Bailey v Nominal Defendant [2004] QCA 344

SUPREME COURT OF QUEENSLAND

CITATION: Bailey v Nominal Defendant [2004] QCA 344

PARTIES: PETER JOHN BAILEY (plaintiff/respondent) v NOMINAL DEFENDANT (defendant/appellant)

FILE NO/S: Appeal No 12006 of 2003 SC No 969 of 1999

DIVISION: Court of Appeal

PROCEEDING: General Civil Appeal

ORIGINATING COURT: Supreme Court at Townsville

DELIVERED ON: 24 September 2004

DELIVERED AT: Brisbane

HEARING DATE: 3 June 2004

JUDGE: Jerrard JA and Chesterman and Philippides JJ Separate reasons for judgment of each member of the Court, each concurring as to the orders made

ORDERS: Appeal allowed. Order below is varied by substituting the amount of $370,000.00 as the judgment sum in lieu of the amount of $523,481.65; Appellant pay one half of the respondent’s cost of the appeal

CATCHWORDS: TORTS – NEGLIGENCE – ROAD ACCIDENT CASES – APPORTIONMENT OF DAMAGES – where respondent suffered injuries when his vehicle was involved in a single car accident – where respondent was the only witness to the accident – where trial judge’s decision based on findings of credibility – whether trial judge misused his advantage in accepting respondent’s account / TORTS – NEGLIGENCE – ROAD ACCIDENT CASES – APPORTIONMENT OF DAMAGES – where respondent suffered physical injuries in accident and subsequently suffered psychiatric injuries – where trial judge awarded damages for economic loss on basis that respondent had been discharged from the army because of his injuries – whether trial judge erred in so concluding – whether discharge resulted from misconduct of the respondent / Uniform Civil Procedure Rules 1999 (Qld), r 770(3) / Beard v Richmond & Ors (1987) Aust Torts Reports 80-129, distinguished / Devries v Australia National Railways Commission (1993) 177 CLR 472 / Fox v Percy (2003) 77 ALJR 989, distinguished / State Rail Authority of NSW v Weigold (1991) 25 NSWLR 500, applied

COUNSEL: P A Keane QC, with K N Wilson SC, for the appellant / J A Griffin QC, with P C Lafferty, for the respondent

SOLICITORS: Walsh Halligan Douglas for the appellant / Roati and Firth for the respondent

1. JERRARD JA: In this appeal I have read and respectfully agree with the reasons for judgment of Philippides J, which held that the appellant fails to overturn the decision on liability. I add the following comments.

2. As Philippides J recounts, a decision to discharge the respondent on disciplinary grounds was made on 20 October 1999 and his discharge was delayed until the receipt of the FMB (Final Medical Board) assessment. That was received on 26 October 1999, assessing the plaintiff as grade 4, which would also result in an inevitable and immediate discharge. But since a decision had been made to discharge him on disciplinary grounds, then unless the conduct constituting those grounds was related to his psychiatric condition and therefore to the accident, it is simply unfortunate for the respondent that his physical injuries and the resultant grade 4 assessment would have resulted in his discharge on medical grounds in any event.

3. It is undeniable that the respondent would have suffered the loss of his army career as a direct result of the accident, had he not engaged in conduct regarded as disciplinary breaches justifying discharge. He engaged in some of that conduct when it was probably clear to him that he would be discharged medically unfit. The trial judge found that Dr James and Mr Zemaitis had said the disciplinary breaches (leading to his discharge) were directly related to the psychiatric condition from which the respondent suffered, and which itself resulted from the accident. In fact Dr James did not say quite that and nor did Mr Zemaitis. What Dr James said was that the respondent’s psychiatric condition could have made him feel that he was too tired to go on parade – (that being one of the disciplinary matters) – and Mr Zemaitis said that the respondent’s knowledge of his approaching discharge could have caused the view that he need not bother to obey orders. On that evidence actually given, while there was a connection between the un-disciplined conduct and the respondent’s knowledge that his discharge on medical grounds would ultimately occur, the nexus existing between the accident and the discharge is different from the nexus described by the learned trial judge.

4. The actual nexus disclosed by the evidence means that the respondent’s discharge from the Army was a consequence of his own conduct voluntarily engaged in, and for which he was criminally and otherwise responsible. He pleaded guilty to an offence of drink driving and to two offences of driving while disqualified, that conduct being part of the disciplinary charges. It was not conduct which was a consequence of the accident and for which the appellant should be held liable. The analysis in the majority decision SRA of NSW v Weigold (1991) 25 NSWLR 500 at 501-517 is against the respondent. That analysis holds, and I respectfully agree, that in circumstances such as these a defendant should not be held responsible for loss a plaintiff suffers post accident, which loss results from a rational and voluntary decision to engage in unlawful activity, or, in this case, inactivity.

