Allianz Australia Insurance Limited v McCarthy [2012] QCA 312

SUPREME COURT OF QUEENSLAND

CITATION: Allianz Australia Insurance Limited v McCarthy [2012] QCA 312

PARTIES: ALLIANZ AUSTRALIA INSURANCE LIMITED (appellant) v EMMA JAYNE McCARTHY (respondent)

FILE NO/S: Appeal No 372 of 2012 DC No 1484 of 2010

DIVISION: Court of Appeal

PROCEEDING: General Civil Appeal

ORIGINATING COURT: District Court at Brisbane

DELIVERED ON: 13 November 2012

DELIVERED AT: Brisbane

HEARING DATE: 16 July 2012

JUDGES: Margaret McMurdo P, White and Gotterson JJA Separate reasons for judgment of each member of the Court, Margaret McMurdo P and Gotterson JA concurring as to the orders made, White JA dissenting in part

ORDERS: 1.Allow the appeal. / 2.Set aside the order below that the second defendant pay the plaintiff the sum of $59,448.67. / 3.Instead order that the second defendant (appellant) pay the plaintiff (respondent) the amount of $32,200. / 4.The respondent pay the appellant’s costs of the appeal to be assessed on the standard basis. / 5.The parties to provide written submissions as to how the costs of the proceedings below ought to be paid.

CATCHWORDS: APPEAL AND NEW TRIAL – APPEAL - GENERAL PRINCIPLES – EXCESSIVE OR INADEQUATE DAMAGES – GENERAL PRINCIPLES – PERSONAL INJURY OR DEATH CASES – where primary judge awarded respondent $40,000 for loss of future earning capacity and $3,600 for lost superannuation benefits – whether these amounts were manifestly excessive / DAMAGES – MEASURE AND REMOTENESS OF DAMAGES IN ACTIONS FOR TORT – MEASURE OF DAMAGES – PERSONAL INJURIES – LOSS OF EARNINGS AND EARNING CAPACITY – LEGAL PRINCIPLES – where appellant contends that primary judge did not state methodology used in making award of damages and did not comply with s 55(3) of Civil Liability Act 2003 – whether primary judge thereby made an error of law / Civil Liability Act 2003 (Qld), s 51(b), s 55, s 61(1)(c), s 61(2), s 62 / Civil Liability Regulation 2003 (Qld), Sch 4 / Uniform Civil Procedure Rules 1999 (Qld), r 766(6) / Ballesteros v Chidlow & Anor [2006] QCA 323, considered / Duong v Versacold Logistics Limited & Ors [2010] QSC 466, cited / Graham v Baker (1961) 106 CLR 340; [1961] HCA 48, considered / Malec v JC Hutton Pty Ltd (1990) 169 CLR 638; [1990] HCA 20, considered / MAM Mortgages Ltd (in liq) & Anor v Cameron Bros (a firm) & Ors [2002] QCA 330, considered / McCarthy v Freeman and Allianz Insurance Australia Ltd, unreported, District Court of Queensland, Richards DCJ, DC No 1484 of 2010, 16 December 2011, varying / Medlin v State Government Insurance Commission (1995) 182 CLR 1; [1995] HCA 5, followed / Nichols v Curtis & Anor [2010] QCA 303, considered / Nominal Defendant v Lane [2004] NSWCA 405, cited / Reardon-Smith v Allianz Australia Insurance Ltd [2007] QCA 211, considered / State of New South Wales v Zerafa [2005] NSWCA 187, cited

COUNSEL: S C Williams QC, with E J Williams, for the appellant K C Fleming QC, with L T Barnes, for the respondent

SOLICITORS: McInnes Wilson Lawyers for the appellant Kerin Lawyers for the respondent

1. MARGARET McMURDO P: As White JA has set out the relevant evidence and issues in this quantum appeal in a personal injuries action, my reasons can be briefly stated.

2. The appellant, Allianz Australia Insurance Limited, admitted liability so that it is not in issue that the respondent, Emma McCarthy, received a significant soft tissue injury to her right forefoot in an accident involving a car on a footpath on North Quay in March 2008. This appeal concerns only the primary judge's award of $40,000 for future economic loss and $3,600 for loss of future superannuation benefits.

3. There is no appeal from the judge's acceptance of rheumatologist, Dr McCauley's evidence that Ms McCarthy has suffered arthritic changes to her foot which were accident-related and amounted to a disability of one per cent whole person impairment, and that these arthritic changes would progress over time.¹ Nor was there a challenge to her Honour's finding that this arthritis will worsen with age and that Ms McCarthy experiences pain with prolonged standing.² Dr McCauley also considered that Ms McCarthy should avoid activities which aggravate her arthritic pain.³ The judge found Ms McCarthy to be a generally credible witness⁴ and accepted her evidence that she gets pain in her foot during long periods of walking or standing,⁵ noting that she has "struggled to walk for long periods of time and standing for long periods of time makes her foot ache."⁶

4. I agree with White JA that the primary judge's reasons do not sufficiently reveal the basis for the $40,000 award as required by s 55(3) Civil Liability Act 2003 (Qld). But, unlike White JA, I consider that, for the following reasons, Ms McCarthy was entitled to an award of damages for future economic loss, albeit a modest one.

