Allianz Australia Insurance Ltd v Elias

CATCHWORDS: TORTS - negligence - road accident cases - whether finding that respondent's reporting of symptoms substantially truthful was glaringly improbable - challenge to assessment of damages - past and future economic loss - reassessment by appellate court where primary judge's method of calculating loss not adequately disclosed

CASES CITED: Kallouf v Middis [2008] NSWCA 61 Najdovski v Crnojlovic [2008] NSWCA 175; (2008) 50 MVR 430

PARTIES: Allianz Australia Insurance Ltd (Appellant) Roukoz Elias (Respondent)

COUNSEL: K Rewell SC/B Smith (Appellant) D Toomey/T Jones (Respondent)

SOLICITORS: Sparke Helmore (Appellant) Stacks Goudkamp (Respondent)

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40920/07 DC 4772/03

BEAZLEY JA MACFARLAN JA YOUNG JA

FRIDAY 29 MAY 2009 ALLIANZ AUSTRALIA INSURANCE LTD v ELIAS Judgment 1 BEAZLEY JA: I agree with Macfarlan JA. 2 MACFARLAN JA: The respondent was injured in a motor vehicle accident which occurred on 2 October 2001. He sued the appellant for damages for negligence in relation to the accident. Following a hearing in the District Court in December 2004, a verdict was entered for the appellant. However, an appeal to the Court of Appeal was successful. Judgment was entered for the respondent and a new trial limited to the issue of damages was ordered. 3 On the new trial, Taylor DCJ awarded the respondent damages of $323,929 comprised as follows:

Past economic loss $130,000 Future economic loss $170,000 Past gratuitous assistance $5,772 Past out-of-pocket expenses $9,863.60 Future out-of-pocket expenses $8,293. 4 Only the awards for past and future economic loss are challenged on the appeal now brought from this decision. There was no claim at first instance for non-economic loss as the relevant threshold impairment had not been reached. 5 The respondent was born in Lebanon in 1974. He undertook studies which qualified him as an electrician and at various times was employed in Lebanon performing electrical work. He came to Australia in October 1999 to visit his brother. He remained here until 20 September 2000, when he returned to Lebanon. He came back to Australia on 22 June 2001. As mentioned earlier, the motor vehicle accident in which he was involved occurred on 2 October 2001. He undertook some limited electrical work, as an employee or contractor, in Australia prior to the accident. He claimed that injuries suffered in the accident impaired his ability to work, giving rise to an entitlement to past and future economic loss. 6 The submissions made by the appellant challenged, first, the primary judge's conclusions as to the extent of the respondent's disabilities and, secondly, his conclusions that those disabilities resulted in economic loss of the magnitude reflected by the damages awarded. Indeed, the appellant said that the respondent had not suffered any economic loss.