PHILIPPIDES J:

Background

34. The appellant appeals from a judgment given in favour of the respondent in the sum of $523,481.65 in respect of injuries he sustained in a motor vehicle accident.

35. The accident occurred at about 1.00 am on 26 September 1997, when the vehicle driven by the respondent left the roadway and overturned. The respondent’s case was that he had been driving in an easterly direction along the Sunshine Motorway near Buderim at about 100 kilometres per hour and that as he came to a gentle left hand curve in the roadway, he was faced with a semi-trailer on, or substantially on, his side of the roadway, causing him to swerve to avoid it and to lose control of his vehicle.

36. The respondent was the sole occupant of his vehicle. The ambulance attended at the scene of the accident and the respondent was taken to the Nambour Hospital at 2.50 am where a blood sample was taken which indicated that the respondent had a blood alcohol reading of .045.

37. The respondent was 18 years of age at the time. He was a serving member of the Australian Army and was returning to his barracks after a period of leave.

38. The learned trial judge found that the accident was caused by the driver of an unidentified vehicle as claimed by the respondent, that there was no contributory negligence by the respondent and awarded damages of $523,481.65. The appellant appeals both the finding as to liability and the quantum of the damages awarded.

Appeal on liability

Grounds of appeal

39. As to the finding on liability, the grounds of appeal pressed before this Court are that the learned trial judge:

(a) acted contrary to the evidence, and to the weight of the evidence;

(b) failed to give any or any sufficient weight to the differing accounts of the respondent;

(c) failed to give any or any sufficient weight to the respondent’s consumption of alcohol;

(d) failed to properly scrutinise the respondent’s evidence; and

(e) gave undue weight to Exhibit 1, being the respondent’s version to the attending ambulance officers.

The appellant did not pursue the ground raised in the Notice of Appeal concerning the trial judge’s refusal to permit the appellant to call evidence from Dr Fisher as to the effect of the respondent’s alcohol consumption prior to the accident.

The decision below

40. The only direct evidence given at trial as to how the accident occurred came from the respondent. The respondent’s evidence was therefore of crucial importance. Before his Honour, as before this Court, the appellant placed emphasis on what was said to be discrepancies between various aspects of the account given by the respondent in his evidence in court and the account given to others. However, his Honour accepted the respondent’s evidence as to how the accident occurred, finding that he was left with the “clear impression, having seen and heard the respondent that he was giving a truthful account when he described what occurred”.

41. At trial the appellant pointed to discrepancies in the respondent’s evidence as to the position of his vehicle vis-a-vis the bend in the roadway immediately before the accident, in particular whether the respondent’s vehicle left the road before the bend or at it. The respondent’s evidence in chief was as follows (R 16):

“I seen the lights of a vehicle in the distance. As I approached a corner, I seen some – like, several very bright lights. And then at about 50 metres away from those bright lights I could see that it was most indeed a semitrailer – a truck, sir. And I had no other option but to veer left because the semitrailer was in my lane. I veered left. I pulled to the left. I hit the gravel. I lost control. And then I ended up on the right side of the Sunshine Motorway, sir.”

42. This evidence was said to be inconsistent with the following version given by the respondent to the investigating police officer Constable Church (R 1173):

“I was just about to go around a corner and I didn’t see the truck at, when I got around the bend I saw the truck over the white line and I saw him swerve back into his lane as I swerved out to my left. I got into the gravel and the car has gone across the road and I don’t know what had happened as I must went into shock as it was going off the edge of the road, it must have flipped as I remember crawling out of it and remember seeing it on its side when I got out of it.”

43. His Honour was not persuaded that the above quoted passage of the record of interview with Constable Church should alter his view that the respondent’s account was truthful stating at [29]:

“… it appears to me that it may, when the whole of the record of interview is looked at, be equivocal but in any case I do not consider that his reference to having come round the bend warrants the rejection of his evidence to the court. It is a somewhat vague term which may mean that he had fully traversed the curve or it may mean something less than that”.

44. The appellant also relied on the discrepancies in the evidence of the description of the other vehicle given by the respondent to medical experts. For example, according to Dr Giles the respondent described the other vehicle as “a wide trailer being towed behind a truck” and according to Dr Graham the respondent told him he swerved to avoid “a prominent trailer being towed behind a truck”. His Honour dealt with these matters at [30] as follows:

“Similarly the various references to the other vehicle involved do not lead me to doubt the [respondent’s] account. I have reservations as to whether what he is recorded as having said to Dr Clark and Dr Giles should be taken as a precise description of what he said. No doubt when examining a plaintiff an account of what occurred forms part of the background material of relevance to the examination, but it is not of primary importance, at least so far as the detail of it is concerned. In each case the doctors have copies of other reports in which some reference is made to what occurred. None of the references to the other vehicle contained in the medical reports lead me to doubt his veracity on the subject of what occurred.”

45. His Honour had earlier referred to this aspect of the case when he observed that, having heard the respondent give his evidence, he had considerable reservations as to whether he was likely to have used the term “prominent trailer being towed behind a truck”.