5. Her statement of claim pleaded in respect of future economic loss that she "has ongoing pain and discomfort associated with the injury to her right foot. … In the future, [her] employment fields will be narrowed as a result of her injuries. …" and optimistically claimed $175,000.⁷ Her counsel's submissions at trial were that future economic loss should be assessed on a global basis as it could not be precisely calculated. Ms McCarthy would eventually complete her business degree and enter the field of events management, a field in which she would clearly be significantly disadvantaged. Her pain and discomfort would worsen in time and Dr McAuley accepted she should avoid jobs which required her to be on her feet for long periods. Counsel urged the judge to award $80,000. By contrast, counsel for the appellant contended that, at best, there was "the merest possibility of some economic loss in the future. If an award were to be made regard should be had to s 55." The mere fact that Ms McCarthy has suffered an injury did not mean this injury was likely to be productive of future loss.

"… The future may be predicted and the hypothetical may be conjectured. But questions as to the future or hypothetical effect of physical injury or degeneration are not commonly susceptible of scientific demonstration or proof. If the law is to take account of future or hypothetical events in assessing damages, it can only do so in terms of the degree of probability of those events occurring. The probability may be very high – 99.9 per cent – or very low – 0.1 per cent. But unless the chance is so low as to be regarded as speculative – say less than 1 per cent – or so high as to be practically certain – say over 99 per cent – the court will take that chance into account in assessing the damages. Where proof is necessarily unattainable, it would be unfair to treat as certain a prediction which has a 51 per cent probability of occurring, but to ignore altogether a prediction which has a 49 per cent probability of occurring. Thus, the court assesses the degree of probability that an event would have occurred, or might occur, and adjusts its award of damages to reflect the degree of probability. …"

9. In my view, this Court should make an award of damages for future economic loss to take into account the general disadvantage Ms McCarthy might suffer on the open labour market, particularly if she does not complete her degree. True it is that she is far more likely to complete her business degree and obtain well-paid employment in which she will manage the pain to her injured foot without economic loss. But the real possibility remains that the accident-related injury may cause economic loss, especially if, without tertiary qualifications, she becomes unemployed and is unable to take positions involving significant periods of standing or walking whilst she waits for more suitable employment.

10. It is impossible to mathematically calculate the precise amount of this loss or even quantify it in terms of percentages of likelihood. But to do justice between the parties consistent with the principles extracted above from Malec, this is a case requiring a modest global award to reflect the contingencies I have discussed. Bearing in mind that Ms McCarthy has a long working life ahead of her, and the relatively modest chance of significant economic loss, I consider she should receive $15,000 damages for future economic loss. In a case such as this, these reasons sufficiently disclose the assumptions on which I base that award and the methodology used to arrive at it in terms of s 55(3): see Ballesteros v Chidlow & Anor¹⁰ and Reardon-Smith v Allianz Australia Insurance Ltd.¹¹

11. Ms McCarthy also claimed lost future superannuation benefits. I would allow $1,350 by way of damages under this heading.

12. I would allow the appeal, set aside the order below and instead order that the appellant pay the respondent $32,200. I would give leave to the parties to provide written submissions as to the appropriate costs orders in accordance with the Practice Direction.

13. WHITE JA: The respondent was awarded damages of $59,448.67 for personal injury in the District Court at Brisbane on 16 December 2011. Of that amount, $40,000 was for loss of future earning capacity and $3,600 for lost superannuation benefits associated with that amount. The appellant, who was the second defendant below, appeals the judgment as being manifestly excessive insofar as it includes those sums. The appellant also contends, as a further ground, that the primary judge failed to comply with the direction in s 55(3) of the Civil Liability Act 2003 by not stating the methodology used in making that award.

14. The appellant seeks an order in its notice of appeal that this Court substitute an award of damages it considers appropriate. However, in its outline of argument the appellant contends that no allowance should be made for loss of earning capacity.

Circumstances of injury

17. At about 8.15 am on 11 March 2008 the respondent was walking to work at North Point on North Quay in the city along the footpath near the Commonwealth Courts building. She was assisting a woman, who was a stranger to her, to carry some boxes of legal papers. A sedan motor car was stationary across the footpath waiting to pull into the heavy traffic on North Quay. As the respondent started to walk in front of the car (there was no room to walk behind it) the vehicle, without warning, drove forward and stopped on her right foot, remaining there for 10 to 15 seconds before driving off into the traffic. The injured respondent was assisted to a nearby bench.

Treatment

18. An ambulance was called by a bystander. The ambulance officers treated the respondent’s foot with ice. Her employer, when contacted by telephone, sent a fellow employee to drive the respondent immediately to consult an orthopaedic specialist at Wickham Terrace, Dr Jeff Peereboom. He reported to her general practitioner that clinical examination, and x-ray and CT investigations showed the respondent had sustained a soft tissue injury to her foot with swelling over the first metatarsophalangeal (“MTP”) joint region on the plantar aspect of her foot. “She was tender in the medial sesamoid and on the dorsal aspect of the first metatarsal.”¹³ Under the heading “Management” Dr Peereboom wrote:

“I think that Emma’s major injury is soft tissue and she is going to have a crushing injury to her foot.