The Respondent's Disabilities 7 It is convenient to note at the outset various matters which were not in issue on the appeal. First, the appellant accepted that as a result of the accident the appellant suffered a disc bulge or protrusion at C5-6 of his spine. Secondly, the appellant accepted that the respondent came to suffer from a post-traumatic stress disorder as a result of the accident. Both of these concessions reflected findings of the primary judge. 8 The issue as to the respondent's disabilities was, as a result, confined to the correctness of the primary judge's finding that the respondent's disc injury led to him suffering C6 radiculopathy, that is, a disorder of the spinal nerve roots brought about by irritation of or pressure on them. 9 The thrust of the appellant's complaint was that the primary judge's finding that the respondent's reporting of his symptoms to the various doctors from time to time was substantially truthful was glaringly improbable. The appellant contended that this was important because the medical diagnoses of this disorder were dependent to a significant extent upon the nature of the symptoms identified to the doctors by the respondent. 10 The appellant first contended that the primary judge had effectively found that the respondent was a person of no credit whose evidence should not be believed. However, whilst the primary judge did make some strong findings against the respondent, he did not completely reject the respondent's evidence. His conclusions were expressed as follows: "I have decided to treat the plaintiff's evidence with caution. In deciding particular issues I have looked to supporting evidence" (Red 34T) "In concluding that I cannot accept the plaintiff's evidence, without support, I have taken into account a number of false and misleading statements he has made" (at Red 35E). 11 The appellant did not submit that there was error in the primary judge taking this approach. 12 Against the background of the primary judge's adverse view of the respondent's credit, the appellant submitted that his acceptance that the respondent's reporting of his symptoms was substantially accurate was "glaringly improbable" because: "Having regard to his total lack of credibility, the respondent's complaints after the previous hearing before Judge Hughes [being the hearing which led to the decision set aside by the Court of Appeal], which were inconsistent with his previous complaints, and which just happened to match exactly his knowledge of the textbook symptoms of C6 radiculopathy, were plainly false or, at the least glaringly improbable" (Orange 21C-F). "His Honour appears to have attached little importance to the fact that the diagnosis [of C6 radiculopathy] originated in August 2006, after a change in the symptoms reported by the respondent" (Orange 26C-E). 13 The contention of the appellant was that the respondent had tailored his reporting to the doctors of his symptoms to fit in with the evidence he heard at the hearing before Hughes DCJ. In particular, the appellant said that after hearing the medical evidence at the first trial the respondent "began for the first time, to complain of affectation of thumb and forefinger on his right hand" (Orange 15H), this being a key indicator of radiculopathy. This submission was not supported by the evidence and should be rejected. It is sufficient to refer to the following evidence which is inconsistent with it: * Dr John Lawson, a consultant physician, recorded well prior to the first trial that the respondent had "sensory reduction for pain and light touch affecting thumb, index and middle fingers consistent with C5-6 sensory impairment" in relation to the right hand (Blue 209U). * Mr J N Matheson, consultant neurosurgeon, recorded that by the earlier point of time at which the respondent had been referred to Dr M Guirgis, the respondent claimed that his pain "was going down to the hands and all of the fingers but namely the thumb, middle, and index finger" (Blue 283). 14 In oral argument on the appeal, the appellant retreated to a submission that whilst there was evidence of relevant complaints being made prior to the first hearing, the respondent's reporting of his symptoms became more focused on the symptom that was indicative of radiculopathy. This submission must also be rejected as the weighing of the evidence, particularly in the context of issues involving the respondent's credit, was a matter for his Honour. There being significant evidence contradicting the appellant's contention that the respondent had "deliberately altered his description of his symptoms, in light of medical evidence given at the previous hearing before Judge Hughes" (Orange 14V), the primary judge's finding was not "glaringly improbable". Particularly was this so where the primary judge had found that there was a medical explanation for such varied reporting by the respondent of his symptoms as occurred, namely, "progressive development of symptoms into the right arm" (Red 28T). 15 The appellant's challenge to the primary judge's findings as to the respondent's disabilities caused by the accident accordingly fails.