46. On the issue of discrepancies, the appellant placed particular emphasis before the trial judge on discrepancies between the account given by the respondent at the trial as to the two days leading up to the accident and that given by his counsel before the Magistrates Court on an earlier occasion in March 1998, when the respondent was being dealt with in respect of an offence arising out of the accident concerning his blood alcohol level.

47. The transcript of the March 1998 proceeding, which was before the Court, disclosed that the respondent’s counsel had made submissions to the Court as follows (R 504):

“[the respondent] was at Bribie Island on the night before the incident [i.e. the Wednesday], he had a big night, he was on leave from his employment – … He said he drank until about 10 or 11 o’clock in the morning [on the Thursday] and then he said he had a number of hours sleep, about six or seven hours’ sleep. He then had a meal, said goodbye to his friends because he was going to – to see his parents for leave at Maroochydore and it was on the trip that he rolled the car. He says that the incident occurred not as a result of his own driving, but as a result of a truck which was coming in the opposite direction which forced him to take evasive action and it was a wet road and he ended up off the road and his car rolled over.”

48. At the trial, the respondent gave evidence that he had consumed a lot of alcohol on the Wednesday night, but had stopped drinking at about 10 or 11 pm that night. He said that the following Thursday he had consumed two beers at midday with lunch at a local hotel. He said that he then went for a swim, had a sleep on the beach for a couple of hours and then went shopping. He said that he left Bribie Island at about 8 pm and travelled to Caboolture where he met some people at a pizza place at about 9 pm and then went with them to a tavern for a couple of hours. His evidence was that he consumed no alcohol at the tavern and left at about midnight to travel to Mooloolaba along the Sunshine Motorway. The respondent accepted that the roadway was dry at the time of the accident.

49. His Honour dealt with the discrepancies in these versions at [31] to [34]:

“There is some discrepancy between the account which the plaintiff gave of his movements in the twenty-four hours or so prior to the accident and what was put to the court on his behalf when he pleaded guilty to drink driving. The defendant placed some reliance upon this. The plaintiff says that he does not remember hearing this account.

It is not clear how such an account came to be given but I accept the plaintiff’s account of his activities during this time, although I do not accept his statement that he had nothing to drink at the tavern in Caboolture. He had earlier said that he was “not a hundred percent sure” whether he had had anything to drink.

There is no evidence that he was substantially affected by alcohol at the time he was driving the vehicle towards the scene of the accident.

Of particular significance, it seems to me, in the resolution of the issue of liability is the account which the plaintiff gave in the immediate aftermath of the accident when treated by the ambulance officers. This is in my view consistent with his account in court. The marks on the roadway are also, it would seem to me, consistent with that account and contrary to the suggestion that the vehicle simply failed to take the curve and ran off the road. The marks show the vehicle out of control and moving at an angle across the roadway”.

Relevant principles

50. The principles that govern the scope of appellate review of a decision of a trial judge who accepts the evidence of a witness and whose decision is thus based on a finding of credibility were recently considered by the High Court in the decision of Fox v Percy.³ In that case, Gleeson CJ, Gummow and Kirby JJ⁴ reiterated the need for appellate respect for the advantages of trial judges, “especially where their decisions might be affected by their impression about the credibility of witnesses whom the trial judge sees but the appellate court does not”, although reaffirming that this approach did not derogate from the obligation of appellate courts of weighing conflicting evidence and drawing their own inferences and conclusions. Their Honours referred to a series of High Court decisions⁵ setting out this principle, including Devries v Australia National Railways Commission,⁶ where the principle was encapsulated in the following statement:

“More than once in recent years this Court has pointed out that a finding of fact by a trial judge, based on the credibility of a witness, is not to be set aside because an appellate court thinks that the probabilities of the case are against – even strongly against – that finding of fact. If the trial judge’s finding depends to any substantial degree on the credibility of the witness, the finding must stand unless it can be shown that the trial judge has failed to use or has palpably misused his advantage or has acted on evidence which was inconsistent with facts incontrovertibly established by the evidence or which was ‘glaringly improbable’.”

51. In a separate judgment McHugh J⁷ also affirmed the approach in cases such as Devries and noted the distinction between cases which concerned the approach of an appellate court in drawing inferences from facts admitted or found by the trial judge and cases such as Devries concerning the approach of an appellate court where the trial judge had made a finding as the result of accepting the oral evidence of a witness that other evidence contradicted. His Honour stated that:⁸

“The distinction between the two classes of case is fundamental and almost always decisive. It was recognised by this Court in Brunskill where the Court said:

“The authorities have made clear the distinction which exists between an appeal on a question of fact which depends upon a view taken of conflicting testimony, and an appeal which depends on inferences from uncontroverted facts.”