I think that she is going to require a couple of days off whilst her foot swells over the next day or two and then as her foot feels more comfortable she will be able to do more with it. I explained that her foot will feel stiff and tired for about four months as the scars increase in size and then diminish in size. I have organised to see her again if she has any further problems with her foot. I’ll let you know if I need to see her again.”¹⁴

19. The respondent did not see Dr Peereboom again or any other doctor. She consulted a physiotherapist the following day on 12 March 2008. Subsequently in August 2008, when consulting a sports medicine clinic for right shoulder problems, she was prescribed an anti-inflammatory gel for her right foot which was tender and orthotics to place in her shoes.

The issue

20. The issue for the appeal is the extent to which the physical consequences of the injury to her right foot have been productive of financial loss to the respondent insofar as it relates to her chosen career of events management.

The respondent

21. In order to appreciate the respondent’s case for damages for loss of future earning capacity something must be said about her background.

22. The respondent was born in 1986 and was aged 24 at trial. She is an elite rower. The primary judge made the following findings about which there is no challenge:

“[4]…[The respondent was] schooled to grade 12 in Bundaberg and after school obtained employment as a junior at Wide Bay Australia and stayed there for three years, ultimately obtaining a position as marketing assistant. During this time she was also rowing. Her job as marketing assistant involved assisting with the events, promotions and sponsorships. The events, which were community events, lasted for an hour or so at a time. That work sparked an interest in event management.

[5]As a result of her rowing ambitions and having been selected in some Queensland teams, she moved to Brisbane in the hope of achieving Australian selection. Initially in Brisbane she obtained a job at Phone Zone and then at Kerrin & Co Lawyers as a legal secretary. She was working there at the time of her accident.

[6]Immediately prior to the accident she had been in Sydney at the Australian Rowing Championships and had won four gold medals in the under 23 level. She had a bandage on her foot at the time of the accident from these championships after experiencing tight muscles in the foot which the physiotherapist had treated and strapped…”¹⁵

23. After the injury to her foot, the respondent:

“[9]… continued to work for Kerrin & Co … until she was selected [later] in 2008 in the under 23 Australian team and she needed to move to Melbourne for two and a half months to train. She was then offered a scholarship in 2009 at the Australian Institute of Sport (‘AIS’) in Canberra and she moved there in January 2009. In 2008 she travelled as a member of the Australian under 23 team and won a bronze medal in the women’s quad. The scholarship at the AIS was worth $40,000 per annum including accommodation, meals and medical treatment if required.

[10]At the time she took up the scholarship she disclosed that she had her foot injury, a right shoulder injury and stress fractures to her ribs. She had keyhole surgery on her right shoulder in the second half of 2008. Whilst at the AIS she had another stress fracture, a sore back and developed a problem with her knee. She was selected in the open team to represent Australia at the World Championship in September 2009, however, three weeks before she was dropped from the team because of the knee injury. She had been trying to manage the injury with cortisone, but had to modify her training so much that she was not fit enough to compete at the Championships and her scholarship was also withdrawn. She then returned to the Queensland Academy of Sport and was on a much reduced scholarship there.”¹⁶

24. The primary judge continued:

“[12]As a result of the injury to her knee, the plaintiff was dropped from the Australian team and lost her scholarship with the AIS. Upon her return to Queensland the applicant obtained part time work at 2XU Compression. She was also studying full time at Griffith University for a Bachelor of Business (Event Management). The applicant has completed four subjects of that degree, having completed three subjects full-time and one externally through Southern Cross University while she was in Canberra. She is currently not studying, as she has to work full-time to support her rowing. She has 20 subjects to complete and is therefore only one-sixth of the way through her course.

[13]Her ambition is to obtain another scholarship, compete in the Olympics in 2012 and 2016 and to do some part-time study while she trains for the Olympics. Alternatively, she will attend to full-time study when she finishes rowing competitively.

[14]The employment she obtained at 2XU Compression at Chermside shopping centre was at a kiosk store. She was working for four hours a day from late February until 26 April 2010. At that stage she says it became too uncomfortable for her to work so she handed in her resignation, having told her employer that she was having difficulty standing up for long periods of time. Her ambition in that job was to stay at least until June 2010, when she was intending to move down to Melbourne to row with the Australian women’s sweep squad. The only other work she found after finishing work there was a temporary job for two days at Johnson Greens for $200 net. (Employment records show that this work was actually undertaken whilst she was at 2XU).

