to put it like that, on lifestyle. It was something that the appellant, if she was going to do it, and indeed there was not really much evidence about what was going to happen in that regard at the trial, she elected to do it to make her life easier. In our respectful submission, it was no different to any other expenditure that a wage‑earner may make in respect of amenities of life.

BRENNAN CJ: That is assuming that it is all a question of deduction. The real question is what is the economic consequence of the physical injury sustained, is it not?

MR SEMMLER: Yes.

BRENNAN CJ: If she were working then she would receive the total amount of her income and no doubt it is right to say you do not assess the value of that income as being subject to a deduction for expenditure on child care. If she is not working, does she then have an economic capacity of a countervailing kind that she would not have had when she was working, and must that be taken into account, not by way of deduction from the salary that would have been earned, but by way of a capacity that is able to be used and would be used by way of diminishing expenditure that would otherwise be made?

MR SEMMLER: Yes, your Honour.

BRENNAN CJ: I am not saying what the solution to it is. It just seems to me to be, looking at it only from one point of view, to talk in terms of deductions.

MR SEMMLER: Yes. That is the way that the Court of Appeal looked at it in terms of a deduction, or an offsetting of the costs against projected earnings.

DAWSON J: What is the principal authority which says that, in the end, what you are looking at is compensation for physical incapacity and that these figures are merely indicators of the correct amount of compensation? I think it is in a judgment of Chief Justice Barwick, but I cannot ‑ ‑ ‑

MR SEMMLER: It is.

TOOHEY J: It sounds like Arthur Robinson.

MR SEMMLER: Yes, Arthur Robinson, and the passage is, it is compensation for loss of earning capacity to the extent that it is or may become productive of financial loss.

BRENNAN CJ: But that is the point. It is, if I recollect it correctly, and I am subject to correction here, not by way of compensation for physical injury. It is by way of compensation for loss of earning capacity and the economic consequence of that.

MR SEMMLER: Yes.

DAWSON J: But then the earning capacity is a physical injury. Perhaps you can direct us to the passage.

BRENNAN CJ: Yes.

MR SEMMLER: Your Honours, before I do that, could I take your Honours to the passage in Sharman v Evans 138 CLR 563, which establishes the fundamental error in the Court of Appeal’s approach. If I could take Your Honours to page 577 where there is a discussion of the general principles in relation to compensation for loss of earning capacity. At about the middle of the page, in the judgment of Justices Gibbs and Stephen:

Compensation for loss of earning capacity is paid only because it is or may be productive of financial loss -

and they quote Graham v Baker -

and to compensate for total loss of earning capacity without making allowance for the cessation of these outgoings is to compensate for a gross loss when it is only the net loss that is in fact suffered.

Now, when one reads what his Honour Justice Clarke had to say in the course of appeal, that is where his Honour seems to derive the justification for taking into account child care and domestic expenses. He, in fact, used the words “gross loss” rather than “net loss”. Their Honours have discussed at page 576 and 577 the kinds of deductions which legitimately can be made, but they go on, having made the statement that I just read, to say:

On the other hand there are other types of saved expenditure upon which a defendant cannot rely in diminution of damages. It is now well established that no reduction is to be made, when awarding damages for loss of earning capacity, for the cost of maintaining oneself and one’s dependants unless an element of double compensation would otherwise intrude, as in the case of hospitalization as a non‑fee paying patient -

and at the top of that page, whilst I am there, at the start of the second paragraph:

Where, as here, a plaintiff suffers a total loss of earning capacity he will not normally continue to incur all of the outgoings necessary for the realization of that capacity which would have been incurred had his capacity been unaffected -

and they talk about items such as the cost of clothing and transportation.

So that, in our submission, the error in this case is to assume that if you do not take into account these private expenditure costs you are compensating for gross rather than net loss in a sense that is referred to by their Honours. There being no question of any double compensation in this case, the appellant was not being awarded the cost of these domestic expenses under some other head in the damages that she was awarded and these expenses not being necessary for the realisation of earning capacity in the same sense as transport to and from work, it was an error to deduct them. The other error, your Honours, was that ‑ ‑ ‑

BRENNAN CJ: What this page is talking about is take‑home pay and what you are saying is that the cost of child minding is not an item to be taken into account in determining take‑home pay.

MR SEMMLER: Yes, that is correct, your Honour. The other error was, even if this was a legitimate kind of deduction, their Honours assumed that it was a saved expenditure in her case. Now, the fact is there had been no cross‑examination of the appellant at the trial on this issue. There was no reason to assume, indeed, there was every reason to assume to the contrary, that simply because she was not working she would not have this expenditure.

BRENNAN CJ: Did she have it?

MR SEMMLER: Yes, at volume 1, page 149K there was evidence that after the accident she had a house cleaner, so that the notion that because of the accident she no longer had the expense of cleaning her house was dispelled by the evidence itself and might I say, your Honours, that this issue was really not canvassed at great length because no one had any idea at the trial - this point was never taken - that it would be contemplated by a higher court that there would have to be a deduction for this kind of expenditure. At page 149K:

Q. You do housework don’t you?
A. No.
Q. Don’t you do work?
A. I have a house cleaner.

She said she other kinds of domestic work and at 179W the appellant’s husband was being cross‑examined and he said:

In addition she runs the household?
No, she’s got help.

So, he confirmed that there was this assistance in the house. The issue of whether she paid for child minding was not canvassed because it was not regarded as relevant by anyone at the trial; not by either side and not by his Honour, clearly. The first time the issue of the need to reduce the verdict because of child care expenses, the first time that was raised, was in the Court of Appeal in the course of what their Honours had to say to me.

TOOHEY J: Mr Semmler, how did the Court of Appeal deal with this as opposed to what was said during the course of argument. Was it done by way of deduction or in affecting the loss of earning capacity in general terms or how was it handled?

MR SEMMLER: If I could take your Honours to volume 2 page 341 at line J, the second paragraph on page 341. This is in the judgment of his Honour Justice Handley with whom the other members of the Court of Appeal agreed:

If the plaintiff, as she said she had intended, continued her demanding business career after marriage, and after the birth of her child or children, she and her husband would necessarily have been faced with the necessity of engaging a full time nanny for the children and substantial household help during the week.

Could I interpolate there, your Honours, that, indeed, that was an error in itself because the only evidence was that she would have had a part time nanny and assistance from her mother‑in‑law and then only until the child reached child minding age. His Honour went on to say:

The Judge’s assessments made no allowance for these costs which must have been substantial and under current tax law have to be paid out of taxed income.

There was the foundation for what he later did and at page 343 line J, and this was the area that Justice Toohey was inquiring about, his Honour said:

A fair allowance must also be made for the cost of domestic help for any children and for other household duties. There was no evidence of the probable cost of such domestic help, but it cannot be ignored, and the Court must do the best it can. In my opinion a fair deduction for these costs would be $250 a week, with the plaintiff and her husband bearing half each. This results in a net loss of $778.79 a week.

He was reducing progressively the amount that the Court of Appeal was prepared to allow for lost earning capacity in the future. In answer to your Honour’s question, the Court of Appeal accepted the figure for lost earning capacity arrived at by the trial judge on the basis of evidence given and then reduced it for superannuation deductions which the Court considered were inappropriate, and also for this child‑minding and domestic duties expense, about which there had been no evidence as to the cost or the duration except the evidence I have referred to but, as his Honour said, the Court must do the best it can, and it arrived at a figure of $125 a week being half of $250 and deducted that from the amount to be projected over the probable working life of the appellant.

Without labouring the point, that is the error that the appellant contends is inherent, both in what was done and in the reasoning by which it was arrived at. We say that that is the error but it reflects assumptions which simply cannot be borne out. Not only is it contrary to Sharman v Evans and a whole host of other cases, too, that I have referred to in the House of Lords: Lim v Camden Health Authority and Dews v National Coal Board which confirm that deductions ought not to be made for this kind of expenditure. They also confirm something that has been part of the law for a long while, which is that the court is not concerned with how a litigant may spend the damages awarded, or how a litigant may have spent the income which he or she is claiming in the case in question.

BRENNAN CJ: That is not quite the point, is it? Take the hypothetical case of a stockbroker with a hobby farm with a manager, and he is injured and he cannot continue stockbroking, but he goes to the farm and dispenses with the services of the manager - does that not sound at all in any reflection of the damages to be awarded; the saving on the manager’s wages?

MR SEMMLER: So far as the deductibility of it is concerned, your Honour?

BRENNAN CJ: No, not deductibility. In determining what the economic effect of the injury is, one would first of all start with saying his stockbroking income was X, and allow that in full, subject to vicissitudes et cetera.

MR SEMMLER: Yes.

BRENNAN CJ: Then you would say now he is able to look after the farm himself. Farm income is the same but he is able to look after the farm himself and save $200 a week.

MR SEMMLER: The answer to your Honour’s question is: that may well be, indeed it would appropriately be the subject of some allowance to reduce the amount otherwise to be awarded for lost earning capacity. If he is actually doing that, and if he is making money from his endeavours ‑ ‑ ‑

BRENNAN CJ: Whether he is making money or not, he is just saving himself the expenditure that otherwise he would have incurred out of his stockbroking income.

MR SEMMLER: The answer to your Honour’s question is that it may well be, subject to the evidence. That may well be indicative of a higher earning capacity than might otherwise be the case, in his injured state.

BRENNAN CJ: It could not possibly be. He was full‑time employed in the stock broking business.

MR SEMMLER: Yes. Well, the way in which it would be relevant to lost earning capacity ‑ ‑ ‑

DAWSON J: It demonstrates that he had a capacity to do something.

MR SEMMLER: Yes.

DAWSON J: Which, at least, was to run a farm.

MR SEMMLER: Yes. He is under an obligation to mitigate his loss, and if he can show, or if he does show ‑ ‑ ‑

DAWSON J: Which produces income.

MR SEMMLER: Yes.

DAWSON J: But, in this case presumably the plaintiff always had a capacity to look after children.

MR SEMMLER: Yes.

DAWSON J: It is not productive of income so it is not indicative of the loss of capacity.