52. However, McHugh J also observed that:⁹

“It is a serious mistake to think that anything said in Abalos or Devries necessarily prevents an appellate court from reversing a trial judge’s finding when it is based, expressly or inferentially, on demeanour. Those cases recognise – in accordance with a long line of authority – that it may be done. But there must be something that points decisively and not merely persuasively to error on the part of the trial judge in acting on his or her impressions of the witness or witnesses. Recently in State Rail Authority (NSW) v Earthline Constructions Pty Ltd (in liq), for example, this court held that undisputed and documentary evidence was so convincing that no reliance on the demeanour of witnesses could rebut it.”

53. This is not a case where the appellant alleged that the respondent’s evidence was inconsistent with incontrovertibly established facts. Rather, the appellant contended that the learned trial judge failed to use or palpably misused his advantage. It was submitted that the learned trial judge did not properly consider all the evidence and did not properly deal with several inconsistencies in the respondent’s evidence which it was said undermined its reliability. In this respect it was argued that, having seen the respondent give his evidence and having heard evidence which contradicted the respondent’s evidence, his Honour failed to adopt a cautious approach to the assessment of the respondent’s evidence and failed to give an explanation as to how he nevertheless found the respondent’s evidence reliable in the circumstances. It was contended by the appellant that when all of the inconsistencies were taken into account, the trial judge could not rationally have accepted the respondent’s account as to how the accident occurred. In those circumstances, it was submitted that his Honour misused or failed to use his advantage and reached a decision which was glaringly improbable and therefore susceptible to appellate correction on the basis of the principles mentioned above.

Is the trial judge’s decision on liability sustainable?

54. Before this court the appellant repeated its emphasis on the inconsistencies in the evidence concerning the position of the respondent’s vehicle immediately before the accident. The respondent had drawn a sketch of the scene of the accident, which was tendered, positioning the course taken by the two vehicles. In cross-examination, the respondent had agreed to the proposition put to him that the sketch depicted the respondent’s vehicle leaving the roadway before entering the bend and to the proposition that that was contrary to his evidence in chief that his vehicle had left the roadway at about the point where the road commenced to curve. The matter of where in relation to the bend the accident occurred was also dealt with in the following passage of cross-examination of the respondent (R 24):

“What I’m asking you is at the time you moved your vehicle to the left and you say that the passenger wheels then moved into the gravel had you commenced to negotiate that left-hand bend? - - I’m – I’m pretty sure it was most indeed before the bend.”

55. It may be that the respondent was too ready to make concessions as to inconsistencies arising from the sketch. It is not entirely apparent that the respondent’s sketch necessarily supports the propositions put to him concerning it. Furthermore, the discrepancies as to whether the respondent went off the road before the bend or in it were relatively minor ones, which could have occurred with a plaintiff being truthful or untruthful as to the actual accident. The scenario that the respondent went off the road at the bend is of neutral value, as it is equally consistent with the respondent’s version that he swerved to avoid another vehicle on the incorrect side of the road, as it is with the possibility raised by the appellant that the respondent lost control through inadvertence or his own lack of attentiveness. Reference was also made by the appellant to the lack of gravel marks on the left hand side of the roadway to support the respondent’s version. However, I do not consider that great significance can be placed on that as it was not inconsistent with the respondent’s account.

56. The appellant also contended that, contrary to the view taken by the learned trial judge, the evidence as to the marks on the road did not assist the respondent and was not available to be used by the trial judge to resolve the conflict in the evidence. It was contended that the markings were equivocal and equally consistent with the possibility that the respondent momentarily lost control of the vehicle because of his own tiredness and inattentiveness. While the evidence as to road markings could not exclude that scenario as a possible cause of the accident, it could be used to exclude the suggestion also raised by the appellant that the vehicle simply failed to take the curve and ran off the road, and as supporting the view that the vehicle travelled at an angle across the roadway. It seems that was the primary use made by the trial judge of that evidence - to exclude the possibility of the respondent having fallen asleep at the wheel.

57. As to the matters raised by the appellant concerning the inconsistencies in the description of the other vehicle, these discrepancies are, as the learned trial judge identified, minor ones and also such as might occur with a plaintiff being truthful or untruthful as to the actual accident.

58. Of greater moment are the inconsistencies concerning the respondent’s activities in the period leading up to the accident, on Wednesday, 24 September and Thursday, 25 September 1997. It was argued that his Honour gave no satisfactory basis for reconciling the divergent accounts as to the period leading up to the accident and that given the rejection of the respondent’s evidence as to not consuming alcohol on the night preceding the accident, his Honour’s finding that the respondent was nevertheless telling the truth as to how the accident occurred called for an explanation.

59. It is certainly the case that very different accounts were given as to the respondent’s activities leading up to the accident, particularly in relation to:

(a) the period over which the respondent had been drinking - whether the respondent had a “big night” the Wednesday night drinking until 10 or 11 am the following Thursday morning (the March 1998 version) or only until 10 or 11 pm on the Wednesday night (the version at trial).