Economic Loss 16 The primary judge referred to the respondent's total claim for past economic loss of $213,916. This was based upon an assumption that for a period of about a year after the accident, the respondent would have been able to earn weekly income net of tax of $630 and for the period of close to five years thereafter, to the date of the hearing before Taylor DCJ, $990. For three of the five years, the respondent conceded a residual earning capacity of $250 net per week and for the remainder of the five year period a residual earning capacity of $350 net per week. Limited actual earnings totalling $5,844 and the first five days loss were deducted in calculating the claim. 17 There was evidence to support the net income rate of $990 per week and that weekly rate was not challenged on appeal. The claim however assumed that the respondent would have been able to work full-time doing electrical work. Based upon evidence that whilst in Australia prior to the accident the respondent had been employed only for limited periods, and some limited evidence of a general nature as to the extent of work that may have been available after the date of the accident if he had not been injured, the primary judge concluded that the respondent would not have been able to work full-time. However his Honour did not express any finding as to what proportion of the year the respondent would have been able to find electrical work but for the accident. He simply said: "Under this head of damage I allow $130,000. This represents 60% of the plaintiff's claim" (Red 45S). 18 The respondent's claim for future economic loss was $423,767 calculated as "845 (5% minus 32 years) x $590 x 0.85" (Red 46F). This again assumed net weekly income, but for the accident, of $990. The residual capacity assumed was $400 per week, giving a net weekly loss of $590. Again, the calculation assumed full-time work. 19 The primary judge's conclusion was expressed as follows: "It is not in dispute that the plaintiff has a capacity for work. This is demonstrated by the fact that he has from time to time been in employment since the accident. The evidence suggests that both his physical and psychological difficulties have resolved to a significant extent. The evidence also points to the plaintiff doing better in future than he did from the time of the accident until the hearing. Bearing in mind the factors and circumstances I find with respect to the plaintiff, the possibilities of future [sic] are such that should be allowed some 40% of the amount claimed. In my opinion an amount of $170,000 represents fair, but not perfect, compensation" (Red 46G-N). 20 As to past economic loss, it is not clear whether the primary judge has accepted the respondent's concession as to the level of residual capacity as appropriate and discounted the claim by 60% to reflect the fact that the respondent would not have been able to obtain full-time work, or whether he has made an adjustment to the residual capacity for which allowance is made, or to some extent done both. Perhaps it can be inferred that his approach was the first mentioned because he speaks of the anticipated lack of full-time work and does not suggest that there was any inadequacy of allowance for residual capacity. However, a conclusion that the respondent would have been likely to obtain work for only 40% of the year would in my view be outside the range of what was reasonably open on the evidence. Relevant in this respect is the fact that, particularly bearing in mind the substantial period of his return to Lebanon, the respondent had had only limited opportunity to establish a working pattern in Australia prior to the accident. Bearing in mind that he was an able-bodied person qualified to perform electrical work under the supervision of a licensed electrician and that the work he did do appears to have been done competently, common sense and knowledge of economic conditions prevailing in the relevant period suggest that he would have been likely to obtain work for a substantially greater proportion of the year. 21 If on the other hand the primary judge adjusted the credit for residual earning capacity, or alternatively made some allowance for the absence of full-time employment and some allowance for the respondent giving too low a credit for residual earning capacity, one is left to speculate as to what those adjustments or allowances were. The primary judge's conclusion is thus defective for want of reasons. 22 A similar problem exists with his conclusion as to future economic loss, although here there is not even the basis for an inference that his Honour's adjustment related only to the proportion of the year which his Honour thought the respondent would have been able to work but for the accident. This is so because he refers in relation to this claim to the respondent's physical and psychological disabilities having "resolved to a significant extent" (Red 46J), suggesting that he probably made some adjustment to the allowance in the respondent's claim in respect of residual earning capacity. 23 In these circumstances, I consider that the assessments made cannot be sustained and that this Court should reassess the economic loss claims. Bearing in mind the substantial time that has elapsed since the accident and that there have already been two trials on damages it would be highly undesirable for this Court to order a new trial. 24 The primary judge's findings and approach should be accepted as far as possible. On this basis, the respondent suffered, as a result of the accident, disabilities which impaired his earning capacity. The two elements that need to be estimated in quantifying his loss are the proportion of the year which the plaintiff would have worked but for the accident (both in the past and in the future) and the extent of his residual earning capacity. 25 As to the former, I consider that the matters referred to in [20] above point to the appropriateness of an estimate that the respondent would have been able to earn net income, at the rate which was not challenged, for 70% of the year, that is, that he would have been able to obtain employment for most of the year but there would still have been a significant part of it when he was without work. 26 As to the latter, his Honour's finding was that the respondent's disabilities precluded him from undertaking "heavy electrical work" but that not all electrical work involved "hard physical labour" (Red 42P, 44J). Appreciating that the task of making an estimate of this character is "necessarily impressionistic" (Kallouf v Middis [2008] NSWCA 61 at [61]) and that in the context of residual earning capacity, the appellant bore an "evidentiary onus to adduce evidence of that which [the respondent] was capable of undertaking and what jobs might be open to him" (Najdovski v Crnojlovic [2008] NSWCA 175; (2008) 50 MVR 430 at [74] per Basten JA), I consider that an appropriate allowance for residual earning capacity is 60% in respect of past economic loss and 70% in respect of future economic loss. On this basis, the net weekly economic loss is $400 and $300 respectively. 27 The total number of weeks claimed by the respondent in respect of past economic loss was 386. This assumed full-time employment. This should be reduced by 30% to reflect the view I have expressed above as to the proportion of the year which the respondent would have worked. This gives a total of 220 weeks. This number is to be multiplied by the net loss per week of $400, giving a total of $108,000 from which the actual earnings of $5,844 and first five days loss of $400 should be deducted. The result is a total for past economic loss of $101,756. 28 For future economic loss the calculation is to be based upon a net loss per week of $300 for 37 weeks per year. Conclusion 29 The damages awarded should be reduced to the total of $23,928.60, being the items not in dispute, $101,756, being the reassessed past economic loss and of the amount in respect of the reassessed future economic loss.

Orders 30 I propose that the following orders be made:

Set aside the judgment entered in favour of the respondent in the sum of $323,929 and substitute a judgment in a sum calculated in accordance with the reasons for judgment.

Order the parties within 7 days to bring in short minutes calculating the amount of the judgment to be awarded in favour of the respondent.

Order the respondent to pay one half of the appellant's costs of the appeal.

The respondent to have a certificate under the Suitors' Fund Act 1951 , if qualified. 31 YOUNG JA: I agree with Macfarlan JA.

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