MR SEMMLER: Yes, that is the essential ‑ your Honour summarises it far better than I, but that is the difference between the two factual scenarios. Your Honours, this has been discussed in some of the literature, particular in Canada, this issue. At best, one could perhaps say that perhaps it is a question of whether damages ought to be reduced for the fact that her time has been freed up, as it were, to do what she wants to do, but that is really not strictly relevant to the issue.

DAWSON J: It just does not tell you anything about her loss of physical capacity.

MR SEMMLER: No. The Court of Appeal assumed that this was saved expenditure and they had, with the greatest of respect to them, no right to assume that on the evidence she had help at home. Disabled people are just as entitled to engage domestic help as people who are not disabled.

BRENNAN CJ: Well, more entitled. It may give rise to a need to have domestic help.

MR SEMMLER: Yes. So that the court should not have concerned itself with what was strictly and essentially a private expenditure. The assumptions which I was referring to earlier, which appear to underlie the reasoning which reaches this erroneous conclusion, would seem to be that the ‑ ‑ ‑

GUMMOW J: They seem be drawn from income tax law, which is part of the problem, I think.

MR SEMMLER: Yes, partly from that, your Honour, and partly also from an assumption, it would seem, that women are responsible for child minding and house cleaning. The reason I say that, your Honours, is that it is ‑ for what it is worth in my experience ‑ unheard of for a court to inquire in the case of a claim for lost earning capacity on behalf of a high‑flying male executive ‑ it is unheard of, one cannot ‑ ‑ ‑

DAWSON J: Did they not split it down the middle here, the expenses?

MR SEMMLER: Well, yes, it was certainly split down the middle but what I ask your Honours to look at is how often does one read ‑ and the answer is never ‑ of a court in assessing the damages for a male employee, who was earning a lot of money, making the inquiry itself, saying, “Well, look, what arrangements did you have for child minding?” They never ask about it.

DAWSON J: But that is because it is wrong, and here where they wrong, they at least went wrong without gender bias. They split it down the middle.

MR SEMMLER: But, your Honours, the fact that they went wrong at all - admittedly, once they had gone wrong, they split it down the middle, that is conceded, but in searching for the reason why they went wrong at all, the answer is to be found in the assumption that when one is dealing with a woman as opposed to a man, you have to look at this kind of consideration.

DAWSON J: No, that was not the assumption, because they did split it down the middle. If he had had an accident, they would have presumably done the same thing. It was wrong - I have not listened to the other side yet. You are saying it is wrong, but it is wrong for fundamental reasons, if it is wrong at all.

MR SEMMLER: Your Honours, I can only summarise what I wish to say on that by saying awards in the case of male plaintiffs are never reduced on the basis that they are likely to have children and needs for house cleaning and child minding.

BRENNAN CJ: The question might be whether males have ever engaged in parenting, post-accident, as this woman did post-accident.

MR SEMMLER: Yes.

GAUDRON J: The first time I knew that parenting was restricted to females.

BRENNAN CJ: It is not.

DAWSON J: It is not now.

BRENNAN CJ: The question is whether it is in fact.

MR SEMMLER: Your Honours, there is an article by a gentleman who is the author of a definitive Canadian text called “Personal Injury Damages in Canada” ‑ ‑ ‑

GUMMOW J: Did they have Arthur Robinson in Canada?

MR SEMMLER: I do not know but it has been referred to. The principle, I think, applies in Canada.

GUMMOW J: Do they? The problem is just fuzzy over there, that is all.

MR SEMMLER: Yes. The author of that text has written an article entitled, “Women’s Earnings and Personal Injuries”, in fact, it is about this case, and he at pages - perhaps if I could take your Honours to it.

TOOHEY J: He suggests, I think, that the language of the Canadian cases is “loss of earnings” rather than “loss of earning capacity”, does he not?

MR SEMMLER: Yes.

TOOHEY J: Whether that makes any difference, I do not know.

MR SEMMLER: Your Honours, at page 22, right at the bottom of that article, the author says that:

To treat child minding as a cost of earning for women is based on the very stereotyping of gender roles which personal injury damages assessment is currently rejecting.

Of course, in making that statement, he does not also point out that in this case, as your Honour Justice Dawson has said, that the Court of Appeal divided the cost between the husband and the wife, notionally at least.

TOOHEY J: Mr Semmler, would it not be more useful though to know what the Canadian courts have said on the matter, if they have said anything, directly on the point ‑ ‑ ‑

MR SEMMLER: On this - - - ?

TOOHEY J: On this aspect?

MR SEMMLER: Your Honour, I do not have any Canadian authorities on this issue. Certainly, I believe from reading this article, it is certainly not the law of Canada that one is entitled to deduct this kind of expenditure. Certainly, the author - he is, I think, the equivalent of Professor Lunz in Canada and, certainly, nowhere in the article does he suggest that there is some difference between Canadian and Australian law in that respect.

TOOHEY J: He does say on page 21 that at one time, at any rate, deduction was made in Canada in what he described as the “much maligned case of Biotin v Newman”, but is that ‑ ‑ ‑

MR SEMMLER: I know of no other case.

TOOHEY J: ‑ ‑ ‑ chronologically, the last time the Canadian courts have spoken on the matter?

MR SEMMLER: Your Honour, I believe that to be the case. There is another authority, copies of which I have. It is not directly on this point, in fact I will hand copies up to your Honours. It is a recent decision of the Supreme Court of Canada, Toneguzzo-Norvell v Savein 110 DLR 289.

DAWSON J: We have got that.

GUMMOW J: I think we already have it.

MR SEMMLER: I have photocopies in any event. Your Honours, it is not really strictly on this point, but it demonstrates an endorsement in that case in the decision of Justice McLachlin delivering the judgment of the court. It demonstrates an endorsement of a ‑ ‑ ‑

GUMMOW J: There is a passage at the bottom of page 294; is that it?

MR SEMMLER: Yes, that is right - at 294 and 295. If I can perhaps summarise it in this way: the court endorses a progressive approach to the assessment of the lost earnings of injured women and it recognises and endorses what the trial judge in that case did, which was to take into account considerations demonstrating the trend to increase and equalise the salaries of women with those of men. That is the only reason why I refer your Honours to that. In effect, if this Court were to reject the approach of the Court of Appeal, it would be at least harmonious with an approach adopted in the Supreme Court of Canada, but in answer to your Honour Justice Toohey’s question, I know of no other Canadian decision that is really directly on this point.

Unless your Honours would like me to take you to the House of Lords decisions I referred to, Lim and Dews, which really confirm that the situation in England is as it is here, as set out in Sharman v Evans, so far as this kind of deduction is concerned, perhaps if it is appropriate I could move onto the other grounds of appeal. Lim and Dews both confirm that the areas of deduction from damages of this kind are limited to those two categories: one is where there is a question of overlapping or double compensation; the other is where the court would be awarding gross rather than net loss if the deduction were not made. That is that the deduction is in respect of money expended necessarily for the purpose of earning the income.

Your Honours, the third ground of appeal relates to the first two, and it is that, even if their Honours were correct in deducting the expenditure in question, they erred in the quantification of the amount to be deducted. The court deducted the amount in question, which was half of what they assumed without evidence to be the cost of domestic help and child minding ‑a rather modest cost in some respects, one might think, $250 a week.

DAWSON J: Could I just stop you for a moment. I am taking you back a little, I am sorry, but if you took a case in which there were two identical women, both employed in American Express, both earning the same amount, both aged 30, and one was unmarried and the other was married with children, in looking at the loss of earnings to indicate on the basis of Arthur Robinson the loss of earning capacity, could you possibly say that the loss of earning capacity of woman 1 was more than the loss of earning capacity of woman 2, they having suffered identical injuries?

MR SEMMLER: No, your Honour, you certainly could not, with respect. The loss would be identical.

DAWSON J: And their expenses of earning income were the same.

MR SEMMLER: The relevance, if there were any relevance, of the fact that one was married with children and the other was not ‑ ‑ ‑

DAWSON J: Would be the vicissitudes ‑ ‑ ‑

MR SEMMLER: ‑ ‑ ‑would be the vicissitudes and it would go to the next - as I indicated earlier, the traditional expression of the formula is loss of earning capacity which is or may be productive of financial loss and perhaps it comes into that second area where the court may have before it evidence which suggests perhaps that ‑ ‑ ‑

DAWSON J: She may give up work.

MR SEMMLER: ‑ ‑ ‑ she may give up work to look after her children.

DAWSON J: That is as far as it goes.

MR SEMMLER: That is as far as it would go, but so far as the loss of earning capacity per se is concerned, it would not make any difference.

DAWSON J: What I am saying is if you could look at these figures to see what the loss of earning capacity is, that is, what the physical disability produces in economic terms, it would be the same really for both.

MR SEMMLER: Yes, identical. In this case, however, even if there was justification for making the deduction, the Court of Appeal made the deduction over the full length of the appellant’s remaining working life, 23.75 years. That is the passage at 343M to Q. It is the passage I quoted earlier, where the court has ignored the appellant’s evidence that she would have only engaged the child‑minding assistance up until the child was old enough to attend a child‑minding centre. That evidence is at 75J to S. Now, admittedly, that may not eliminate the need for domestic assistance, if there was a need, but this was really not a matter that was ever covered in the evidence at the trial and, certainly, if the appellant was only going to engage a part‑time nanny and the assistance of her mother‑in‑law only until the child reached 5 or so, the age of the child minding, it is inappropriate and it is an excessive deduction to project the deduction of this assumed amount over the full working life, 23 or 24 years.

There was simply no suggestion in the evidence in this case that the appellant would have needed to employ, first of all, a full‑time nanny at all - there was no evidence to that effect, although his Honour Justice Handley has wrongly assumed there was such evidence - and, secondly, over that period. There was no cross‑examination of the appellant to suggest that there would be the need for this kind of care for that length of time and, again, in approaching this question of the quantification of the loss, if the deduction itself was legitimate, I would suggest that the error came about because the court assumed something they would not assume in the case of a male, that there would never be this offsetting need for child care over that length of time.