(b) how the respondent had spent the day before the accident - whether the respondent had slept for 6 or 7 hours on the Thursday, after which he had a meal and embarked on the trip which culminated in the accident (the March 1998 version) or instead had lunch accompanied by two beers, a short sleep of perhaps one hour then went shopping for several hours in the afternoon followed by a visit to the hotel that evening, where he did or did not consume alcohol (trial version).

60. It was contended on behalf of the appellant that, there being two possible causes for the accident (one that the respondent’s attempt to avoid the oncoming truck travelling on, or substantially on, his side of the roadway, the other that the respondent simply losing control through inadvertence as a result of tiredness or falling asleep) the accuracy of the respondent’s evidence of his activities over the preceding days was important in determining the likely cause of the accident. It was submitted by the appellant that, when the evidence of what the respondent had been doing over the preceding period was taken into account, the more probable explanation for why the respondent’s vehicle left the roadway was either his inattention or his falling asleep. The discrepancies in the respondent’s evidence, it was said, supported a conclusion that he had no true recollection of what had occurred, and that he was not describing an event which he actually observed, for the reason that he was momentarily dozing or inattentive before becoming aware of the presence of another vehicle. It was contended that the account given to the Magistrates Court strongly supported an inference that, at the time of the accident, the respondent would have been exhausted.

61. There is some force in the complaint that the learned judge failed to deal adequately with or opine why there was such an inconsistency between the March 1998 version and the version given at trial. The variations between these versions prima facie made the respondent an unreliable witness generally. The trial judge failed to consider in any detail the fact of the two differing versions, let alone why they both existed. The first version included, as well, the description of the road surface as “wet”, as an implied explanation contributing to the respondent’s loss of control of his vehicle. That explanation was simply untrue, on any view of the facts and could have been demonstrated to be untrue had it been given at trial. Additionally, the respondent was not believed by the learned trial judge when he said he had had no alcohol on the Thursday night.

62. The account given at trial, makes it less obviously likely that the respondent fell asleep at 1.00 am on Friday, but possible. The first account given in March 1998 does make it more probable that the respondent would have been tired and in need of sleep at 1.00 am on Friday morning. If the respondent’s evidence at trial of how the accident occurred was true, it is peculiar that such a different account could have been given in March 1998. If the evidence at trial concerning the accident itself was untrue, those changes of story are readily explicable; the respondent simply wanted to diminish the apparent likelihood of his falling asleep.

63. It follows that there were grave difficulties with the respondent being a reliable witness as to the events of Thursday and Friday, unless the March 1998 account could be explained as caused by his counsel having misunderstood and enlarged upon his instructions. The appellant contended that no explanation was offered for the divergent accounts. However, the possibility that counsel had misunderstood and or enlarged upon instructions cannot be excluded, and was actually established to the extent that the respondent gave evidence that he would not have given his barrister instructions that he had drunk until 10.00 am or 11.00 am in the morning.

Quantum

The judgment below on quantum

69. The awarded damages of $523,481.65, comprised, inter alia, of an award of $45,000 for general damages, $125,000 for past economic loss and $300,000 for future economic loss.

70. A few months prior to the accident the respondent had been posted as a rifleman to Infantry Battalion 1RAR, having completed a rifleman’s course in mid 1997. His Honour found that the respondent placed great store in his membership of 1RAR and accepted his evidence that he intended to continue in the army and aspired to advance to more specialised units. The evidence indicated that after a period of recuperation the respondent had returned to work and had undergone various medical assessments in 1999, but that on each occasion he was assessed as level 3R, which precluded him from certain physical activities required of a rifleman posted to 1RAR. His Honour considered that these restrictions had had a major impact on the respondent’s life and his perception of himself, in that he saw his life in the army disintegrating and was depressed by his inability to do what was necessary to retain his life with his colleagues. His Honour stated that it was common ground amongst the psychiatrists and the psychologist that the respondent had been left with a psychiatric condition which was a consequence of the accident and that the evidence indicated that the condition was stable but permanent.

71. In assessing economic loss, his Honour accepted the evidence of Dr Chalk that because of the psychiatric consequences which the respondent suffered as a result of the accident (the adjustment disorder with depressed mood) he would be limited to part time work, noting that the respondent had no skills or experience in sedentary employment. His Honour observed that it was also the evidence of Mr Zemaitis and Mrs Coles that the respondent was limited to part time work.

72. There were two important issues concerning the assessment of damages which arose below. They related to the evidence concerning the respondent’s use of drugs and the circumstances of the respondent’s discharge from the army. The appellant’s case before the trial judge was that, to the extent that the respondent’s condition had been made worse as a result of his abuse of drugs, that was not compensable and that the respondent’s discharge from the army was not a consequence of the accident.

