Adrian & Anor v Ronim Pty Ltd

[1] On 25 July 2005 the plaintiffs commenced proceedings to recover damages from the defendant. The first plaintiff's claim was for damages for personal injuries he suffered on 29 July 2002 'occasioned by the negligence ... of the defendant in its occupation of certain commercial premises ...'. The second plaintiff's claim was for 'damages for loss of the services of the first plaintiff in [his] employment with the second plaintiff as a result of ... personal injuries [he] sustained ... on

[2] The action came on for trial on 12, 13, 14 and 15 February 2007. On

30 March 2007 I gave judgment for the first plaintiff against the defendant in the sum of $70,594.43. For reasons which I explained when giving judgment the further hearing of the second plaintiff's action was adjourned, and was to be resumed on a date to be fixed.

[3] The defendant has applied pursuant to UCPR 293 for judgment against the second plaintiff on the basis that the findings of fact made in the first plaintiff's action, which went to judgment, precluded the possibility of the second plaintiff recovering damages.

[4] The first plaintiff was employed by the second plaintiff as a legal costs assessor. The second plaintiff's sole shareholder and director was Mrs Adrian, the first plaintiff's wife. The first plaintiff was the principal of the business. Despite the legal formality of employment by the company it was Mr Adrian's knowledge and reputation which generated the plaintiffs' income. He was paid a salary. The second plaintiff charged the work he (and other employed assessors) performed and the second plaintiff's income, after payment of expenses, was distributed by way of director's fees and dividends. It was entirely the first plaintiff's choice how the income derived from work should be distributed. He could have chosen to be

self-employed in his own business; or to be in partnership with his wife; or to be employed by a family company.

[5] Among the findings of fact I made was a determination that the plaintiff had not suffered any diminution in earning capacity. I said:

'On his own evidence [the first plaintiff] returned to work after an absence of about two weeks and has performed as before though with discomfort and pain. On occasions he needed assistance to lift boxes of files, and to turn pages. He feels a need to stand and move around after he has been sitting for a prolonged period. None of this affects his capacity to work very long hours as a costs assessor. It is noteworthy that he mentioned to the doctors that he copes with work.'

[6] The defendant's submission is that this finding precludes any recovery of damages by the second plaintiff.

[7] An employer's action for loss it sustains by reason of bodily harm done to an employee whether negligibly or maliciously inures in favour of an employer who is deprived of his employee's services.

'The loss of service is, on the other hand, essential, but a service, de facto, is enough to support the action'. Per Dixon J in Attorney-General for New South Wales

v Perpetual Trustee Co (Ltd) [1952] HCA 2; (1951) 85 CLR 237 at 246 quoting Dicey on Parties to an Action.

To the same effect is the judgment of Lord Sumner in Admiralty Commissioners

v SS Amerika [1917] AC 30 at 55:

'It is the loss of service which is the gist of the action ...'.

Rich J explained in The Commonwealth v Quince [1944] HCA 1; (1944) 68 CLR 227 at 240-1 in a passage quoted with approval by Fullagar J in Perpetual Trustee Co:

'If a person is in fact rendering service to another of a kind that is performed under a contract of service, and sustains injury, through the negligence of a third party, which prevents him from continuing to render the service, the person whom he was serving may recover from the wrongdoer compensation for the damage which she has sustained through the loss of service ... the exception is of great antiquity in English law.'

'... in a case of negligence I would think it clear that the field of damages was strictly limited to pecuniary loss actually sustained through the loss of the services of the servant and ... expenditure necessarily incurred in consequence of the injury to the servant.'

[8] The finding that the first plaintiff did not suffer any loss of earning capacity carries with it the implication that the second plaintiff was not deprived of any of the first plaintiff's services, at least not by any negligence of the defendants. There was some evidence that the first plaintiff and his wife had reorganised cash flows to give the impression that the second plaintiff had been put to additional expense by reason of the first plaintiff's inability to perform his work to the same extent as he did before his fall. It was that part of the debate which had to be adjourned because of the late disclosure of relevant material to the forensic accountants. No finding can be made about whether the second plaintiff did or did not incur additional expenditure after the first plaintiff's injury. The finding I made establishes that the second plaintiff cannot prove that it was the first plaintiff's fall and injury which led to the changed pattern of expenditure, or loss of income.