TOOHEY J: Mr Semmler, I am just having a bit of difficulty with an answer you gave to Justice Dawson who put to you the example of two women employed by the one employer, one without children and the other with children, and I understood your answer to be the loss of earning capacity would be the same in each case, though the vicissitudes might be different in one case from another.

MR SEMMLER: Yes.

TOOHEY J: That seems to put “vicissitudes” outside “loss of earning capacity”. Obviously there are certain vicissitudes such as you might get run over tomorrow, that has got nothing to do with loss of earning capacity, but if you are looking at factors which might lead to a person leaving work earlier than might otherwise be the case, does that stand outside loss of earning capacity?

MR SEMMLER: Your Honour, indeed, on reflection - as I understand the authorities what they say is this, that what is to be compensated for is this: the loss of earning capacity in so far as it is or may be productive of financial loss, so that it is an amalgam of two concepts, so that the proper subject matter of compensation is those two combined and perhaps the best way of approaching it in answering your Honour’s question is to look at the example posed by Justice Dawson and say the loss of earning capacity itself is the same in a sense that because of the physical injury they do not have the capacity. The question of whether it is or may be productive of financial loss may be different depending on the evidence and therefore the amount to be awarded for the combination of the two may be different depending on the evidence.

BRENNAN CJ: Why should it be? Why should there be any difference in that situation if a woman choses not to work because she has domestic responsibilities and places the value of those domestic responsibilities, so far as she is concerned, at the same level as her earning capacity? Why should not there be compensation on the same basis?

MR SEMMLER: Your Honour, I would respectfully suggest that, indeed, there probably should be, although I do not know that that is a question that has been explored in this country.

BRENNAN CJ: No, I am not sure that it has.

MR SEMMLER: But certainly, in our respectful submission, a value should be put upon the time spent in this kind of activity just as in cases such as Van Gervan v Fenton and Griffiths v Kerkemeyer, a commercial value is put on and the commercial cost is awarded to injured plaintiffs. In the Cooper-Stephenson article that I have referred your Honours to, there is a discussion of the notion that the time spent in performing this kind of domestic activity itself has an economic value.

It is taken up also in another article that has been referred to by Ms Graycar in the Torts Law Journal, talking about putting an economic value on this kind of activity. So that from that perspective, my answer to your Honour the Chief Justice’s question would be that, in principle, there is no reason why there should be a difference. In effect, a court should be prepared to recognise the value, in terms of earning capacity, in economic terms, of doing that work just as much as the value of working in what is described as the paid work force.

BRENNAN CJ: I have no difficulty with that notion, I must say, for myself, but the difficulty that I do have with this case is the other aspect that you have not directed any argument to, and that is the ability consequent upon the giving up of work and the earning of income, to save expenditure ‑ whether it is voluntary expenditure, optional expenditure, whatever.

MR SEMMLER: Yes. Your Honour ‑ ‑ ‑

BRENNAN CJ: You see, in this case there is evidence that she did not engage a nanny, full or part time, but she did engage housekeepers. Now, it may be that she engaged housekeepers as a direct consequence of her injuries, in which event the cost of those housekeepers is recoverable. I am not saying there is evidence of them, I am saying, in principle.

MR SEMMLER: Yes.

BRENNAN CJ: But if she was able to and chose to save herself expenditure on the nanny, why is her capacity to do that not to be taken into account?

MR SEMMLER: The only way in which it could be taken to account, in my respectful submission, would be by way of reduction of the damages for lost amenities, lost enjoyment of life, because, in effect, she is able to engage someone to do things which she otherwise would not have done and would not have wanted to do, so that she suffered less loss of enjoyment of life in consequence.

DAWSON J: But what it does not do is indicate loss of earning capacity, because if you take the two women situation, the loss of earning capacity, that is what they are capable of earning, is the same.

BRENNAN CJ: Yes, I agree.

GAUDRON J: And is the situation any different from an injured male who has lost his earning capacity, but is now able to paint the house in the time available to him and thus save expenditure on employing a house painter every five or six year. Certainly that is not taken into account for the males, ordinarily.

MR SEMMLER: No, your Honour, and that is ‑ ‑ ‑

BRENNAN CJ: Why is it not taken into account?

MR SEMMLER: There is no reason, in principle, your Honour, why it could not be, or indeed should not be, in the appropriate case, if the evidence is there, that although the male makes a claim for loss of $300 a week from his work, nevertheless, in reality he has and will in the future use the time made available by reason of the fact that he cannot do the work, to do things around the house that have an economic value and that he otherwise would have spent money on. In principle there is no reason why that should not be taken into account in some way.

BRENNAN CJ: What is the difference between that then, and the present case?

MR SEMMLER: First of all, there is no evidence in this case that this appellant effected that kind of saving.

BRENNAN CJ: Well, she did not engage a nanny.

MR SEMMLER: No, but there is no evidence that through her labours at home she was, analogously to the situation of a man doing his own painting, that she was saving herself money. There is no evidence of that.

BRENNAN CJ: She saved herself the cost of a nanny.

MR SEMMLER: That was not a subject of evidence, either. Because this issue was never raised - there was evidence that she utilised her mother‑in‑law to do things in the way that she anticipated in her evidence she would have done had she remained with American Express.

GAUDRON J: The fact of the matter is you just do not take account of how money is expended. That is the first ‑ ‑ ‑

MR SEMMLER: That is right. That is the principle, indeed it has been ‑ ‑ ‑

GAUDRON J: It is a personal choice as to how earnings are expended.

MR SEMMLER: Yes.

DAWSON J: Unless it is necessary to earn the income.

MR SEMMLER: The way I have put it in the written submissions is that it was her intention to use her time during the day to work, to obtain fulfilment from work as an executive, which she clearly enjoyed very much. It was her choice to do that and not to spend her free time at home doing what others would regard as equally worthwhile work - looking after a child or children and keeping the house in order - but that was her choice.

DAWSON J: If she had had a grandmother to look after the child, would you say her loss of earning capacity was greater because of that?

MR SEMMLER: No. That is the test, and the answer to that question demonstrates the error.

This issue that your Honour the Chief Justice has raised is discussed in the Cooper‑Stephenson article at page 23. At the top of page 23 the author says:

the question is whether in the award of pecuniary loss as a whole the value of time which would otherwise not have been available should be set off.

The author discusses the theoretical considerations that bear upon that approach. He concludes in the end that it is not clear that the plaintiff in this case is a “category (c)” person at all. She may more closely resemble a “category (b) person:

one who is largely “disabled from both earning and homemaking”.

The author addresses that very issue that has arisen in your Honour’s mind.

Ground 3 of the grounds of appeal is, as I have already indicated, in relation to the quantification; it is relatively straight forward. It is that even if the deduction were justified it was too large. There was no cross‑examination about it, and it ought not to be allowed on that ground, also.

Grounds 4 and 5 of the notice of appeal go to the issue of the reduction of the award of damages for lost earning capacity on account of vicissitudes. The grounds upon which this reduction is challenged are that it was erroneous for their Honours to substitute 28 per cent as a deduction for the vicissitudes of life, and in doing that there was an error in failing - in regarding certain assumptions that the trial judge had made on the evidence as not being borne out, for instance, the probability that the appellant would have gone the next step up the ladder, which was to become a vice president at American Express.

TOOHEY J: Was it a deduction or an allowance for vicissitudes of life in the sense in which that is ordinarily done in the assessment of damages? If you look at line 3 on page 344, it speaks of “a fair allowance for such vicissitudes”, which seems to link it with the question of future economic loss.

MR SEMMLER: Yes. Your Honour, it is not clear from what Justice Handley has to say whether he is including within that 20 per cent what is sometimes referred to as the usual deduction for vicissitudes.

TOOHEY J: Those deductions are sometimes made from the end result, as it were. You end up with a figure ‑ ‑ ‑

MR SEMMLER: And it is reduced.

TOOHEY J: You reduce it by 10 per cent or 15 per cent or whatever it might be, but this seems to be a more specialised form of deduction for vicissitudes.

MR SEMMLER: Yes. Your Honour, if it is the case that his Honour has not included that category of usual or ordinary reduction, in our respectful submission, it does not really matter because the fact is, the trial judge analysed in real detail the various positive and negative considerations bearing upon the future so far as this appellant was concerned, and it is our respectful submission that his assessment of 5 per cent ought not to be interfered with, because he took into account those very matters that your Honour Justice Toohey has referred to as the ordinary deductions. Whether or not the Court of Appeal did that, it does not really matter.

TOOHEY J: Perhaps not. I think it is fairly clear that they did it in relation to future economic loss, because if you look at page 343P, there is a figure of $571,320.34, and then there is the discussion of vicissitudes that follows and a reduction, an end figure of $411,350 for future economic loss. I have not done the mathematics, but it rather looks as if that is the way in which vicissitudes was approached, which is a somewhat unusual way, I think.

MR SEMMLER: Yes. It is unusual, your Honour, and one could - and, indeed, I believe my learned friend, Mr Barry, will argue - justify what was done by the Court of Appeal on other grounds, that is, that she had a vulnerable neck and there were the vicissitudes of life that should have been taken into account but, in our respectful submission, the trial judge’s approach was correct. If you analyse his own detailed analysis of the possibilities for the future, he takes into account these things that are normally taken into account in these cases. Might I hasten to add, this notion of ordinary vicissitudes is not something that has been universally accepted, certainly not in New South Wales and, indeed, even in this Court, Justice Windeyer on many occasions in Bresatz v Prizibilla and other cases, criticised the approach adopted by some judges that ‑ ‑ ‑

GUMMOW J: They are always pessimistic.

MR SEMMLER: Yes, that assumes that life is always going to be ‑ ‑ ‑

TOOHEY J: A sort of a Mr Micawber really.

MR SEMMLER: Yes, and, your Honours, might I respectfully suggest that that approach, particularly in a case where you ‑ ‑ ‑

TOOHEY J: I retract that, because he always thought that something good was going to turn up.