73. The evidence as to drug use was that the respondent commenced using amphetamines shortly before his discharge and was seriously abusing amphetamines and other drugs following his discharge. The respondent had sought treatment in late 2001 and had thereafter ceased using drugs, although he continued to suffer ongoing consequences as a result of his drug abuse.

74. As regards the issue of the respondent’s drug use, his Honour held, relying on the evidence of Professor James, a consultant psychiatrist, that the respondent’s resort to drugs was to alleviate depression resulting from the accident, stating [at 67]:

“It was the view of Professor James, which I accept, that the plaintiff became increasingly aware following the accident that he was not going to be able to continue his army career as his physical restrictions excluded him from the role of rifleman in the 1 RAR. He developed a major depression as the inevitability of his discharge struck him and he was in fact discharged. He resorted to drugs to alleviate his depression and his use grew until it reached a serious stage resulting in a psychosis.”

75. His Honour held that to the extent that damages had been increased by the respondent’s drug abuse that was not compensable, accepting the appellant’s submission that the use of the drugs was neither foreseeable nor reasonable. However, relying on Professor James’ evidence, the learned judge stated that he was not prepared to approach the assessment of damages on the basis that the drug-induced events would have happened in any event; that is, that they were supervening events occurring independently of the accident. Rather, the learned judge took the approach that, in assessing damages, regard was to be had to the risk that the respondent may have reacted in a similar way if faced with setbacks of a serious nature which threatened or brought about the termination of his career in the army.

76. As regards the issue of the respondent’s discharge from the Army, this occurred on 26 October 1999. There was evidence concerning a number of incidents leading up to his discharge. Apart from the respondent’s conviction of drink driving arising out of the accident, he was convicted of drink driving in August 1998 and was convicted of driving whilst suspended in September 1998. In November 1998, the respondent received an “administrative warning for discharge” from the army, placing him on notice that his performance generally would be monitored over the following 12 months and that his discharge would be recommended if during that period he was convicted of any offence, civil or military or there was any instance of alcohol abuse. He subsequently failed to comply with a general order, which required him to attend a parade in July 1999, resulting in his conviction of that charge on 23 July 1999 and triggering a show cause notice also issued on 23 July 1999.

77. His Honour accepted that the appellant should not be regarded as liable for the commission by the respondent of the criminal offences leading up to his discharge for reasons similar to those given in relation to the use of illicit drugs. However, his Honour considered that it was not entirely clear that the respondent was discharged on those grounds.

78. His Honour accepted that the show cause process was based upon the offences committed by the respondent, and that a decision to discharge him was based upon his failure to show cause. However, his Honour referred to a document on the respondent’s file requesting a “new discharge” to be on 25 October 1999 “due to pre-administration and med board confirmation.” His Honour observed that it showed the date of 5 October 1999 as being the date of the Board meeting and assessed the respondent as “class 4,” a medical classification, an assessment relating entirely to his physical condition and one which would necessarily have resulted in discharge. His Honour found that, on the face of things, the respondent had been discharged for two reasons. His Honour observed that the “certificate of discharge or transfer” stated that the discharge was authorised under Australian Military Regulation 176(1), which deals with a discharge of a person whose retention is not in the interests of the Army and also deals with discharge generally, including discharge on medical grounds.

[79] The learned trial judge found that “to the extent the [respondent] was discharged on grounds other than medical grounds, it must be taken that this was triggered by his disciplinary breach or breaches”. As to those disciplinary breaches, his Honour found that the evidence of Professor James¹⁰ and Mr Zemaitis¹¹ “suggests that those matters are directly related to the [respondent’s] psychiatric condition which is the consequence of the injuries he sustained”. His Honour therefore concluded that, “taking the evidence as a whole, the [respondent’s] discharge could be regarded as flowing from his injury and the psychiatric consequences to him of them, and the [appellant] should be held responsible for any loss flowing to him from that.”

[80] His Honour therefore assessed future economic loss on the basis of the loss of opportunity to continue employment in the Army. His Honour had regard to the figure of $630,000, “as at best a starting point”, being the amount calculated by Mr Coco, as the present value of the salary and entitlements to age 60 (premised on certain assumptions as to the respondent’s career path including promotions at various stages). Although having reservations about the respondent’s claimed intention to stay in the Army to age 60, his Honour accepted that he would have been likely to have remained in the army at least for 20 years, when he would have been entitled to a discharge. However, his Honour discounted the figure of $630,000 by 50% to $300,000 to take into account, inter alia, the risk that the respondent “may not have lasted very long at all in the army”, especially given the adverse comments of the respondent’s superiors to which his Honour made specific reference and taking into account “the risk that he may have continued to commit offences involving alcohol and been discharged in any case” and his vulnerability to reacting in the way that he did to any set back of serious physical injury.