[15]She moved to Melbourne in May 2010 and she now rows and works full-time at National Australia Bank. She has been invited to trial for the Australian team to go to the World Championships this year. Her role at the National Australia Bank is in a full time administration role and she is paid $704 nett per week. She has a Certificate III in Financial Services obtained while she was working at Wide Bay Australia Building Society. Her ambition, however, is to organise large events. She has previously worked to raise money for the rowing clubs affected by the floods and she has assisted in a marquee at the Melbourne Cup. She feels that in order to project the right image in event management she must wear high heels and she has difficulty wearing high heels with her foot. Normally when she wears running shoes and when she is in the boat she wears orthotics, which cost $275 a pair.”¹⁷

25. Mr Ivan Hooper, the sports medicine co-ordinator for the National Rowing Centre of Excellence in Canberra put the respondent through musculo-skeletal screening when she arrived at the Institute of Sport in 2009. This was to ascertain if she had any problems which would affect her rowing training. He was aware of the accident to her right foot but there was no further mention of it after her arrival. He agreed that had she mentioned any problems with the foot he would have made a note in her file. As found by the primary judge, in April 2009 the respondent started to complain of upper thoracic and upper back pain as well as posterior shoulder pain. On 25 May she complained of ongoing right medial knee pain. From 4 June the respondent was put on a modified training program because of the pain in her right knee. On 3 August the notes at the Institute of Sport recorded that the respondent experienced fatigue with lunges. This was contended by the respondent to be a consequence of her foot injury. Mr Hooper, however, recalled that this was not the explanation for difficulty with lunges. By the end of October 2009 the respondent was complaining of rib pain.

26. The respondent’s various injuries had led to such a significant state of de-training that she could not maintain her place in the Australian rowing team. Mr Hooper said that the foot injury “may have had a very, very small effect” on the respondent needing to work on her own rehabilitation away from the Australian Institute of Sport. The right foot injury had never been discussed. He agreed that the knee injury would have prevented her from engaging in running training.

27. At the trial the respondent explained the area of pain in her right foot as: “The ball of my foot, mainly the big toe, kind of area, and the joints”.¹⁸ She described it as “… quite a significant ache, pain … the pressure on the bottom of my foot is quite painful as well.”¹⁹ The pain occurred only when the respondent was doing weight-bearing exercises or putting all her weight “in” her feet.

28. The respondent said that when wearing high heeled shoes the top of her foot “gets really tight”.²⁰ When she wore high heeled shoes for the four days she worked at the Spring Racing Carnival in Melbourne in November 2010 she experienced pain in the ball of the right foot and the joint of the big toe and for a couple of days afterwards. If she were required to be on her feet for several hours, whether wearing high heels or not (although high heels were worse), her foot became quite sore.

29. The respondent was not used to wearing high heels and wore them only on special occasions and for short periods of time. In cross-examination, the respondent was reminded of an attendance on 4 May 2009 at the medical clinic at the Australian Institute of Sport complaining, amongst other things, of left foot numbness near her third and fourth toes secondary to wearing high heels. She was treated with non-steroidal anti-inflammatory drugs. She had no documented complaint relating to her right injured foot when she wore high heeled shoes.

“… she had not done any of the work that required her to be standing in heels, and she was therefore unaware of the problem. Being an athlete, she is a person who does not wear high heels a lot.”²²

Medical evidence

33. The primary judge heard evidence from three specialists, Dr J Fraser, orthopaedic surgeon, Dr D McCauley, rheumatologist, and Dr M Wallace, orthopaedic surgeon. Her Honour’s evaluation of that evidence is not challenged. Her Honour described Dr Fraser’s opinion as follows:

“… the injuries from which she has suffered do not give rise to any quantifiable impairment of bodily function and she does not require any treatment presently or going forward. Her injury should not affect her working life. … [H]er symptoms were in excess of the injury from which she suffered. … [H]e did not find any mild bony enlargement of the right first MPT joint and that it was highly unlikely that she would have developed degenerative arthritis in such a short period of time”.²³

Dr Fraser rejected the proposition that the respondent’s injury would preclude her from a job which entailed her being on her feet for a long period and/or wearing high heels.²⁴ He could offer no medical reason to prescribe orthotics for forefoot arthritis of the “possible” degree present in the respondent’s foot.

34. Dr Wallace concluded that the respondent suffered a crush injury to her right forefoot. Her ongoing symptoms suggested a sesamoiditis, something which Dr Fraser did not accept, which was reflected in the assessment by Dr Wallace of a four per cent whole person impairment. Dr Wallace agreed, as was recorded by the primary judge, that sesamoiditis can be caused either by an acute injury or repeated trauma such as running (or marching in the military); high heels were associated with an increased incidence. He thought the respondent would have difficulty standing for long periods.

35. Dr McCauley diagnosed the respondent as having sustained a soft tissue injury with early degenerative arthritis in the right first MTP joint. He assessed her impairment at one per cent. Dr McCauley said that wearing modern high heeled shoes would be likely to aggravate arthritic changes in the first MTP joint and spoke generally against wearing such shoes, describing the practice “as a Chinese foot binding treatment”²⁵ which would lead to

“another generation of girls who are going to have operations on their feet at a very early age. … [T]hey’ve all got bad feet, bad backs, and all you’ve got to do is take them out of their high heel shoes”.²⁶

36. The primary judge preferred the evidence of Dr Fraser and Dr McCauley about the respondent’s percentage permanent disability. Her Honour noted that the respondent was still able to row at an elite level without pain. Her Honour said:

“It is an injury that doesn’t currently affect her in her normal life as she is not in a position where she has [to] stand for long periods of time. I accept that she has arthritis in her foot which will worsen with age and that she experiences pain with prolonged standing, running and lunging.”²⁷

Her Honour concluded that the respondent’s injury should be classified as a moderate foot injury²⁸ for the purpose of identifying an injury scale value as prescribed in s 62 of the Civil Liability Act. Her Honour found there was evidence of permanent discomfort with ongoing symptoms of minor severity but towards the bottom of the range. Her Honour awarded an injury scale value of four, which gives an award of $4,000 for general damages.