MR SEMMLER: Yes. That was Justice Windeyer’s approach. He took the view, “Well, why should we assume that there’s this ordinary reduction”, and even if you leave that approach to one side, it really always has to be a question of analysing the evidence, and the evidence in this case, as his Honour the trial judge acknowledged, was very favourable in respect of certain considerations that could have meant a significant jump or increase in the amount on the basis on which he made his award.

Two factors spring to mind. One is the fact that the appellant acknowledged - or, when she was asked about this, how long she would have worked. She said, “Well, to age 60 or as long as I could”. She testified that she loved working, it was her life. She had come a long way from her humble beginnings in, I think it was Quirindi. She had done well in this organisation and wanted to do better and work was a very big part of her life.

Now, his Honour only allowed a loss of earning capacity projection to age 60, whereas in fact evidence was given that there was no restriction in American Express; 60 was not a cut-off point. Indeed, the evidence was she could have worked as long as she felt able to do so and no doubt as long as the company felt that they were getting some value from her services. That was one factor. The other factor was that there was no suggestion in the evidence in this case that this appellant had any of the kinds of negative vicissitudes operating upon her that might, in other cases, cause a trial judge to reduce the amount that she would otherwise be awarded for lost earning capacity. There was no evidence that she was likely to burn out, as their Honours in the Court of Appeal assumed; there was no evidence, indeed, that the pressure of the position was something that caused her problems. Indeed, the evidence of the customer services manager, Ms Magarry, was to the effect that she seemed to be coping well with the pressure of the position. The appellant herself testified that she did not consider that the job was emotionally demanding.

His Honour found that it was quite acceptable that she would have worked for as long as she could, given her background and her high motivation to succeed as a business woman, and he took the view that, given her substantial salary package, which he assessed as $1453 net, as at the date of trial, it was not very probable that she would simply retire, and indeed that, in logic, had a lot to commend it as a consideration. He took the view that it was very probable that she would work at least to age 60.

His assessment that she had that intention was partly based on her demeanour. That is apparent from page 302 of the appeal books. He had the advantage of seeing her in the witness-box for several days. Your Honours, in relation to this so‑called ordinary deduction for vicissitudes, it is not universally accepted. Indeed, Professor Luntz in his book takes the view that 5 per cent ought to be a reasonable approach to it rather than 15, which is sometimes said in the authorities to be the ordinary reduction.

The Court of Appeal in increasing the deduction for vicissitudes, as I indicated earlier, took the approach that in respect of things like the likelihood that she would have been promoted, took the view that this could not be established on the evidence and then did not seem to reflect the less than 50 per cent possibility that that might have occurred in the overall assessment for vicissitudes. Our submission in that regard is that this was contrary to the approach that this Court has laid down as the proper approach to the assessment of the likelihood of future events occurring in cases such as Malec v Hutton and more recently that approach has been extended to other situations and endorsed in Sellars v Adelaide Petroleum, whereas the trial judge indicated in his judgment that Malec v Hutton required this approach of assessing the likelihood of events occurring and then he did so with a great deal of precision. This is at 301. He refers to this Court’s decision in Malec v Hutton.

Then at pages 302 to 305 he goes into all of the vicissitudes and, indeed, it seems he has covered the field, perhaps with the exception of strikes and things of that nature, although he does not specifically refer to them but one would assume that in an executive position with American Express that was hardly likely to be a factor that would impinge upon her ability to work, but all of the other factors that are traditionally referred to by courts as things that have to be taken into account his Honour has, indeed, taken into account and he then reached the conclusion at page 305Q that 5 per cent was the appropriate deduction.

The Court of Appeal placed significantly greater emphasis on the unfavourable possibilities and, as I have indicated, they adopted the approach which Justice Windeyer in this Court in Bresatz v Przibilla and General Motors v Moularas has questioned, which is to necessarily assume that the future for everyone is bleak to the extent of 15 per cent. That is the percentage often used in New South Wales. Your Honours, the genesis, again, of the error that their Honours ‑ ‑ ‑

BRENNAN CJ: There are some authorities, are there not, that Courts of Appeal ought not to interfere with discretionary judgments of that kind in the assessment of damages?

MR SEMMLER: Yes, your Honour.

BRENNAN CJ: What is the best authority for that?

MR SEMMLER: In Moran v McMahon in the New South Wales Court of Appeal the various authorities are reviewed. Indeed, I believe that some of the fundamental authorities on this matter are referred to by the respondent to this appeal. In Wilson v Peisley 7 ALR 571, at 575, your Honours, that was a similar situation in that case to that involved in the present appeal. At line 15 on page 575 they talked about the general entitlement to set aside the trial judge’s award if it was:

so disproportionate to the nature and consequence of the injuries received as to go beyond the range of the exercise of a sound discretion in the awarding of damages......In a case where there is no challenge to the findings made by the trial judge, the appellate court should accept them.....Further, inferences from those facts which could properly be drawn in a sense favouring the maintenance of the judge’s award should be accepted and used by the appellate court. It is not permissible, in my opinion, for the appellate court first to consider for itself, even upon those facts and inferences what it would award in the circumstances and then compare that sum with the judge’s award.....Certainly the appellate court cannot in any case make its own assessment upon its own view of the evidence, or upon inferences drawn from the accepted facts in a sense other than a sense open to the trial judge, which favoured the judgment, and use that assessment as the basis of a decision as to the adequacy of the judge’s assessment.

What happened in this case was that, for instance, on the issue of the trial judge’s inference that he found it probable that she would have been promoted to the position of vice‑president, he inferred that that would have brought with it increased remuneration and benefits, but the Court of Appeal rejected that inference. They rejected this idea. They said there was not evidence to make that inference and his Honour was not entitled to do so.

TOOHEY J: You mean, not entitled to draw an inference as to promotion or not entitled to draw an inference as to the financial consequences of promotion?

MR SEMMLER: The latter, your Honour, that is what they specifically said, but as to the former, his Honour had found that it was quite or very probable that she would have been promoted. His Honour Justice Handley in the Court of Appeal dismissed that and said, “That finding was not justified on the evidence” and then does not appear to have taken into account the possibility, if it was less than a probability, that that eventuality would occur, because the evidence was all one way.

The evidence in this case was to the effect that this appellant had made extraordinary progress in a short space of time and her goal was only one step further up the ladder, she, having been promoted four times in three years.

Admittedly there was uncertainty in the evidence as to when she could have expected to achieve that goal, and as to the precise nature of the benefits, but his Honour was, in our respectful submission, amply justified in drawing the inference that it would have been a valuable, economically, promotion for her.

In the case of Moran v McMahon that I referred your Honours to ‑ I am not sure that it is on the list of authorities ‑ it is a Court of Appeal New South Wales decision, (1985) 3 NSWLR 700. The issue of the appropriate discount for vicissitudes is discussed at page 706. The court talks about “conventional” rules at 706C:

The first is the conventional discount of 15 per cent from the award of general damages for the vicissitudes of life ‑

perhaps the use of the expression, “general damages” is not appropriate but, in any event ‑

Why there should be any conventional discount, and why it should be 15 per cent regardless of the infinite variety of chances which may befall an injured party, has never been adequately debated.

Your Honours, our respectful suggestion would be that this is an appropriate case to ventilate that issue.

GUMMOW J: Well, apart from ventilating it, what should we do about it?

MR SEMMLER: Your Honours should restore what the trial judge did in that his deduction of 5 per cent was eminently appropriate and rationally justifiable on the evidence, but the approach of the Court of Appeal, on the other hand, is exemplified at page 319 of the appeal book.

GUMMOW J: You are not saying that there should be no conventional discount, that is what I - - -?

MR SEMMLER: With respect, your Honour, yes. In our respectful submission, the notion that right across the board in cases involving working people who are injured, the notion that one can assess the future, and assess it across the board negatively and that that should be the starting point, or the ordinary reduction, is not founded on fact; it is not founded on experience of life. Everyone’s experience of life is different. The future holds different things for different people, and the approach should not be to assume that the future necessarily holds bad things for each plaintiff and then to have to work from that starting point. Indeed, if there vicissitudes are to be taken into account, and that would be appropriate, they ought to be taken into account only on the basis of the evidence in each case. In this case at page 319U, Justice Clarke, in dealing with the vicissitudes in the course of argument:

Under the heading of vicissitudes, I simply remark for some reason the plaintiff in this case, because she had undertaken a spinal fusion in the past, was clearly assessed by his Honour as an appropriate person to have less than the ordinary 15 per cent averaging for vicissitudes, a process by which his Honour persuaded himself he reduced it to 5 per cent. If his reasoning were correct then we would all be better off with a spinal fusion and approach the future with more confidence. That must be a nonsense.

Now your Honours, the fact is that, with the greatest respect to his Honour, it was not a nonsense. On the facts of this case the possibilities of increased remuneration vastly outweighed the possibilities that in the future events might occur which would diminish the loss of earning capacity to the extent that it might be productive of financial loss. The two most important considerations from a positive perspective were, first of all, the overwhelming likelihood that she would have been promoted and secondly, the real chance, given her history, that she would have worked beyond age 60.

The countervailing considerations included the fact that she had had a previous injury with a spinal fusion, and I believe Mr Barry may say something about that, but the fact is, that was dealt with in detail by his Honour, there was a lot of medical evidence about it. Their Honours do not seem to have referred to that in their judgment. In justifying the 28 per cent, the Court of Appeal does not seem to have taken that into account any more than the trial judge did, but in any event, the fact was the earlier injury had been in 1972, she had had a very good result from that injury, she had got back to water skiing, to playing squash, to a whole range of physical activities, and the treating specialist, a Dr Bryan, described by his Honour as a conservative doctor in his experience, had taken the view that it would be speculation to say that at any point in time, absent the 1986 accident, she would necessarily have had symptoms in the future which would have disabled her and indeed, even Dr Bodel, the high point of the respondent’s case on this issue, said that with appropriate modification she could continue, even if symptoms had occurred.

