Zorom Enterprises Pty Ltd v Zabow

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NEW SOUTH WALES COURT OF APPEAL

CITATION:      ZOROM ENTERPRISES PTY LTD v ZABOW & ORS [2007]  NSWCA 106
This decision has been amended. Please see the end of the judgment for a list of the amendments.

FILE NUMBER(S):
40477/06

HEARING DATE(S):               14 March 2007

JUDGMENT DATE: 4 May 2007

PARTIES:
Zorom Enterprises Pty Ltd (In liq) - Appellant
Peter John Zabow – First Respondent
Easterly Pty Ltd – Second Respondent
Robert Murray Tate – Third Respondent

JUDGMENT OF:       McColl JA Basten JA Campbell JA   

LOWER COURT JURISDICTION: District Court

LOWER COURT FILE NUMBER(S):          DC 1802/05

LOWER COURT JUDICIAL OFFICER:     Keleman DCJ

LOWER COURT DATE OF DECISION:    27 July 2006

COUNSEL:
P. Deakin QC/S.W. Hickey – Appellant
M.F. Holmes QC/E.C. Muston – First Respondent
N. Polin – Second and Third Respondents

SOLICITORS:
Curwoods Lawyers – Appellant
Zabow Lawyers – First Respondent
Griffin Hilditch Lawyers – Second and Third Respondents

CATCHWORDS:
TORTS – vicarious liability – Civil Liability Act 2002 (NSW) – whether s 3B(1) excluded the operation of the Act in relation to the vicarious liability of an employer for an intentional tort by its employee
TORTS – vicarious liability – employment of security guards on licensed premises –  – conditions imposed on licences under Liquor Act 1982 (NSW) – unauthorised act by an employee – whether employer of security guard vicariously liable
DAMAGES – exemplary damages – whether employer could be vicariously liable for exemplary damages
DAMAGES – future economic loss – whether assessment should be by way of a ‘buffer’ – whether correct comparable earnings used
DAMAGES – superannuation based on future economic loss  – whether actuarial evidence necessary – whether a second discount should be applied because the amount is received now rather than later

LEGISLATION CITED:
Civil Liability Act 2002 (NSW), ss 3B, 3C, 13
Law Reform (Vicarious Liability) Act 1983 (NSW), ss 5, 7, 8
Liquor Act 1982 (NSW), ss 103, 125
Security Industry Act 1997 (NSW)
Superannuation Guarantee (Administration) Act 1992 (Cth)

CASES CITED:
Allesch v Maunz (2000) 203 CLR 172
Branir Pty Ltd & Ors v Owston Nominees (No 2) Pty Ltd & Anor (2001) 117 FCR 424
Braverus Maritime Inc v Port Kembla Coal Terminal Ltd (2005) 148 FCR 68
Commissioner of Police v Estate of Russell (2002) 55 NSWLR 232
Copyright Agency Ltd v Department of Education of New South Wales (1985) 4 IPR 5
59 ALR 172
Cowra Shire Council v Trudgett [2004] NSWCA 9
Darling Island Stevedoring and Lighterage Co Ltd v Long (1957) 97 CLR 36
Deatons Pty Ltd v Flew (1949) 79 CLR 370
Foster v Tyne and Wear County Council [1986] 1 All ER 567
Fox v Percy (2003) 214 CLR 118
Ghunaim v Bart [2004] NSWCA 28; (2004) Aust Torts Rep 65 451
Gray v Motor Accident Commission (1998) 196 CLR 1
Hughes v Law Society of New South Wales [2004] NSWSC 290
Jones v Schiffmann (1971) 124 CLR 303
Jongen v CSR Limited [1992] Aust Torts Rep 81-192 (WASC)
Jovic v Lamont [2007] NSWCA…

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Details
Case
[2007] NSWCA 106
Decision Date

CaseChat Overview and Summary

In *Zorom Enterprises Pty Ltd v Zabow*, the Court of Appeal of New South Wales considered an appeal concerning damages awarded to the respondent for injuries sustained in an incident involving a security guard employed by the appellant. The dispute centred on the assessment of damages, particularly the calculation of future economic loss and superannuation benefits, and whether the appellant, as the employer, was vicariously liable for the actions of its employee.

The primary legal issues before the court were whether the *Civil Liability Act 2002* (NSW) applied to exclude the employer's vicarious liability for an intentional tort committed by an employee, and how damages for future economic loss, specifically the loss of employer superannuation contributions, should be assessed. The court also considered the appellant's submission that a further discount should be applied to the calculated sum for future superannuation loss.

The court affirmed the trial judge's methodology for calculating the loss of future superannuation contributions. This involved determining the weekly loss of employer contributions based on the employee's ordinary time earnings and the statutory superannuation guarantee rate, applying a discount for vicissitudes, and then using 3% discount tables to ascertain the present value of these future losses over the employee's remaining working life. The court rejected the appellant's argument for an additional discounting step, holding that the conventional approach to calculating future losses, which does not necessitate sophisticated actuarial evidence, was appropriate and that the trial judge's method aligned with established principles.

The appeal was dismissed with costs.