Grounds of appeal

[81] The appellant raised three principal grounds of appeal on the assessment of damages.¹² The first ground of appeal concerned the consequences flowing from the respondent’s drug use in respect of the assessment of damages. The appellant argued that his Honour failed to properly take into account that the respondent’s ongoing incapacity and reduction in earning capacity was attributable to his consumption of illicit drugs, which was not compensable. Further, the appellant contended that to the extent to which his Honour had assessed the respondent’s damages taking into account a psychiatric disorder said to have been caused by the accident, his Honour erred as any psychiatric problems experienced by the respondent were caused by his consumption of illicit drugs and thus also not compensable. In written submissions the appellant also contended that the award for pain, suffering and loss of amenities should be reduced to $30,000 because of the on-going effects of the non compensable drug abuse.

[82] Secondly, it was contended that his Honour erred in finding that the respondent’s injuries and their physical consequences that led to the respondent’s discharge from the Army, as that was contrary to the documentary evidence produced by the Army, and that accordingly the respondent’s damages were assessed on an erroneous premise. It was contended that the actual basis for discharge, namely the disciplinary breaches, was one for which the appellant was not liable.

[83] In making the first two submissions, the appellant contended that the awards for past and future economic loss should be disallowed, relying on the decisions of State Rail Authority of New South Wales v Weigold¹³ and Beard v Richmond.¹⁴

[84] Thirdly, the appellant submitted that his Honour erred in assessing damages for past economic loss and future impairment of earning capacity on the basis of the reports of Mr Coco, since the reports were based on various assumptions, none of which were proved by evidence.

Did the learned trial judge err in the assessment of quantum?

The issues concerning the respondent’s use of illicit drugs

[85] This was not a case where damages were recoverable for drug addiction, even though there was medical evidence linking their use to the accident, since the learned trial judge found that the use of illicit drugs was not foreseeable, nor reasonable.¹⁵

[86] The appellant contended that damages, including damages for loss of earning capacity, flowing from the use of drugs was not compensable and that although his Honour had accepted that proposition, his Honour had erred in the actual approach taken in assessing damages. In particular, his Honour, it was said, assessed damages on the basis that the effects of the drug addiction were but a manifestation of a contingency. In making these submissions the appellant relied on evidence of Professor James which indicated that it was the consumption of illicit drugs which was the most likely cause of his ongoing psychiatric disability and in fact destructive of the respondent’s earning capacity (R 138).

[87] Professor James’ view was that the respondent suffered from a post-traumatic stress disorder resulting from the direct effect of the traumatic experience of the accident, with features of anxiety and depression. He gave a bleak outlook in respect of the respondent’s drug use. He stated that the respondent’s presentation of detachment and withdrawal and his disordered “concept formation” were more likely to be due to his drug use than to his post-traumatic stress disorder or depressive disorder (R 129-130). His opinion was that, while the drug induced psychosis had subsided, the more enduring effect of the drug use concerned the adverse consequences for the respondent’s processing abilities, which he considered rendered the respondent completely unemployable (R 138).

[88] This picture of the respondent’s situation is different from that put forward by Dr Chalk. In his report Dr Chalk noted that the respondent had been a heavy user of illicit drugs and that that had led to the development of a psychotic illness. However, he also noted that the respondent was not taking any psychotropic medication, that there was no evidence at the time of examination of any psychotic illness and that drug testing had revealed that the respondent was free of illicit substances. Dr Chalk did not appear to view the drug taking as having consequences which limited the respondent’s employability and concluded in his report (R 452) that:

“… the accident and its sequelae have led to the development of a psychiatric condition. This is in the nature of an adjustment disorder with depressed mood … He has no neurocognitive deficits and from the psychiatric point of view, is able to return to the work force following suitable retraining and would be able to hold down a job. …this man is employable though there are clearly orthopaedic restrictions as a result of his accident.”

[89] In cross-examination Dr Chalk clarified that “the development of the psychiatric disorder” was a result of a combination of factors, one being the way the respondent perceived he had been treated by the Army and the other having to do with his ongoing pain and disability (R 149). Dr Chalk also expanded on his views as to the respondent’s employability stating that, while the respondent would, with the passage of time, be able to return to part-time employment, he would require retraining and “a very understanding employer” (R 147).

[90] It is clear that in preferring Dr Chalk’s opinion over that of Professor James, his Honour rejected the more pessimistic views of Professor James concerning the long term effects and consequences of the respondent’s drug use. I see no difficulty in his Honour taking that approach while accepting other aspects of Professor James’ evidence. His Honour was entitled to proceed on the basis that the respondent’s drug use had not diminished his earning capacity other than as a matter to be taken into account in the general manner he proposed. In the circumstances, I do not consider that it has been shown that his Honour erred in the manner in which he treated the issue of the respondent’s drug use in the assessment of damages.