So that their Honours in the Court of Appeal have given insufficient weight to favourable factors. They have dismissed the notion that she might have been promoted without, in accordance with Malec v Hutton, allowing for the less than 50 per cent chance, if that was their view, that indeed it might have occurred. Unless the chance was so low as to be regarded as speculative, Malec v Hutton dictates that the Court of Appeal should have taken that chance into account when assessing the damages. Now, on no basis, by no stretch of the judicial imagination, could it be said that the chance of this appellant being promoted was such as to be regarded as speculative.

Indeed, the contrary was the case. It would be speculative to suggest that she would not have been promoted given her rise within the organisation. His Honour’s finding - and he had the benefit of hearing other witnesses and the appellant - that he was quite satisfied the goal was well within her ability. He found it quite probable - this is at 305M - that her career path would have led her to a vice presidential position. He comfortably inferred, “this probability would bring increased financial rewards”. American Express was, “an organisation well and truly oriented towards equality of the sexes.” His Honour found at 304: it was a very progressive organisation and there was a tendency within it to promote from within rather than to recruit people from outside.

The appellant testified at page 49H that the organisation encouraged promotions within so that people had a career path when they joined so that there were places for them to go. She was clearly one of those people, who from relatively humble beginnings, was going to those places.

Justice Handley seems to have reasoned from an assumption that promotion in her career and maternity were mutually exclusive. Again, looking at page 319P of the appeal book, volume 2, in the course of argument, Justice Handley said this - this was in the course of exploring with Mr Shore, counsel for the appellant in the appeal:

there seems to be some continuing relationship. What I was really seeking to find out from you and get your help was whether she was asked whether the promotion began through one door and maternity and that door through another, which door she would go through if uninjured.

The assumption in his Honour’s mind, from that statement, appears to be that promotion and maternity were mutually exclusive. That assumption is reflected in the discount which he makes on behalf of the court of 20 per cent of the amount awarded by the trial judge for lost earning capacity, 20 per cent for the chance that she would either be unable or unwilling to continue in her work. The overall deduction of 28 per cent which the Court of Appeal made, assumes that the appellant would not have worked for one year in every three and a half years. In the case of this appellant, who, after this accident which ultimately caused her to leave the work force - a job that she really enjoyed - she had only taken, I think it was four days off; this woman, who after the birth of her child had only taken, I think, three or four months off, his Honour Justice Handley and the Court of Appeal assumed that the vicissitudes were so negative that in the future she would not work for one year in every three and a half years from the time of the trial to age 60. Given the evidence which is adequately set out in his Honour’s reasons, that degree of reduction for adverse vicissitudes was simply unwarranted; it was contrary to the trial judge’s meticulous findings about the possibilities and probabilities, and it was contrary to the evidence.

The Court of Appeal in particular took away 8 per cent of the award for the lost earning capacity in the future on the assumption that the appellant would be two years out of the work force having children. The reality was that when she had the only child which had been born by the time of the trial she had only taken three months away from the part‑time work that she was doing in her brother and her husband’s sports store business. That is at volume 1, 71P. Rather than one year, she had taken three months off, despite the fact that she had the disabilities which she had.

She had only one child at the time of the trial. She was 36. She and her husband had talked about the possibility of a second child but nothing definite clearly had been arrived at in that regard. The Court of Appeal, in our respectful submission, erroneously treated the birth of a second child as a practically certain negative contingency. In any event, even if the child had been born at some stage in the future while she had remained at American Express, there is no certainty that she would have taken a full year off for that child, indeed, bearing in mind she had only taken three months off after the birth of her child in August 1991, such an assumption would appear to be contrary to the facts as they were known at the time of the appeal.

The deduction for a full two years of maternity leave overlaps with the deduction for child‑care expenses. Their Honours have not taken into account the fact that they have reduced her damages by 8 per cent to cover the two years off away from the work force for having two children, one of whom had not yet been born or even conceived; secondly, that deduction was in addition to a deduction of the cost of child care for 23.75 years, a full‑time nanny, which itself was contrary to the evidence.

In a case in New South Wales, Burden v Rath (1986) Aust Torts Reports 80-050, the President of the New South Wales Court of Appeal dealt tangentially at least with this question of how one goes about assessing damages for lost earning capacity in the case of female plaintiffs of child‑bearing age and his Honour then cautioned about the need for approaching the problem with some degree of care.

His Honour said, in effect, that -one is entitled - this is at 67,948. His Honour recognised that it was permissible to take into account the possibility that female plaintiffs of child‑bearing age might in the future be away from the work force for having children, but he recognised and at 67,948 he said that the court must discount that possibility by other considerations such as the possibility that it might not occur, that she might not have the child, she might continue to work, things of this nature. This area generally, your Honours, has not been the subject of a great deal of judicial analysis, certainly, not at a high level in this country ‑ ‑ ‑

DAWSON J: It is not really capable of analysis, is it?

MR SEMMLER: No, your Honour, but certainly assumptions which are contrary to life, social morays in late 20th century Australia, should be the subject of correction, because what happened in this case was that, in effect, the Court of Appeal, contrary to what the judge had found, contrary to the evidence, took the view that this appellant, despite her record, her attachment to the work force, was far more tenuous than she said it was, and than the judge found that it was and indeed, all the evidence suggested that it was.

The Court of Appeal took the view that considerations which would never be taken into account in the case of a very successful male, be he a barrister or an executive or whatever, who has had an impressive work record, the Court of Appeal suggested that considerations such as the possibility of the career trying the love and patience of the spouse, that kind of consideration ought to be taken into account as a significant factor in reducing the award of damages for lost earning capacity in the future.

That proposition, not only was it not borne out by the facts of this case, indeed the contrary was the case, the judge had found that the appellant’s husband was extraordinarily supportive. The appellant had testified that when she was asked about, “Well, if you’d gone on an overseas posting as an adjunct to this promotion, had you discussed the question of going overseas with your husband and the possibility of separation?” Her answer was, “Yes, we had discussed it and his answer was, ‘Whatever is necessary, I’m with you’”, in effect.

His Honour the trial judge drew on that kind of answer and said he was extraordinarily supportive, but the Court of Appeal, on the other hand, without any evidence at all to the contrary, suggested that the risk that her demanding career might have tried the love and patience of her husband was so great that this, combined with other factors, such as a suggested risk of burnout when the evidence was to the contrary, that she was coping well, she did not find it emotionally draining, that those factors combined justified a reduction of 20 per cent of the award which, in dollar terms, was a very substantial amount of money.

It was contrary to the evidence and it displayed a notion, an assumption, which is contrary to what I would respectfully suggest is the recognised social trend, which is that women today in this country, as well as men, can have a very strong attachment to the work force, not so weak that it will be severed by the stresses and responsibilities of life as an executive, and in a case of someone who has demonstrated by her evidence and by her work history such a love of her work ‑ ‑ ‑

DAWSON J: We are going down the same path.

MR SEMMLER: Yes, your Honour. So our submission finally is that this woman had a classic successful male work history, but despite this, she was still treated as someone who, in effect, was unable to cope with the competing considerations of the work place and the home.

Putting it squarely, your Honours, our submission is that the reasoning underlying the decision taken by the Court of Appeal demonstrated an outdated assumption about this woman’s role and family responsibilities contrary to the evidence that was available in the case.

GUMMOW J: And which had been accepted by the trial judge which seems to be the case at point.

MR SEMMLER: Yes, your Honour. Viewed overall, their decision shows a lack of understanding of the changes which have taken place in the work force to accommodate women and men with family responsibilities. So, our submission is, your Honours, that the judgment of the trial judge, as to loss of earning capacity, should be restored. The calculations attached to the outline of submissions exclude the superannuation deduction, which is not the subject of this appeal, and it is our submission that that judgment, with that exclusion, should be restored.

TOOHEY J: What is the position regarding costs, Mr Semmler?

MR SEMMLER: We would seek the costs of the appeal.

TOOHEY J: What happened in the Court of Appeal?

GUMMOW J: There was a Suitor’s Fund certificate?

MR SEMMLER: Yes, there is a Suitor’s Fund certificate.

TOOHEY J: That assumes that there was an order for costs made against your client on the appeal.

MR SEMMLER: Yes, your Honours ‑ ‑ ‑

TOOHEY J: I am sorry, I am not making myself very clear. It is just the fact that part of the judgment below is not under attack.

MR SEMMLER: Yes, the issue of superannuation is not under attack but, in our respectful submission, that is only a small part of the overall result. It is a difficult situation, your Honours. In our respectful submission, the lion’s share, as it were, of the appeal, if your Honours accept what we put forward, will have the result that the Court of Appeal is recognised as having erred in the most substantial aspects of the claim and, in our respectful submission, the appellant should be awarded all of her costs.

BRENNAN CJ: Here?

MR SEMMLER: Yes.

BRENNAN CJ: And in the Court of Appeal?

MR SEMMLER: Yes.

GAUDRON J: Mr Semmler, if the Court were minded to grant you something less than all of your costs in the Court of Appeal by reason of the superannuation contribution, what affect would that have on the certificate under the Suitor’s Fund?

MR SEMMLER: Your Honours, I think that the amount allowed under any certificate under the Suitor’s Fund Act is not going to be substantial in any event; it probably will not in any way reflect the actual cost to the appellant in this case.

GAUDRON J: But would you lose the certificate?

MR SEMMLER: Presumably we would. If we were awarded a substantial part, although not all, of our costs, there would be no claim made under the certificate. I think that is the answer, your Honour.

GAUDRON J: And would that be more beneficial?

MR SEMMLER: Undoubtedly. Yes we would certainly seek - we are not really interested in the Suitor’s Fund certificate because the reality is, it does not mean a lot financially to the appellant. Unless there is anything further, your Honours.

BRENNAN CJ: Thank you, Mr Semmler. Mr Barry.

MR BARRY: Can I hand up to your Honours an outline of submissions.

BRENNAN CJ: When was it decided to concede grounds 1,2 and 3, Mr Barry?

MR BARRY: When the submissions were being prepared last week.

TOOHEY J: So, in effect, we have been entertained by Mr Semmler for some time, what, on matters that are not really in issue?

MR BARRY: No. your Honours may come to the view that the Court of Appeal was correct, notwithstanding the concession, but I do not wish to say anything about it.

