Future loss of earning capacity
105The plaintiff makes a claim for future loss of earning capacity in the submitted sum of $159,033. In contrast, the defendant has submitted that any award of damages for future loss of earning capacity should be in the form of an economic buffer or cushion, in the rounded sum of $100,000. The parties are in agreement that these sums are suggestions for a range, but do not constrain an assessment of this head of damage.
106The reasoning behind the plaintiff's submission involves three stages of calculation. The first stage assumes a net loss of earning capacity of $20 per week for an estimated five years from the present time, and discounted by 10 per cent for vicissitudes, which yields the sum of $4167 net. The second stage assumes that after those five years have passed, it is likely that the plaintiff will experience a six-month period of total incapacity whilst undergoing and recuperating from an anticipated right ankle arthrodesis procedure. The claim for that period is $700 per week net over 26 weeks but deferred on the 5 per cent tables for 5 years (x 0.784) which yields an amount $14,269 net. The third stage assumes that thereafter, there is a continuing loss of earning capacity of $350 over the remaining 17 years of the plaintiff's working life to age 65 (x 602.8) and deferred for 5 years (x 0.784), and allowing a discount of 15 per cent for possible adverse vicissitudes, to yield $140,597 net. The total of these 3 staged calculations is in the amount of $159,033. I will return to my analysis of the assumptions underlying that submission after reviewing the defendant's submissions, the medical evidence and the evidence of the plaintiff.
107The rationale behind the submission made on behalf of the defendant is that the plaintiff is in employment that is comparable to his pre-injury employment without discernable ongoing loss, and he is likely to continue in that employment over the remainder of his working life. In those circumstances, it was argued that a buffer of the order of $100,000 represents proper compensation for the plaintiff's future loss of earning capacity. I will return to consider that submission after reviewing the medical evidence, as I consider that in order to obtain a proper insight into the plaintiff's claim for loss of earning capacity, it is relevant to examine the medical evidence on this issue.
108The plaintiff's general practitioner, Dr King has provided a very brief report dated 12 March 2010. That report provided a short overview of the treatment that the plaintiff has received since 21 August 2006. Dr King focused upon the period following the plaintiff's return to work and commented that the plaintiff should be subject to sitting and lifting restrictions, these being sitting with his foot elevated and lifting no more than 15kgs on a single lift, and restricted to no more than 7.5kgs with repetitive lifting, noting that the plaintiff was not to walk with such weights.
109The reports from the plaintiff's treating orthopaedic surgeons, Dr Fox and Dr Newman, offer only limited insight into recommended work restrictions because their reports are respectively dated 19 May 2008 and 31 August 2008, which were times when the plaintiff was still undergoing active treatment, and his medical condition had not yet stabilised. What does come from my overall reading of the more discursive reports of Dr Fox, is that my own impression of the plaintiff being a stoic understater of his physical limitations, has been confirmed.
110In my view the first relevant insight from a specialist orthopaedic surgeon comes from the first report of Dr John Harrison, which is dated 31 July 2008. At that time, Dr Harrison stated his opinion as follows:
"He is not fit for his former normal work activities, which involved a fair bit of time on his feet, rather than simply sitting at a desk and processing a search for spare parts and obtaining them, as was his role as a spare parts interpreter with his firm.
He has got back to light restricted duties again and his loss of capacity for work is substantially as a direct consequence of the effects of that injury on 29 June 2006.
I would agree that he is only appropriately fit for light restricted duties involving a substantial part of the time in sedentary work where he can sit, rather than having to stand and frequently or get up and down frequently from a desk or a chair to attend to customers and do other tasks.
He will remain permanently incapacitated for the normal, active role and position that he filled before, based on this assessment here today and that incapacity is a direct result of the accident on 29 June 2006 and the effects that it has had on him."
111When Dr Harrison saw the plaintiff again on 18 January 2010, his assessment was essentially unchanged, and was expressed as follows:
"Since I last saw him, there has been deterioration in range of active movement of the right foot at the ankle and yet, he has resumed work and has coped back at work on modified duties in a satisfactory manner.
His on-going problems have included diminished, active movement in the right foot at the ankle, a persisting tendency to limp favouring the right and sometimes the left leg and residual pain patterns at and around both knees left worse than right with pain and restricted mobility in the right foot and ankle continuing to trouble him. He has shown an ability to get back to modified the duties again with which he is coping, but he does not have the capacity or mobility to safely and confidently expect or anticipate that he will get back to his former, normal work activities as a spare parts interpreter with his company, based on this further assessment."