Orders

Orders of the court

Appeal dismissed with costs

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

As is well-established, the fact that calculations of future loss are both imprecise and to an extent speculative, justifies a conventional approach which does not require sophisticated actuarial evidence. That principle is not in issue in the present case. What is in issue is one of the factors which should, on one approach, be separately identified and, on the other, be subsumed within the simple calculation proposed. Authorities in which the issue has been discussed, rather than assumed, support the proposition that the employer’s contribution should be treated as giving rise to a fund payable on a future date, which must be discounted according to the 3% tables so as to provide a net present value for that sum. That was the approach adopted by the trial judge. Accordingly, the challenge based upon the proposition that there should have been a further discounting, should be rejected.Conclusions I would dismiss the appeal and order the Appellant to pay the Respondent’s costs of the appeal. CAMPBELL JA: I have arrived at the same conclusion as Basten JA concerning the allowance for loss of the value of the employer’s future contributions to superannuation benefits. However I have arrived there by a different route, and so will give my own reasons concerning that topic.The Trial Judge’s Methodology The trial judge indicated, in his reasons for judgment, the method that he regarded as appropriate for calculation of damages for loss of the employer’s contribution to future superannuation benefits, and left it to the parties to make the calculation. He entered judgment in accordance with that calculation. If one spells out the way in which that calculation proceeds, it involves the following steps. First, there was an implicit assumption (not shown to be wrong on this appeal) that the type of superannuation benefit that the plaintiff would have been likely to receive upon retirement, had he remained uninjured and in employment, was a benefit calculated by reference to the accumulation of contributions paid into a superannuation fund on the employee's behalf. An accumulation fund is different to the type of fund considered in Todorovic v Waller (1981) 150 CLR 402, which concerned a defined benefits fund from which the employee receives upon retirement a defined benefit calculated other than by reference to the accumulation of contributions – in Todorovic, the fund in question provided a pension calculated at a particular percentage of the final salary of the employee. The trial judge took into account the legal obligation of an employer under the Superannuation Guarantee (Administration) Act 1992 (Cth) to pay superannuation contributions on behalf of an employee at the rate, after the 2002/2003 tax year, of 9% of the employee’s gross ordinary time earnings. The trial judge assessed the gross wage loss of the plaintiff due to the injury as being, at the date of trial, $600 per week. He took 9% of that sum ($54) as being the amount per week of employer's contributions to superannuation that the employee had lost by reason of his injury. He had held earlier in his judgment, in connection with assessment of damages for future loss arising from loss of earning capacity, that a discount of 30% for vicissitudes of life was appropriate for this particular plaintiff. This was because there was a chance that the plaintiff would be able to earn more income than he presently anticipated, and because the plaintiff was a young man, so that there was special uncertainty in making predictions involving the whole of his likely future earning career. The trial judge adopted that discount of 30% as also appropriate to apply in calculating the loss concerning employer contributions to future superannuation benefits. Applying that discount to the weekly sum of $54 resulted in a figure of $37.80 per week. He noted that the plaintiff was aged 24, and hence had 40.3 years until his ordinary retirement date. He consulted the 3% discount tables, and found that the appropriate multiplier for 40.3 years was 1227. He then multiplied the sum of $37.80 per week by 1227, and thereby arrived a figure of $46,380.60 as the quantum of the amount to be allowed for the loss of superannuation benefits.

Ratio Decidendi

Legal Principle Established

The trial judge took into account the legal obligation of an employer under the Superannuation Guarantee (Administration) Act 1992 (Cth) to pay superannuation contributions on behalf of an employee at the rate, after the 2002/2003 tax year, of 9% of the employee’s gross ordinary time earnings. The trial judge assessed the gross wage loss of the plaintiff due to the injury as being, at the date of trial, $600 per week. He took 9% of that sum ($54) as being the amount per week of employer's contributions to superannuation that the employee had lost by reason of his injury. He had held earlier in his judgment, in connection with assessment of damages for future loss arising from loss of earning capacity, that a discount of 30% for vicissitudes of life was appropriate for this particular plaintiff. This was because there was a chance that the plaintiff would be able to earn more income than he presently anticipated, and because the plaintiff was a young man, so that there was special uncertainty in making predictions involving the whole of his likely future earning career. The trial judge adopted that discount of 30% as also appropriate to apply in calculating the loss concerning employer contributions to future superannuation benefits. Applying that discount to the weekly sum of $54 resulted in a figure of $37.80 per week. He noted that the plaintiff was aged 24, and hence had 40.3 years until his ordinary retirement date. He consulted the 3% discount tables, and found that the appropriate multiplier for 40.3 years was 1227. He then multiplied the sum of $37.80 per week by 1227, and thereby arrived a figure of $46,380.60 as the quantum of the amount to be allowed for the loss of superannuation benefits. The 3% tables that the trial judge used in calculating the amount to be allowed for loss of the superannuation benefits are tables that calculate the present value of a series of weekly payments of one dollar for various numbers of years, at a 3% rate of compound interest, with no allowance for mortality. A sample of such a table can be found in Luntz, Assessment of Damages for Personal Injury and Death, 4th edition, page 683. The numbers contained in such tables were described by Gibbs CJ and Wilson J in Todorovic at 414 as showing “the sum which, if invested at the discount rate, would suffice to enable periodic drawings of the given amount to be made from income and capital over the given number of years, so that at the end of that period both capital and income would be exhausted." They are, thus, well-suited to ascertaining the capital sum that is needed to replace a particular periodical loss of income over a number of years. The Appellant’s Submission The appellant in the present case submitted, in substance, that we should follow completely the methodology that the trial judge adopted, but then take an additional step. It submitted that, having arrived at the figure of $46,380.60, we should apply the “deferred table multiplier” to it to ascertain the present value of that sum.