The respondent’s discharge from the Army

[91] The initial discharge determination was made on 24 September 1999 for disciplinary breaches and stated to be effective from 20 October 1999. The respondent’s discharge was delayed to 25 October and then to 26 October 1999, for the purpose of obtaining the final medical board assessment. That assessment was made on 5 October 1999 and was received on 26 October 1999, assessing the respondent as class 4, which, as his Honour found, was an assessment which would result in an inevitable discharge. However, while it is true that that medical assessment would have also led to the respondent’s discharge, it remains that the actual discharge determination made on 24 September 1999 was not made on the basis of the respondent’s medical condition, but for the disciplinary breaches specified in the show cause notice.

[92] The trial judge took the view that the evidence of Professor James and Mr Zemaitis suggested that the disciplinary breaches leading to his discharge were directly related to the psychiatric condition from which the respondent suffered resulting from the accident. Counsel for the appellant conceded that in so concluding his Honour had correctly summarised that medical evidence, but argued that, even so, the appellant could not be liable for loss resulting from the respondent’s discharge for disciplinary breaches.

[93] The decisions of State Rail Authority of New South Wales v Weigold¹⁶ and Beard v Richmond & Ors¹⁷ support the appellant’s submission. In State Rail Authority of New South Wales v Weigold, Samuels JA, with whom Handley JA agreed, stated:¹⁸

“If the plaintiff has been convicted and sentenced for a crime, it means that the criminal law has taken him to be responsible for his actions, and has imposed an appropriate penalty. He or she should therefore bear the consequences of the punishment, both direct and indirect. If the law of negligence were to say, in effect, that the offender was not responsible for his actions and should be compensated by the tortfeasor, it would set the determination of the criminal law at nought … Hence, the application of the simple “but for” test to determine causation would be singularly inappropriate in this case. In all the circumstances, it will be quite unreal to find the appellant caused the respondent to engage in criminal conduct.”

[94] His Honour summarised the relevant principle of law in the following terms:¹⁹

“To my mind, a defendant should not be held responsible for the losses a plaintiff sustains that result from a rational and voluntary decision to engage in criminal activity. Such losses, to echo the words of Chapman, fall outside the limits for which the wrongdoer should be held responsible.”

[95] There is no suggestion that the conduct of the respondent listed in the show cause notice and resulting in the discharge was other than rational and voluntary. Even accepting that the expert evidence indicated that the conduct was also directly related to the psychiatric condition from which the respondent suffered resulting from the accident, the appellant cannot, on the authority mentioned, be liable for economic loss suffered by the respondent flowing from the conduct resulting in his discharge.

[96] It follows that even if there were two basis for the respondent’s discharge, any assessment of economic loss cannot be made on the basis of the likelihood of the respondent remaining in the Army. To take such an approach would be to ignore not only possible contingencies, but also actual occurrences, that is, the fact of the respondent ceasing to remain in the Army because of conduct for which the appellant is not legally liable.²⁰

[97] But the matter does not rest there. As I have mentioned, his Honour found that, as a result of the injuries for which the appellant is liable, the respondent was only able to undertake part-time work. In my view, the correct approach to the assessment of economic loss is to consider the matter in terms of what employment, other than in the Army, the respondent could have undertaken but is no longer able to undertake because of the incapacity resulting from his injuries. Counsel for the appellant conceded that that approach was correct,²¹ but submitted that there was no evidence to support any loss of residual earning capacity on such a view. It appears that the question of economic loss was approached solely on the basis of loss of opportunity to pursue employment with the Army.

[98] I consider that, in the circumstances of this case, it is appropriate that the course adopted by Jerrard JA in respect of the assessment of damages be followed. It follows that it is unnecessary to consider the issues raised on appeal concerning the report of Mr Coco.

[99] I agree with the assessment of damages made by Jerrard JA and with the orders proposed by his Honour.

Footnotes

1. As a statutory instrument (Statutory Instruments Act 1992, s 7) of which judicial notice must be taken – Evidence Act 1977 s 43(b). ↩

2. Industrial Relations Act 1999 s 123(1)(b) and s 133. Publication is provided for in s 287(6). ↩

3. Fox v Percy (2003) 77 ALJR 989. ↩

4. Fox v Percy (2003) 77 ALJR 989 at [26], Callinan J disagreeing on this issue. ↩

5. See particularly Jones v Hyde (1989) 63 ALJR 349 at 351-352 and Abalos v Australian Postal Commission (1990) 171 CLR 167 at 179. ↩

6. Devries v Australia National Railways Commission (1993) 177 CLR 472 at 479. See also State Rail Authority of New South Wales v Earthline Constructions Pty Ltd (1999) 73 ALJR 306 at 307 where the above passage was quoted with approval by Gaudron, Gummow and Hayne JJ. ↩

7. Fox v Percy (2003) 77 ALJR 989 at [88]. ↩

8. Fox v Percy (2003) 77 ALJR 989 at [88]. ↩

9. Fox v Percy (2003) 77 ALJR 989 at [90]. ↩

10. At record page 137. ↩

11. Incorrectly giving page 143 of the record. The matter is dealt with at p 112 – 113 of the record.