Past economic loss

37. The primary judge found that the respondent suffered no past economic loss which could be related to her right foot injury. She rejected the respondent’s claim that the loss of her Australian Institute of Sport scholarship was in any way contributed to by her right foot injury.

Future economic loss

38. In her statement of claim, the respondent claimed that her “employment fields will be narrowed as a result of her injuries”; her ability to be selected to row in special events such as the Olympics would be adversely affected by her foot injury with the consequential loss of sponsorships “and loss of income from activities which would be consequent upon her winning Commonwealth Games or Olympic medals”.²⁹ A global claim for economic loss in the sum of $175,000 was made and superannuation benefits loss of $16,425. By the end of the trial, the respondent’s future economic loss claim was based on the difficulties which she would experience in carrying on her preferred career of events management because of her inability to stand for long periods. The global sum sought was $80,000. While the focus during the trial seemed to be on the respondent’s difficulty with wearing high heeled shoes, the respondent’s appeal submissions emphasised her pain on prolonged standing, even in flatter footwear.

39. The primary judge noted that at the time of trial the respondent had “a stable job in a stable industry”³⁰; was studying business and could easily change her major; had a preliminary qualification in finance and experience in the industry; had likely opportunities for promotion in her present job when she completed her business degree; had no significant experience in events management; had no predetermined career in that field and:

“… one cannot be certain of the likelihood of future economic loss if she chooses to persist in pursuing a career in an area for which she is not yet qualified, does not yet have a position in, and in which she has barely commenced her degree.”³¹

40. Her Honour noted that the respondent was earning $704 net per week whilst training for selection in the Australian rowing team and that she was unlikely to commence her (non-rowing) career until after the 2016 Olympics. Her Honour said:

“It is suggested that to work in event management which is [her] chosen career, she will need to wear high heels and she exhibits pain when she wears high heels because of her injury. Whilst I accept that some events would require high heels to be worn, I do not accept that this is always the case. I note that she experienced pain when wearing high heels in the foot that wasn’t injured and she is not someone that wears high heels on a regular basis.

Whilst one must admire her persistence in trying to pursue her chosen career, she acknowledges that standing on her feet for long periods causes pain and this is worsened when she wears high heels.”³²

41. The primary judge referred to Dr McCauley’s opinion that wearing high heel shoes all the time was “… extremely bad for the feet in any event and will cause foot and back pain”,³³ presumably, to uninjured feet, and that wearing high heels aggravated arthritic change. Her Honour commented:

“If she [the respondent] does persist with event management and wears high heels regularly then this is a choice she has made in defiance of her injury.”³⁴

Her Honour noted that event management would require many hours of preparation and, even if the event itself required a particular dress code, that may only be for a relatively short period.

42. Her Honour said:

“[38]I do accept that she has arthritic changes and that this will become increasingly painful, the question is whether this will amount to an impairment of earning capacity. In Duong v Versacold Logistics Limited & Ors (2010) QSC 466 no allowance was made for future economic loss because the plaintiff had elected to stay at home while his wife went back to work. The evidence before the court is that after five years in event management the plaintiff could be expected to receive a taxable income of $80,000 per annum. If she is a successful event planner and if she passes her degree and if she’s able to obtain a job and if the job is one that requires her to wear high heels, then she may be disadvantaged.

43. In view of those findings, the following is somewhat unexpected:

[39]The plaintiff submits that her employment field has been significantly narrowed because of her injury however, it is more accurate to say that she may not be able to do event management if the event management position she obtains requires her to wear high heels. It does however seem appropriate to order some allowance for future economic loss. Due to the uncertainty of any future loss it is appropriate to give a global allowance. For the reasons already stated any allowance for future economic loss should be moderate and I allow $40,000 for future economic loss. The plaintiff is entitled to 9% loss of superannuation benefits on the future economic loss and that represents a sum of $3,600.”³⁵

44. The report on which her Honour relied for an estimate of a per annum income of $80,000 described event management as a growing industry with many employment opportunities.³⁶ The writer suggested that the gross per annum figure of $80,000 would be achievable and available to a person with three to five years experience. The starting salary would be $45,000 to $50,000 per annum. The writer also noted that the task of event manager varied considerably but that some major events, particularly relating to sport, required a person to be on her feet 50 per cent of the time. There was no mention of wearing high heeled shoes for a woman.

45. The respondent’s case seemed to be predicated on her completing a business degree specialising in event management before obtaining employment in that field. There was no evidence as to the range of employment opportunities within the banking industry if the respondent completed a business degree with or without event management as a major.

Discussion

*(i)*Loss of earning capacity

46. The requirement to wear high heeled shoes for employment in event management was very much grounded in the respondent’s perception of what was required for a particular event in Melbourne. It is a truism to observe that fashion is fickle. It would be impossible to predict what would be seen as “smart” footwear in such an industry far into the future, at least post 2016. It may be for that reason, as well as the rather awkward fact that Dr Macauley castigated high heeled shoe wearing as damaging to feet and spine, that Mr Fleming QC for the respondent emphasised that the respondent was disadvantaged whatever she wore on her right foot if the job required her to be on her feet for any length of time.