[9] The finding of fact is binding on the second plaintiff. It was made in the second plaintiff's action as well as the first plaintiff's. The two were heard together and all the evidence was led in support of both claims. The only part of the second plaintiff's claim which was adjourned was the assessment of what, if any, loss the second plaintiff had sustained. That was the distinct question which was ordered to be tried separately from all the other issues in the actions. The other elements of the second plaintiff's cause of action were heard and determined at the trial. Those elements were: (1) Whether the second plaintiff's servant had been injured by reason of the defendant's negligence and (2) Whether the second plaintiff had thereby been deprived of his services. No specific finding was made as to the ultimate fact described in (2) but it follows ineluctably from the finding of fact made that the first plaintiff suffered no diminution in earning capacity. There is, in the second plaintiff's claim, a finding of fact which gives rise to an issue estoppel. The point has been precluded against it, unless and until set aside on appeal.

[10] It is right, as the defendant submits, that the second plaintiff has failed to prove that the defendant's negligence caused any incapacity in the first plaintiff to perform the services due under his contract of employment with the second plaintiff.

[11] There may have been an exception with respect to the two weeks for which the first plaintiff was off work receiving treatment and recovering from his injuries. However it was candidly accepted that there was no evidence of loss established by the second plaintiff with respect to that particular period.

[12] Accordingly the defendant has, in my opinion, made out its claim for judgment without further evidence.

[13] In applying UCPR 293 I adopt as the relevant expression of principle what I said in Jessup v Lawyers Private Mortgages Pty Ltd [2006] QSC 3 paras 12-23. A defence which has no real prospect of succeeding is one which is hopeless, or one which is bound to fail. To repeat what I said:

'If summary judgment is not to work injustice it must be limited to those cases where it can be seen that a plaintiff ... could not succeed at a trial of the action. It is only where a trial can be seen to be pointless that judgment should be entered summarily. Whatever form of words one uses the reality must be that it will only be just to deprive a party of its right to prosecute the claim ... at trial where it can be seen that the claim ... cannot succeed. If it might succeed, if there is a possibility of success, it cannot be just (though it might be expeditious) to enter summary judgment.'

[14] Applying that test the defendant is entitled to judgment. There has been a trial of part of the second plaintiff's claim. All the evidence it sought to adduce in support of that part of its cause of action which required proof of loss of services failed to do so. The defendant is entitled to judgment.

[15] The second plaintiff advances two arguments to resist the application. The first is that in my assessment of damages I allowed the first plaintiff the sum of $7,109 by way of the 'Fox v Wood component.' The second plaintiff submits:

'The principle explained in Fox v Wood is that an injured plaintiff may recover ... the amount of income tax deducted from [his] receipts of periodic compensation ... intended to replace lost income ... . ... By rewarding the appellant in damages the total amount - $7,109 - of the income tax deducted from the periodic compensation, it can only be inferred that his Honour was ... satisfied that the necessary causal link had been established between ... the first plaintiff's injuries and ... the totality of the period of [his] absence from work ... . Logic and common sense ... compel the conclusion that ... the [second plaintiff] has established an entitlement to be compensated for its loss in respect of the three periods (for which the first plaintiff was off work and received compensation).'

[16] This is a point which the first plaintiff takes in his appeal. It is that the award of the component is inconsistent with the finding of undiminished working capacity. The point being committed to the Court of Appeal I should say little about it. It is perhaps enough to remark, as the submissions themselves do, that the amount was conceded during a debate about special damages which the first plaintiff had difficulty establishing and the point which now excites the first plaintiff received no attention or analysis.

[17] The second point is that Dr Pentis, one of the medical specialists who gave evidence at the trial, expressed the opinion that:

'... were the condition of the [first plaintiff's] lumbar spine to deteriorate such that [he] began to show more specific signs of nerve re-entrapment with pressure of the nerve root, operative treatment should be considered, with a recovery period of anything between a year to 18 months.'

The point is made that the reasons do not address that point. There was no specific rejection of the doctor's opinion. The submission is, therefore, that surgery which would incapacitate the first plaintiff for a year or 18 months is a possibility for the future 'which will demand the application of Malec v JC Hutton Pty Ltd principles'.

[18] This also is a matter which has been committed to the attention of the Court of Appeal which makes it inappropriate for me to expand, in these reasons, upon my opinion of Dr Pentis' evidence.

[19] The real point is that the second plaintiff's arguments are ones aimed at showing that the critical, adverse, finding of fact should not have been made. They are properly addressed to the Court of Appeal. That court may set aside the finding of fact if satisfied that it was wrongly made. Judgment has been entered on the basis of that finding. I am not able to alter it, even if persuaded that it was wrong.