TOOHEY J: I do not follow that. Do you mean that you would seek to persuade us that overall the sum arrived at by the Court of Appeal is one that should not be disturbed by this Court?

MR BARRY: Yes, your Honour.

TOOHEY J: Although it is accepted that, in arriving at that sum, the Court of Appeal erred in particular respects?

MR BARRY: Yes, your Honour. Some negative to the appellant, some positive to the appellant. The positive ones were to use the future cost of child-minding expenses as an offset against the award for loss of earning capacity. Our submission is that we concede that that is wrong. At best all that is is a demonstration that there was a residual earning capacity, notwithstanding the injury, but nevertheless the Court of Appeal, with respect, had they identified another error of some importance in the trial judge’s finding of fact, and given it proper weight, they would have come up with the same result at which they ultimately arrived.

BRENNAN CJ: How would that be?

MR BARRY: Because, what their Honours in the Court of Appeal failed to take into account when assessing the vicissitudes is the evidence of the treating specialist accepted by the trial judge, that the appellant had a vulnerability to injury as a result of the spinal fusion or cervical fusion that she had in 1974, which may have produced the result, at any stage during her life, that she could have ended up in the same position that she ended up in any event.

TOOHEY J: But it is the position, is it not, that by reason of the concession, this Court is not asked to determine those matters which were urged by Mr Semmler in support of grounds 1, 2 and 3?

MR BARRY: That is so, your Honours.

TOOHEY J: We take as our starting point, apparently, that the Court of Appeal erred in that respect, or it is accepted that the Court of Appeal erred in those respects.

MR BARRY: Yes, your Honour.

BRENNAN CJ: Is it right to say that the grounds 1, 2 and 3 were the subject of defence on the application for special leave?

MR BARRY: Yes, your Honour.

GUMMOW J: Only one side was called on, was it not?

BRENNAN CJ: Yes, that is right. Only the defence was called on ‑ is that not right?

MR BARRY: That is right. It was thought that the existence of that error was, of itself, a ground for granting special leave.

TOOHEY J: The appeal could have been shortened, presumably, by the court being told at the outset that no challenge was to be made to grounds 1, 2 and 3.

MR BARRY: I thought I had indicated that to my learned friend, but perhaps I did not do so clearly enough and perhaps the appropriate course might have been to give him the outline of submissions in advance of today.

BRENNAN CJ: No doubt that will be a matter which might have to be taken into account in determining the question of costs, in any event, Mr Barry.

MR BARRY: Yes, your Honour. But, I repeat, it is still open to your Honours to find that, notwithstanding the concession, the approach taken by the Court of Appeal was right in what they did.

BRENNAN CJ: The approach was right, or the result was right?

MR BARRY: The result was right, but your Honours may find that, contrary to the concession, the approach was right. It is simply that we concede that it was not. It would be, with respect, open to your Honours to find that, notwithstanding the concession, as a matter of determining what the appropriate law is, it was correct for their Honours to approach the matter in the way they did.

DAWSON J: But we are not going to embark on a frolic of our own.

MR BARRY: Your Honours, it is a question of whether the principles which the Court of Appeal acted on are correct.

BRENNAN CJ: But the proposition comes before this, that the Court of Appeal’s decision is, by concession, vitiated by an error of principle, so that the question then is, are you able to defend the Court of Appeal’s decision in its end result? That is all the question is before us, is it not?

MR BARRY: That is so.

TOOHEY J: It does not require this Court to give its endorsement, or otherwise, to the matters argued in support of grounds 1, 2 and 3.

MR BARRY: Yes, with respect, I agree with what your Honour says.

BRENNAN CJ: You had better proceed.

MR BARRY: May I then identify, your Honour, what our submission is, and it is, if I could move ahead slightly, simply to observe that what this appeal turns on is the question of whether or not an appropriate allowance was made in relation to vicissitudes. Our submission is that the principles applicable to determining loss of earning capacity are that if it be established that there is an interference with earning capacity, that is the first step. The second step for a court to determine is to what extent that interference is, or may be, productive of economic loss. Then, at that stage, the court arrives at an assessment.

There are then two further steps that need to be undertaken. The next is to determine what the residual earning capacity is. To take your Honour the Chief Justice’s stockbroker example, the fact that the stockbroker is able to perform the same work that the manager is able to perform is evidence that there is a residual earning capacity in the stockbroker at least equivalent to the performance of work as a station manager.

The final matter for which allowance needs to be made is the question of vicissitudes and our submission is that the Court of Appeal got the result right. In effect they awarded a discount for vicissitudes of 38 per cent or, to put it in ‑ ‑ ‑

DAWSON J: Twenty-eight.

MR BARRY: No, your Honours. If your Honours include the child‑minding expenses as part of the vicissitudes then it constitutes a 38 per cent reduction on what the position would have been if there had been a straight multiplication of the wage loss at time of hearing up until age 60.

TOOHEY J: Are you not getting close to a situation in which a notice of contention ought to have been filed? In other words, are you not seeking to support the judgment below, not merely in terms of the end figure but by reference to considerations which you say should have been found more favourably to your client?

MR BARRY: Yes, your Honour.

GUMMOW J: Are you not seeking to attack the primary judge’s decision on grounds that were not utilised in the judgment of the Court of Appeal?

MR BARRY: No, your Honour.

GUMMOW J: Were they put to the Court of Appeal?

MR BARRY: Yes, in the particular passage that was identified by my learned friend in the course of argument where the question was raised by Mr Justice Clarke about if what the trial judge had decided was correct, that having had a spinal fusion she was now less likely to be incapacitated through injury, that his Honour described that, with respect, correctly as a nonsense, because what the trial judge needed to determine was what she would have been like in any event given the 1974 neck operation and that was a question that needed to be determined as a part of the analysis of the vicissitudes, not as part of an analysis of how she was at time of trial given the motor vehicle accident.

That was the error which led the trial judge to assess loss of vicissitudes at 5 per cent and the error which the Court of Appeal was seeking to correct, but in correcting it they used what we have conceded is an inappropriate yardstick, namely, that what she would have expended on child‑minding expenses bears no relationship with interference with earning capacity except that it is some evidence of the existence of a residual earning capacity.

GUMMOW J: But what you would now say as the correct yardstick is that yardstick put to the Court of Appeal ‑ ‑ ‑

MR BARRY: Not in the way that I propose to put it to your Honours.

GUMMOW J: ‑ ‑ ‑ in support of disturbing the primary judge’s decision.

MR BARRY: No, in the Court of Appeal the matter was argued on the basis that the matter which we wish to argue here was a matter that ought to be taken into account by the Court of Appeal, but their Honours declined to do so, it would appear, because they addressed their mind to the issue of degenerative changed but not, if I could put it bluntly, to the eggshell skull point. May I just identify to your Honours the particular section where the error in the trial judge’s judgment which the Court of Appeal was right to correct arose. It is at page 304.

BRENNAN CJ: We had better read your submissions, I think, first. Yes, Mr Barry.

MR BARRY: May I identify, your Honour, the error at page 304. Before doing that I should indicate, your Honours, that Mr Shore has indicated to me that he appeared in the Court of Appeal and tells me that the point which we argue was argued in the Court of Appeal by reference to the Court’s decision in Malec v Hutton. Perhaps the point was put slightly differently than what is put in the outline of submissions.

If put in Malec v Hutton terms, one would say that it was urged upon the Court of Appeal that what should be done is that the quantification for future loss of earning capacity should take into account various matters identified in the outline of submissions and that, in the end, when assessing the probability that the appellant would have worked uninjured until the age of 60, a discount of 50 per cent should have been made to the amount of the award for loss of future earning capacity. Their Honours, of course, made a discount in mathematical terms of 38 per cent.

Your Honours, at page 304D, the trial judge, when dealing with adverse vicissitudes, said:

It is possible that she may suffer further injury. In the words of Dr Bryan she has a spine which is vulnerable to injury. However, because of her now protected lifestyle the probability of this occurrence is low.

As I submitted to your Honours a moment ago, when dealing with that adverse vicissitude, what his Honour should have been concerned with is her vulnerability prior to 1986 motor vehicle accident, not as she was at the time of trial, as his Honour says, “now protected lifestyle”. That, in our submission, was an error which led him to assess the vicissitudes component as too low a figure, namely, 5 per cent.

BRENNAN CJ: What was the evidence of the pre-1986 - - -

MR BARRY: May it take your Honours to it now? Could I just ask your Honours to note on the way through at page 298T, that the trial judge accepted the evidence of Dr Bryan, to which I am about to take your Honours. He said:

I accept Dr Bryan’s evidence. He is a well known and well respected orthopaedic surgeon whose views have always been carefully and conservatively expressed. In this case the evidence of Dr Bryan, who is the plaintiff’s treating orthopaedic surgeon, is most persuasive as to the effects of these injuries upon the plaintiff.

If I may take your Honours to that. The report is at 226J to L. Your Honours will see Dr Bryan’s opinion - and this is his first report - at line K:

I believe that her neck was far more vulnerable to injury because of a previous spinal fusion some years ago when she had a spinal fusion carried out at the level C6/7.

At 227Q, the doctor says, under “conclusion”:

She continues to have trouble as a result of an aggravation of pre‑existing neck problem from the motor vehicle accident.

Your Honours would have noted the reference to the word “aggravation”. At 232M to O, the doctor says this:

She was then involved in an accident in 1986 and from that accident there was serious aggravation of a pre-existing neck problem with pain and stiffness in the neck, with headache and pain extending into the shoulder girdle region.

Dr Bryan was, of course, cross-examined as to what the significance of all of this might have been to her condition had she not been injured in the motor vehicle accident. The particular passage of ‑ ‑ ‑

TOOHEY J: Just before you leave that page, should we go down to the next couple of sentences, namely that:

Before the 1986 accident there had been relatively little physical disability -

MR BARRY: That is what he had said, and in the passage to which I am about to take your Honours, when cross-examined he relied in part upon that state of affairs as being relevant to the extent to which, uninjured, she may have been vulnerable in any event. That, your Honours, is at page 61.