47. Section 55 of the Civil Liability Act 2003 provides:

“(1)This section applies if a court is considering making an award of damages for loss of earnings that are unable to be precisely calculated by reference to a defined weekly loss.

(2) The court may only award damages if it is satisfied that the person has suffered or will suffer loss having regard to the person’s age, work history, actual loss of earnings, any permanent impairment and any other relevant matters.

(3) If the court awards damages, the court must state the assumptions on which the award is based and the methodology it used to arrive at the award. …”

While the primary judge’s assumptions upon which she proceeded to award a global sum are accepted by the appellant to be adequately identified, her Honour’s methodology is not. Before considering that matter it is necessary to mention some relevant principles. Section 55(2) of the Civil Liability Act mandates that a court may only award damages if satisfied that the person injured will suffer loss of earnings. In this, the provision does not alter the common law.

48. In Graham v Baker³⁷ Dixon CJ, Kitto and Taylor JJ noted:

“… an injured plaintiff recovers not merely because his earning capacity has been diminished but because the diminution of his earning capacity is or may be productive of financial loss.”³⁸

That is, it must be demonstrated that the injured person’s impairment has resulted in loss in monetary terms. This statement of fundamental principal was restated in Medlin v State Government Insurance Commission:³⁹

“A plaintiff in an action in negligence is not entitled to recover damages for loss of earning capacity unless he or she establishes that two distinct but related requirements are satisfied. The first of those requirements is the predictable one that the plaintiff’s earning capacity has in fact been diminished by reason of the negligence-caused injury. The second requirement is also predictable once it is appreciated that damages for loss of earning capacity constitute ahead [sic] of damages for economic loss awarded in addition to general damages for pain, suffering and loss of enjoyment of life. It is that ‘the diminution of … earning capacity is or may be productive of financial loss.’”⁴⁰

49. In Nichols v Curtis⁴¹ Fraser JA, with whom the President and Chesterman JA agreed, observed of a finding by the primary judge that there was no evidence that the plaintiff had lost employment or, in seeking employment, had rejected work because of her injury:

“The effect of those findings was that the applicant did not merely fail to prove that it was more probable than not that she would have earned more money if she had not been injured; she failed to establish that there was any real prospect that that [sic] she would have earned more money. On that basis there was no room for the application of Malec v JC Hutton Pty Ltd.”⁴²

50. His Honour continued:

“Nor did the primary judge make the mistake of thinking that damages for economic loss were awarded for loss of earnings rather than for loss of earning capacity. Whilst damages are awarded for loss of earning capacity, they are awarded only to the extent that the loss produces or might produce financial loss. In Medlin v State Government Insurance Commission, Deane, Dawson, Toohey and Gaudron JJ held that a plaintiff in [an] action for negligence is not entitled to recover damages for loss of earning capacity unless the plaintiff establishes both that the plaintiff’s earning capacity had been diminished by reason of the negligence-caused injury and that the diminution of earning capacity was or might be productive of financial loss.”⁴³

51. What the respondent had to prove here, on the balance of probabilities, was that her earning capacity had been diminished because of the negligently-caused injury to her right foot. The evidence did not go so far. The respondent said her foot became “quite sore” if she had to stand on it for any length of time. The evidence of Dr McCauley was to the effect that arthritic change in the right foot would increase over the years. This would be productive of discomfort leading to pain but how that would impact upon the respondent’s earning capacity was not fully explored. The respondent did not say that she had reluctantly decided that event management was a career she could no longer aspire to. To the contrary, the inference (and it seems it was accepted by the primary judge) was that she would put up with the discomfort/pain. Her heavy rowing training schedule and management of past injury suggested a high capacity for endurance. It is difficult to pin her case down but it did not seem to be that she would enter the field of event management and take days off from time to time above those allocated to sick leave when standing (or walking about) made her foot too painful; or leave a position because of the pain in her foot and be unemployed for a time. That scenario of time off would not sit well with a career in event management if it would avoid “the event” if the racing carnival experience were repeated.

52. The respondent submitted that as a consequence of her injury the field of employment was narrowed which suggests she would not enter event management, or if she did, would not remain. Such a possibility does not mean that her earning capacity has been reduced because of the injury but that she may be precluded from entering into a career or employment which required significant standing rather than the sedentary occupation which she presently has.

53. The second requirement for an award for future loss, as identified in Medlin, is that the injury will be productive of financial loss. At the trial the respondent was in what she described as a boring job. The assumption seems to have been that her future employment was event management with pain on prolonged standing or her present occupation with its limited remuneration for the future. However, the respondent was embarking on a tertiary degree in business. She had obtained some qualifications in finance in the past. She was plainly a diligent and hard working person when it came to pursuing her goals. There was no reason to suppose that when she ceased high level competitive rowing, or even before, she would not graduate from university with employable qualifications which would attract higher remuneration than her present employment.