[20] The second plaintiff's contention is that there ought to be a trial of its claim in which it could re-agitate the issues of fact already litigated and pronounced upon. This cannot happen.

[21] The second plaintiff submitted that I should not entertain the defendant's application and ought to disqualify myself from further involvement in any aspect of the hearing or action because of apprehended bias. The bias is said to arise from the fact that after judgment was pronounced on the first plaintiff's claim the parties made written submissions as to costs included in which, on the defendant's side, were copies of without prejudice offers to settle. Mr Grant-Taylor SC who appeared for the second plaintiff rightly pointed out that there are cases which establish that such a circumstance may constitute ground for judicial disqualification. He fairly acknowledged that the rule is not absolute. It is a matter for judgment whether the revelation and its circumstance make it necessary that a judge decline further participation in a case in the interests of preserving the appearance of justice.

[22] Mr Grant-Taylor also referred to UCPR 357 which prohibits the communication about the making and terms of any offer to settle to the court 'until all questions of liability and relief ... have been decided.' To the same effect is s 40(7) of the Personal Injuries Proceedings Act 2002. Neither statutory provision mandates a judge to whom such a communication is made to refuse to continue the adjudication. The provisions are silent as to the consequence of their breach.

[23] Mr Myers who appeared for the defendant submitted that the rule and Act were satisfied. The claim had been decided by virtue of the judgment given on the first plaintiff's claim with its essential finding of fact which bound the second plaintiff's claim to fail.

[24] The submissions have substance, but whether it be right or not I will not accede to the request that I accept my disqualification to hear this application or any further hearing of the second plaintiff's claim. I do so for the reason that the claim is part heard and no other judge could take it over without awkwardness and inconvenience. The second reason is that there is no controversy between the parties which needs to be adjudicated. The evidence already adduced and the findings already made determine, inexorably, what must happen to the second plaintiff's claim. To accede to the second plaintiff's application, even if it were possible as a matter of practicality, would achieve nothing. That claim was bound to fail because of the events which occurred prior to the communication of the office of compromise.

[25] There remains only the question of costs. A number of offers were made by both plaintiffs and defendant. Relevantly, on 15 May 2006, the defendant offered 'to settle the claimants' claim for damages ... in relation to personal injuries and loss of services ... by payment of the sum of $120,000.'

The defendant submits that the plaintiffs have recovered a judgment less favourable than the terms of its offer and that the appropriate order for costs is that the first plaintiff recover costs, assessed on the District Court scale to 15 May 2006 and that thereafter the first plaintiff pay the defendant's costs of the action to be assessed on the standard basis appropriate for an action in the Supreme Court. It is also submitted that the second plaintiff should pay the defendant's costs of its action, to be assessed on the standard basis.

[26] The plaintiffs' submission is that the offer of 15 May 2006 was not a mandatory offer for the purposes of s 40(6) of the Personal Injuries Proceedings Act nor is it an offer contemplated by UCPR 361 because a composite offer was made to settle the claims of both plaintiffs. The point is that the first plaintiff could not have accepted the offer because it was not addressed to him, but to him and the second plaintiff, and no discrete sum was offered to compromise his claim. It was pointed out that the first plaintiff had never been a director or shareholder of the second plaintiff and had no control over its response to the offer. It was also pointed out that the claims were separate and distinct in respect of separate and distinct losses.

[27] This is all true and may have given rise to difficulties if the question of costs had been decided before judgment was given dismissing the second plaintiff's claim. It is now clear that the amount offered by the defendant was more than sufficient to satisfy both plaintiffs' claims. It may be right that one plaintiff could not settle without the other but it is equally right that the plaintiffs could jointly have accepted the offer and worked out between themselves their proportion. The offer could have been accepted by the plaintiffs acting jointly. As between them and the defendant that fact is enough to make the order for costs sought by the defendant appropriate. Whether or not the offer was one within the meaning of UCPR 361 the terms of the offer, and its rejection are a sufficient reason for making 'another order' pursuant to UCPR 689.

[28] I give judgment for the defendant against the second plaintiff. I order the second plaintiff to pay the defendant's costs of the action, to be assessed on the standard basis.

I order the defendant to pay the first plaintiff's costs of the action, to be assessed on the standard basis, fixed by reference to the appropriate District Court scale up to and including 15 May 2006. I order the first plaintiff to pay the defendant's costs of the action subsequent to 15 May 2006, those costs to be assessed on the standard basis appropriate to an action in the Supreme Court.