GUMMOW J: Page 61L.

MR BARRY: At page 61 Q to S and your Honours, over the page 62 J to L. It is, of course, the case that the defendant takes the plaintiff as he finds him or her, but if there is a vulnerability which may produce the result, then our submission is that that is a matter which is relevant to the issue of vicissitudes. It was touched on by the trial judge when he identified the various matters, but as I have indicated our submission is that he misinterpreted or misdirected himself as to he way in which he should deal with it. The Court of Appeal identified it in the course of argument and failed to deal with it. Had they done so, then the amount by which they would have reduced for vicissitudes, in our submission, would have been the equivalent to the amount that they otherwise, by an improper approach, reduce the damages. Your Honours, the principle that we would submit ought to have been applied may be found in Wilson v Paisley (1975) 7 ALR 571. At page 574 line 26, the then Chief Justice said this:

Thus, whilst the appellant must pay for bringing out that condition, what he must pay must, in my opinion, justly reflect the fact that that condition was not merely latent in the respondent but that events, not of an unusual or unlikely kind, could and might in the ordinary course of life have evoked that condition had not the appellant’s negligence intervened. The judge included this possibility in the vicissitudes of life which he was bound to bring to account in connection with the assessment of economic loss. In my opinion, he was not in error in so doing.

Your Honour Justice Toohey raised with me the question of her having few problems prior to the 1986 accident and, indeed, there was evidence, in particular at line 30T, that amongst other things in which she engaged, she had engaged in water skiing as one of her recreations that she was able to do, notwithstanding that she had had the spinal fusion and had been relatively untroubled by it for a number of years, but our submission, your Honours, is this, that had an event occurred such as an event of the type that she suffered in the motor vehicle accident, in effect, what is colloquially referred to as a whiplash injury to the neck, in the course of water skiing or as a result of a fall or for any other reason, then her condition in terms of the pain and restrictions it imposed upon her would have been precisely the same as it was as a result of the 1986 accident, a matter which the trial judge failed to give any weight to and a matter which the Court of Appeal referred to in argument but failed to take into account and our submission is ‑ ‑ ‑

TOOHEY J: Mr Barry, I am sorry to interrupt you, but in Wilson v Peisley what was the latent condition?

MR BARRY: It was of a psychiatric nature. Yes, it is referred to at page 572, line 35.

TOOHEY J: Yes, thank you.

MR BARRY: What their Honours in the Court of Appeal should have done, in our submission, is this, that they should have used what has been the convention in New South Wales, whether rightly or wrongly, of a conventional discount of 15 per cent for vicissitudes. Now, the reason why there would be a discount of that order rather than higher or lower is not easy to determine but probably the only explanation for it is that across the board there will be some plaintiffs who will be under compensated to the extent that they will receive a lump sum award of damages for loss of earning capacity yet will in events that may have turned out may well have worked the whole of their life without interruption through sickness, illness, untimely death, unemployment, retrenchment or any other reason, yet there will be other plaintiffs who will die sometimes very shortly after the accident. In respect of the awards made to them, there is over compensation.

So the way in which that issue has been dealt with has been to include a conventional discount of 15 per cent, which may be increased or decreased if particular circumstances of the case would warrant it. For example, in young plaintiffs, if the working years ahead might be 40 or 45 years, one could imagine that the discount would be greater. Someone who had a work history of relatively little employment, the discount for vicissitudes may be much greater than somebody who had a regular history of employment and the like. Whether, your Honours, that is right or wrong, it has been the judgment of the courts, certainly in New South Wales, for a number of years. In the late 70s there was some resistance to it, but certainly for the last five or six years that has been the conventional approach taken to discounting for adverse vicissitudes.

TOOHEY J: Is there a difference in your submission between a latent condition which is unaffected by the accident the subject of litigation but which, in the ordinary course, might some produce incapacity and a latent condition which is affected directly by the accident in question, namely, in this case the aggravation of the spinal condition?

MR BARRY: No, because it goes to vicissitudes, not to capacity. In other words, it is done at the end of the equation, if I could put it that way, rather than on the way through. The approach, in my submission, is that the court starts by assessing whether there has been interference with earning capacity, then looking at whether it has or may be productive of economic loss; then, having arrived at an assessment of those various matters, then stands off and says, “But this is a lump sum assessment of damages. We do it once and for all. When undertaking this task we must allow for the fact that even uninjured, this person may not have continued to work or may have been restricted or the like, and then take into account there”. If, in doing the last step there is an unrelated, if I could put it that way, medical condition which may have been incapacitating in any event, then that is a vicissitude of an adverse nature which would be taken into account. If there is a pre‑existing disability which has been aggravated by the motor vehicle accident then it is in exactly the same position, namely, it is something that may have affected the plaintiff in any event, and is therefore taken into account as part of the calculation of vicissitudes.

BRENNAN CJ: That is a little too broad based, is it not? What one must take into account is the prospect of a post‑accident event which would trigger the florid condition which has been latent at that time, in circumstances which would not give rise to a claim for compensation. In other words, the prospect of a future compensible accident is not something which is to be taken into account in determining a negative vicissitude.

MR BARRY: With respect, your Honour is right and the way that that would work then would be that if it were of a traumatic nature, then the amount that would be allowed, if I could put it that way, in terms of the vicissitude to account for it, would be less than if it were an hereditary condition or a disease process.

BRENNAN CJ: So that in the present case, for example, the triggering by a water skiing accident might be taken into account as a negative vicissitude if the prospect of a triggering by a compensible motor accident should not.

MR BARRY: That would seem to follow, but I suspect there may be something further to it.

BRENNAN CJ: I would be assisted if you could discover what that something further is.

MR BARRY: It would be that when assessing the damages against the particular tortfeasor then the assessment needs to be made once and for all and to compensate the plaintiff by a verdict against that particular tortfeasor for the damage that tortfeasor has caused. It would seem to be wrong in principle to take the view that the amount of the verdict against the tortfeasor who was before the court ought to be increased or decreased because of the possibility of a compensible rather than non‑compensible injury otherwise occurring in the future.

BRENNAN CJ: Is it not because if you are endeavouring to discover what the amount of the damage is that has been caused by the tortfeasor, what you are seeking to do is to discover that which, but for the accident, would have flowed to the plaintiff?

MR BARRY: Yes.

BRENNAN CJ: And in the event of a water skiing accident, for example, nothing would have flowed to the plaintiff as the result of the disability, but if there had been a compensable accident, then what would have flowed to the plaintiff is the same as if that accident had never happened.

MR BARRY: Except that the putative second accident might otherwise extinguish any damage that we know has actually occurred in the action that has been brought.

BRENNAN CJ: That depends on how you assess the vicissitudes. That puts us into a circle in that event.

MR BARRY: Yes, it does, your Honour. In this case, our submission is that it would have been appropriate to take into account the ordinary adverse vicissitudes, a figure of say 15 per cent, which is being in the nature of a conventional figure and then add to it the various matters which have been referred to in the outline of submissions. The ordinary degeneration which is a different point from the eggshell skull point, the evidence was that there had been degeneration as a result of the 1974 accident up until 1986 but it had not produced any symptoms. Even if there had not been a subsequent trauma, the process of degeneration was one that would have continued and it may have shortened the appellant’s working life in any event.

TOOHEY J: But once you move into the area of a degenerative condition, you are talking about something quite different. I mean, that is something that doctors can assess to a greater or lesser extent, but we are not talking about something in the present case which is capable of assessment. It is really a question of probabilities, is it not, or possibilities?

MR BARRY: Our submission would be it goes to vicissitudes in this way, that the degenerative change may reduce the number of hours, or may have, in any event, reduced the number of hours that the appellant could have worked. True enough, as your Honour has observed, it may be possible that with good medical management, or otherwise, the effect of that on earning capacity might be able to be minimised, but it is ‑ ‑ ‑

TOOHEY J: No, I was not putting that. I was putting something rather different, that the doctors may be able to make an assessment in the case of the degenerative condition, as to what effect it is likely to produce, such as arthritis, and if so over what period of time and what the consequences might be, but you are talking about something quite different here, as you put it to us. You are talking about a condition which was latent at the time of the accident, but which you say might have produced an incapacity later in life had the plaintiff suffered some form of accident.

MR BARRY: I was talking, your Honour, about both, but they being discrete: one being another trauma to an already vulnerable neck; the second being the degeneration ‑ or the continuing process of degeneration ‑ otherwise restricting working capacity even if the accident had not occurred.

TOOHEY J: Yes. Well, the difference, I think, is that in the second case the court is entitled to expect evidence as to what the consequences are likely to be and over what period of time. In the first case there is no evidence which the court can hear, can they, except of the general nature, that if the person had suffered an accident of a particular sort, it might have affected this latent condition?

MR BARRY: No. On the question of vicissitudes, the question in relation to degeneration is if the trauma had not occurred and no other trauma had occurred, would there have been degenerative changes over time which would have, in any event, reduced the earning capacity of the plaintiff? If the answer to that is yes, then that is a factor to take into account in the assessment of vicissitudes so as to increase them, or increase the adverse vicissitude.

BRENNAN CJ: That seems to me to accept a burden on your side, which is perhaps heavier than you need. The plaintiff bearing the onus of proof of damages, as well as liability, it is for the plaintiff to prove that the damage to the earning capacity is likely to produce a particular loss. In determining that, the experience of mankind that the body does degenerate is a relevant factor.

MR BARRY: My point, with respect, your Honour, goes a little further than that. It is that if there is a pre-existing injury which has caused degenerative change up until the time of trauma, then the defendant bears at least an evidential onus of demonstrating the existence of such a phenomenon, but having demonstrated his existence, ie through the cross‑examination of Dr Bryan in this case, then the trial judge, or anyone reviewing and reassessing, as the Court of Appeal was here doing, must take that into account as being an adverse vicissitude. That is the way in which it is put.

The third matter, your Honours, in relation to assessing vicissitudes is an assessment of what the extent of the residual earning capacity may have been. May I take your Honours to page 155E, where my learned friend in re-examination put a leading question to the appellant. He put to her:

You concede do you not, that I think, as I have already said, your skills are under utilised, is that right?