54. The respondent did not, in my view, demonstrate either that the injury to her foot reduced her earning capacity or, if it did, that it might be productive of financial loss. The only evidence which was advanced on her behalf was the capacity to earn $80,000 or even up to $100,000 per annum in event management compared to the approximately $42,000 which she presently earns but that evidence was insufficient to cross the thresholds discussed in . In those circumstances there was no basis for assessing damages in accordance with the principles in .

“If a court assesses an injury scale value for a particular injury to be more or less than any injury scale value prescribed for or attributed to similar particular injuries under subsection (1)(c), the court must state the factors on which the assessment is based that justify the assessed injury scale value.”

Section 61(1)(c) requires the court in assessing the injury scale value to assess that value under provisions in the regulations and to have regard to the injury scale values given to similar injuries in previous proceedings.

57. The parties did not proffer any augmented figure for general damages in their appeal submissions to take account of increased pain in pursuing a physically active job or disappointment at not having the opportunity to work in the chosen field. The court has power pursuant to r 766(6) of the UCPR to give any judgment and make any order which ought to have been made. McPherson JA said in MAM Mortgages Ltd (in liq) v Cameron Bros (a firm):⁴⁴

“That rule has been held to authorise the giving or making on appeal of the appropriate judgment, order or declaration that ought to have been made below …”⁴⁵

His Honour was there referring to the power to make an order where no notice of contention was filed by a respondent but the rule is drawn broadly enough to encompass any appropriate order.

58. In the absence of any comparable cases guidance might be obtained from Item 149 in Schedule 4 of the Civil Liability Regulation 2003 with an ISV of four to eight which gives as an example of the injury:

“A displaced metatarsal fracture causing permanent deformity, with ongoing symptoms of minor severity, for example, a limp that does not prevent the injured person engaging in most daily activities.”

Item 153 refers to the ISV for a moderate toe injury. The commentary describes the nature of the injury: “There will be permanent discomfort, pain or sensitive scarring.” Examples of the injury are a moderate injury to the great toe or a crush injury causing multiple fractures of two or more toes and a further comment:

“An ISV at or near the top of the range will be appropriate if there has been more than 1 unsuccessful operation, or there are persisting stabbing pains, impaired gait or similar effects.”

The ISV for Item 153 is four to seven, similar to Item 149 under which the respondent was compensated. It might, therefore, be appropriate to increase the ISV to seven from four making an award of $7,000 rather than $4,000.

*(ii)*Failure to state the methodology

59. In Ballesteros v Chidlow⁴⁶ the President said:

“… Section 55(3) must be read in the context of the whole section. The heading of the section is When earnings can not be precisely calculated. Section 55(1) makes plain that the section only applies to “an award of damages for loss of earnings that are unable to be precisely calculated by reference to a defined weekly loss. Whilst [the trial judge] could have chosen to more fully state her method of reaching an award of $20,000 for damages for future economic loss including future superannuation losses, from the modesty of that award and the assumptions and facts stated previously in her reasons, her Honour’s methodology is plain enough…”⁴⁷

60. Fryberg J, however, took a rather more structured approach observing:

“… “Assumptions” and “methodology” operate in tandem in the provision, and the one throws light on the other. Both words have overtones of at least quasi-mathematical meaning. “Assumptions” could, of course, refer to the facts found by the judge upon which the award is based. In my view that would be a most inappropriate use of the word, and it seems unlikely that it was intended in this context. Apart from anything else, the subsection would be unnecessary if that were the meaning, since judges must in any event state their findings of fact. In the context of making a global award where, ex hypothesi, precise calculation by reference to a defined loss is impossible, it is much more likely to have been intended to refer to assumed facts underlying one or more hypothetical calculations which a judge might use in order to get a general idea of what might constitute a suitable global figure; or to similar facts or sets of facts used by the judge to confirm or cross-check a global figure selected by making an experienced guess. That in turn suggests that “methodology” does not refer to anything too demanding. In this context, an experienced guess is a legitimate methodology, although if possible it should be dissected in a manner appropriate to the circumstances of the case in order to understand what it might imply in those circumstances and thereby to confirm that the figure is of an appropriate order of magnitude.”⁴⁸

61. His Honour suggested that the intention of a provision like s 55(3) was to promote intellectual rigour:

“If it is not complied with, a court of appeal will be obliged to scrutinise the award rather more closely than ordinarily it would do in such cases. After all, the purpose of requiring the assumptions and methodology to be stated must surely be to expose them clearly, including to a court on appeal.”⁴⁹

62. In Reardon-Smith v Allianz Australia Insurance Ltd⁵⁰ Keane JA, with whom Williams JA and Atkinson J agreed, observed:

“Section 55(3) of the Act is evidently concerned to ensure that the assessment of damages proceeds in a manner which is sufficiently transparent that the basis of the decision is apparent, both to the parties and to an appellate court. To this end, the provision requires that the methodology and assumptions on which the award is based be stated: it is clear, however, that it does not require an explicit statement of a calculation in which a formula is applied to factual findings.”⁵¹

His Honour noted that if the statement of the methodology were insufficient to comply with the requirements of s 55(3), referring to State of New South Wales v Zerafa,⁵² the error would not of itself result in a new trial or reassessment on appeal. However, his Honour said:

“In some cases, a failure to comply with s 55(3) may result in a decision which is so opaque that the judgment should be set aside on the basis that the paucity of reasoning amounts to an error of law…”⁵³

63. Mr Williams QC, for the appellant, sought to demonstrate that $40,000 was manifestly excessive by engaging in a notional “reverse engineering” exercise, deconstructing that sum. He contended that on the assumption that the respondent’s loss commenced in 2017 (after completing her degree and training for high end rowing competitions) at an annual income of $80,000 net (ignoring the three to five years experience mentioned in the report), if it be assumed that the respondent was deprived immediately of the whole of her earning capacity for the rest of her working life, the discounted sum (present value) using the tables for early receipt, but not contingencies, would be $807,422. A global award of $40,000 is just under (4.95) five per cent of the respondent’s total potential loss of future earning capacity. Mr Williams suggested that would be about $60 per week for the whole of the respondent’s working life, or, approximately, one working day per month for the respondent’s working life, or two and a half weeks per year. Mr Williams posited that if the injury led to progressive arthritis and the loss occurred into the future, for example, in 15 or 20 years into an event management career at about the age of 45, $40,000 would become 13.5 per cent of a total potential loss and amounted to 32.4 days off work every year from the age of 46 to retirement. This, the appellant contended, demonstrates plainly the error in a global award of $40,000.

64. Mr Fleming, for the respondent, did not contradict those figures.

65. The primary judge’s reasons do not reveal any basis at all for selecting $40,000 to compensate the respondent for loss of her earning capacity and should be set aside as constituting an error of law. However, the basis upon which the appeal should succeed is more fundamental. The primary judge identified the many imponderables which operated against anything other than a very small chance of loss in the Malec v JC Hutton Pty Ltd sense.⁵⁴ But it was necessary, before making that assessment, to be satisfied that the negligently inflicted injury would lead to an impairment in the respondent’s earning capacity and, that that impairment would be productive of actual financial loss. As has been discussed above, the evidence did not permit of such satisfaction. The result is that no award ought to have been made for loss of future earning capacity. Instead, there ought to have been a modest augmentation of the injury scale value to reflect the loss of the satisfaction of engaging in her chosen career (“loss of amenities of life” in s 51(b)) or for additional pain and suffering experienced by virtue of persevering in that occupation rather than in a more sedentary one. I would propose an injury scale value of seven, that is, an extra $3,000.

66. I would make the following orders:

67. Allow the appeal.

Future economic loss$40,000 Future superannuation loss$ 3,600

68. There are two broad themes to the challenge. One of them is that the learned judge did not comply with s 55(3) of the Civil Liability Act 2003 in awarding these components of damage. This challenge must succeed for the reasons explained by White JA with which I agree.

69. The other theme as expressed in the appellant’s outline of argument is that the award for future economic loss (and, consequently superannuation loss calculated at 9 per cent of future economic loss) is “manifestly excessive”.⁵⁵ In developing that theme, the appellant submitted that:-

“The award is generous because it evaluates disadvantage in a career which at this point in time can be regarded has no more than a speculative outcome for the Respondent. This is particularly so in circumstances where the Respondent has a present opportunity to change direction in the studies which she has commenced post-accident to obtain a mainstream business degree and thereby supplement her Certificate III in Financial Services to enhance her prospects in a career with her current employer or in a similar career in which she would suffer no disadvantage at all in consequence of her accident related symptoms.”⁵⁶

70. In summary, the appellant contends that the respondent’s working life in the future is dependent on many contingencies and that the issues of whether she has sustained a loss of income earning capacity, and, if so, to what degree of loss, are so speculative that no award ought to have been made for that head of damage.

71. I agree with the President that the factual findings made by the learned judge do justify a conclusion that by virtue of her injury and the arthritic symptoms which have developed from it and which are likely to worsen over time, the respondent is exposed to some risk of bouts of income loss because of short term inability to work and that, in consequence, her income earning capacity has been impaired. The risk, though low, is not insignificant to a point that it ought to be disregarded, in my view. However, it bespeaks a no more than very modest impairment of income earning capacity and a correspondingly modest likelihood that it will produce financial loss.

72. I agree with the awards for future economic loss and future superannuation loss and with the orders proposed by the President.

Footnotes

1. McCarthy v Freeman and Allianz Insurance Australia Ltd, unreported, District Court of Queensland, RichardsDCJ, DCNo1484 of2010, 16 December 2011, [26]. ↩

2. Above, [32]. ↩

3. Transcript, 1-67 (30 March 2012). ↩

4. McCarthy v Freeman and Allianz Insurance Australia Ltd, unreported, District Court of Queensland, RichardsDCJ, DCNo1484 of2010, 16 December 2011, [22]. ↩

5. Above, [16]. ↩

6. Above, [7]. ↩

7. Statement of claim, para 8(d). ↩

8. Transcript, 1-26 (30 March 2012). ↩

9. (1990) 169 CLR 638. ↩

10. [2006] QCA 323, [41]. ↩

11. [2007] QCA 211, [37]. ↩

12. Ground of Appeal no7, AR 920. ↩

13. AR 87. ↩

14. AR 87-88. ↩