That is correct.

There was, your Honours, considerable cross-examination about what her residual earning capacity was - may I take your Honours to page 146N over to 147J - the result being that this was a plaintiff who had a physical injury, namely the disability as a result of the neck injury, but whose capacities in terms of her ability to generate income did not derive from her ability to do something in the nature of process work, but derived from what one could perhaps broadly call organisational and intellectual skills, rather than physical skills.

The result of that is that it may well be, and this is a matter again relevant to assessing vicissitudes, that with advances in medical science her condition may be able to be better managed; the condition may itself improve over time. Alternatively, ways in which people work: the use of ergonomically designed equipment, rather than what she was used to when she was working may have produced the result that these intellectual capacities, which she had and continued to have, would have continued in any event and, in our submission, were matters about which weight should have been given when assessing the extent to which the future loss of earning capacity awarded ought to be discounted for vicissitudes.

The fourth matter, your Honours, of course, is this question of the time away to raise children. The evidence in relation to that is at 50J to K, where she was asked this:

Q. Assuming that instead of working for Peter Wynn’s Score -

which is the name of a sports store -

in July and ceasing from that employment on 19 July 1991 you had in fact stopped working for American Express at that time to have your baby, how longer after would you have gone back to work?
A. 12 months from that date.

So the evidence is from the appellant that she would have had 12 months off to have the first child, in any event, and one perhaps may infer 12 months off to have the second child, thereby giving the 8 per cent or two years as a proportion of 23.5 years which is referred to by the Court of Appeal. So if one starts with 15 per cent, one adds 8 per cent for the time off to have children, then one is up to in mathematical terms 23 per cent. If one then adds on the residual earning capacity, adverse vicissitudes of a general nature, in our respectful submission, one gets pretty close to an assessment of the type that the Court of Appeal, when reassessing, ultimately came to.

The final matter I wish to deal with, your Honours, is this, is whether or not there ought to be any offsetting of that or counterbalancing, if that is the way to put it, to deal with the prospects of promotion. The evidence in relation to promotion was at 47G where the appellant said:

What was your aspiration as far as your career was concerned?

Her answer was:

I wanted to be vice‑president of operations.

At 49E:

What was your observation ‑

in effect, about the way in which people were promoted, and she said:

There was a lot of promotion within the organisation instead of hiring outside.

And at 50M to N, her aspiration was to be promoted to the position of vice‑president of operations, and she said that was as far as she intended to go at that stage.

In O’Brien v McKean (1968) 118 CLR 540, at page 546, the then Chief Justice at about point 8 said this:

But it is otherwise with respect to real advances in remuneration due to an increase in the real reward for an increased or a better regarded exercise of that capacity if there is solid evidence upon which the probability of such an advance can be inferred.

And the reference to “solid evidence”, in our submission, would mean that in a case such as the present, it would have been necessary for the appellant to have called somebody from a senior position in American Express to say, “Yes, we’ve had our eye on this person. There is somebody at present occupying the position of vice‑president of operations but, in due course, if the position becomes available she would be one of the people favourably regarded to take it”. There was no evidence of that nature. There was not even any evidence as to how much the vice‑president of operations would be paid; whether she would be paid the same or less or greatly more than what was being paid to the appellant. In our submission, for a judge to make an allowance to offset the adverse vicissitudes by the prospects of

promotion, the evidence would have needed to have gone a great deal further than it had done.

The Court of Appeal, in our submission, dealt with this matter correctly at pages 341O over to 342J, if I may invite your Honours to read those two paragraphs. The result of all of that, in our submission, your Honours, is that although the Court of Appeal used an inappropriate yardstick when dealing with vicissitudes, the result to which they came, had they done the task by taking into account the matters which we have identified, would have been the same and therefore the appeal should be dismissed.

Your Honours, for more abundant caution, Mr Shore has handed me five photocopies of the written submissions that were filed in the Court of Appeal on the question of whether or not these matters were argued or argued in the same way or to the same extent in the Court of Appeal. May I hand those up. The particular part of those written submissions where this matter is identified is on page 8 and your Honours will see from 2.5 through to probably about 2.8. I withdraw that, your Honours; it goes over to page 12. Those are our submissions.

BRENNAN CJ: Thank you, Mr Barry. Mr Semmler.

MR SEMMLER: Your Honours, as to grounds 1, 2 and 3, my understanding was that, from what my friend said to me, he was not going to say very much. He was not going to have much to say about these grounds. I did not understand him to concede the grounds. As to the other grounds, your Honours, there was an abundance of evidence upon which his Honour was entitled and justified in reaching the conclusions he did about the possibility of the pre-existing condition supervening and about the vulnerability of the spine to other accidents.

BRENNAN CJ: Do you wish to draw our attention to any passages other than those that we have already been referred to either by you or by Mr Barry?

MR SEMMLER: I do, your Honours. Your Honours, before I do that, could I just quote, because this really summarises what the appellant’s response to what my learned friend has just had to say is, and I am quoting from Wilson v Peisley 7 ALR 571, at 583. At 583, line 25, the judgment of Justice Stephen, his Honour says at 25:

The apparent modesty of the award -

and might I interpolate and say the apparent generosity, if that is what the respondent says it is -

is to be explained, not by any error of law or mistake in fact, but by the particular view which his Honour took of what the future in fact held for the respondent and what it might have held had she not suffered her accident-caused injuries. This was a view which was not only clearly open to him but which, for my part, I would be slow to describe as in any respect unreasonable.

Your Honours, his Honour the trial judge dealt with the possible negative vicissitude of a pre-existing condition eventually affecting the appellant’s capacity for work. He did so at pages 302U to 303K and, before that, at 298U he indicated his acceptance of the evidence of the treating specialist about these matters. He found Dr Bryan’s evidence at 298 “most persuasive as to the effects of these injuries upon the plaintiff”. At 302U, the first negative vicissitude that he took into account was the possibility now relied upon by the respondent that the pre-existing condition would have become symptomatic. He dealt with that at 302V to 303 ‑ ‑ ‑

TOOHEY J: I did not think that was what was being put to us, Mr Semmler. It was that it would develop symptoms so much as that the plaintiff had a condition which in the ordinary course of events might, by reason of some accident or trauma unrelated to this accident, have produced a condition which would have affected her loss of earning capacity.

MR SEMMLER: That is the possibility of further injury unrelated to this. His Honour dealt with that at 304C to E:

It is possible that she may suffer further injury. In the words of Dr Bryan she has a spine which is vulnerable to injury. However, because of her now protected lifestyle the probability of this occurrence is low.

Your Honours, I will accept, as I have to, that that test is not the right test to apply because it is not her now protected lifestyle that is relevant, it is what her lifestyle would have been absent the 1986 accident. Having said that, what his Honour effectively was doing was discounting that as a possibility for her future. He was justified in doing that amply by the evidence because, first of all, she had had what, on the uncontested evidence, was a very good result from the earlier surgery. She had a vulnerable spine but when you examine the evidence about it, the possibility of further injury was not great. At 107T, which was probably the high point of the defendant’s case in this regard, Dr Bodel called for the defendant - this was in‑chief, I might add - at 107T to U, Dr Bodel said,when talking about the sports:

They are both potentially violent sports, but one taking care with the sports may well get through without any disability.

Earlier, at line M he said she had a “vulnerable spine”, but he said at M to O:

Not more so than if that spine had not had those pre‑existing situations.

It is somewhat abstruse, but it would appear that he was conceding that in fact she was not at particular risk. Dr Bryan, on the other hand, at page 62M to P, in discussing the risk - and this is something, your Honours, that my learned friend referred you to 62 but did not take you to these particular words. First of all, at 62E the treating specialist said:

I am quite sure there was a fair amount of rough and tumble at home. I mean I am not doubting that. I think that she probably did engage in that she was at risk, and she was getting along and she had managed to negotiate life without any trouble and therefore it was reasonable to believe that she may well have continued to go along without any be trouble.

And at N on 62:

She was at risk - she wasn’t particularly at risk - I would have said she was particularly at risk in the first 4 to 5 years after she had the spinal fusion. I think as the years passed I would think that she became much able to handle the situation.

He was directing his attention to the possibility of injury from other sources to this vulnerable spine. Now, your Honours, the trial judge accepted that evidence and he was entitled so to do and, in our respectful submission, there is no reason why one should go beyond his careful assessment in the pages that I have indicated of that evidence compared to the other evidence. She undoubtedly had a better than average result from surgery and my learned friend speculates that advances in technology may mean that she would be able to realise her earning capacity better with better ergonomically designed work place.

If that is the view that is taken then it would equally apply to any risk that symptoms from the pre‑existing condition would supervene and cause

her problems at American Express. Similar considerations would apply to her ability to continue with that kind of work. My learned friend’s other submission was that she had, in effect, a higher residual earning capacity than was allowed for. Even the Court of Appeal said at 335D that the residual earning capacity allowed by the trial judge of $440 per week was, in their words, generous to the defendant. In fact, the uncontested evidence was she was only being paid $200 a week. His Honour took the view that she was capable of earning more than double that, notwithstanding her evidence about her inability to do any more than the eight hours a week or so that she worked.

My learned friend referred also to the fact that she testified that she would have had 12 months off to have her first child. That is correct but, on the other hand, the fact is she only had three months off following the birth of her child before she returned to the light work that she was doing in her husband’s business.

My learned friend referred to the fact there was no evidence about how much she would have been paid had she been promoted but, your Honours, one could, as the trial judge did comfortably infer that she would have received more as vice-president of the company than she would have received in her position at the time she was obliged to resign Your Honours, unless there are any other matters, those are our submissions in reply.

BRENNAN CJ: Thank you, Mr Semmler. The Court will consider its decision in this matter.

AT 12.55 PM THE MATTER WAS ADJOURNED

[1995] HCATrans 289

Key Legal Topics

Areas of Law

Negligence & Tort

Statutory Interpretation

Legal Concepts

Causation

Damages

Duty of Care

Negligence

Statutory Construction