112It is also pertinent to note that at the time Dr Harrison gave that view, it was in the context of his opinion that there was likely to be some further deterioration through arthritic change in the right ankle at the time. Significantly, Dr Harrison's views did not include any consideration of the plaintiff's back or knee problems, which are also of relevance to the issue of loss of earning capacity. When Dr Harrison saw the plaintiff again on 9 December 2010, his opinion concerning the plaintiff's work restrictions was in the following terms:
"He is fit enough for restricted duties but certainly not fit and he is unlikely to be fit again in light of his on-going impairments to perform his former and normal previous work activities on other than modified duties as a spare parts interpreter with his company and they seem to have adapted to that changed role for him and had provided suitable, ongoing employment."
113When Dr Pillemer assessed the plaintiff on behalf of the defendant's insurer on 18 November 2009, his commentary on the plaintiff's fitness for employment was as follows:
"Mr Chaseling is obviously a very well motivated gentlemen and back doing his normal hours but on restricted duties which in my opinion are very appropriate at this stage. He will need to continue with his restrictions in the future.
It is predictable that Mr Chaseling is going to have significant ongoing problems of his right foot and ankle region in the long term and, as suggested above, deterioration in his condition can be anticipated. This is likely to be on the basis of the development of an early osteoarthritis in the ankle with increasing restriction on movement and increasing discomfort."
114Dr Michael Couch, a consultant occupational physician, examined the plaintiff on the 18 February 2010. He gave a very detailed and practical consideration of the work restrictions that applied to the plaintiff's situation. His opinion on the plaintiff's work restrictions was expressed in the following terms:
"I agree with Dr Harrison's previous statement, that Mr Chaseling is not fully fit for [h]is pre-injury duties. As an occupational physician, I recommend the following restrictions:
Not to lift of (sic for or) carry more than 15 kg occasionally or 10 kg more repetitively
Not to lift below the knee height (because of difficulty in ability to squat fully)
No heavy pushing or pulling, for example heavy or awkward trolleys or exerting strong force on tools or materials
Whenever possible, you should work seated, preferably with right foot elevated to reduce pain and swelling
When working seated he needs to have a good ergonomic workstation
Not to walk more than 300 m without a rest break or more than 3000 m per working day
Avoid more than occasional use of up to one flight of stair (for example to access workplace) with no carrying of loads up and down stairs
Not to use at all of ladders/stepladders
Not to squat or crouch fully
Avoid negotiating steep slopes or rough ground
No running
If driving in the course of his duties, not to drive more than 45 minutes without a rest break out of the vehicle, or more than three hours per working shift
Needs to be able to travel with little walking between home and workplace - ideally you should be able to drive within 100 m of the workplace.
Note that these restrictions are not consistent with the full range of duties of any of Mr Chaseling's previous jobs. He is capable of performing the sedentary portion of his job (mainly sitting at a computer/on the phone/working as a spare parts interpreter taking orders etc). He would be quite limited doing physical store duties and is not suited for more than occasional picking and packing of orders."
115When Dr Giblin assessed the plaintiff on 23 March 2009, he expressed the following opinion on work restrictions:
"I would assess him as being permanently unfit to work using his right leg for periods of walking, standing, for more than about 10 minutes, and permanently unfit to use his right leg in a repetitious impact fashion, stair or ladder climbing or working at heights or doing labouring duties. These restrictions would apply indefinitely to his domestic and recreational activities."
116The plaintiff's own evidence of his awareness of the need for him to observe work restrictions was somewhat limited. He stated that when he returned to his work after recovering from the cumulative effects of his 6 injury related surgical procedures, he found it hard at work. He said that he had concerns over his safety, and experienced pain in his right leg most of the time: T. 30.5 - T. 30.25. That was at a time when he was still on crutches. He noted that following all of the surgeries he has had performed on his right leg, the pain still remains and has not receded: T. 32.40.
117On his return to work with the defendant, the plaintiff was no longer required to do ladder work. He was not required to do any heavy lifting, and he kept his walking around the premises to a minimum whereas beforehand these activities formed part of his duties. The plaintiff's post-injury work with the defendant involved him doing more telephone work, having customer contact over the counter, and taking on some extra duties such as banking. It was also agreed that if his work as spare parts interpreter required him to have access to higher shelving, he would be assisted by a storeman in order to do that aspect of the work. The plaintiff's post injury work with the defendant involved him carrying out deskwork for about 60 per cent of the time, with some residual walking. That was a regime that would be expected of an employer with legal obligations towards an employee injured in its workplace.
118The evidence disclosed that just before the hearing, the plaintiff exercised his right to change his place of work in the hope of securing better conditions for himself. The plaintiff gave evidence that he is currently aware of the need to avoid physical work that would adversely affect his injured condition. He said that he has discussed the matter with his new employer: T. 37.5 - T. 37.46. It is his opinion that his new employer, according to him, is understanding of such matters: T. 38.1. That may well be the case for the moment and there is no evidence to the contrary.
119However, in reviewing the plaintiff's own evidence on work capacity issues, I consider that it is overly optimistic of him to assume that over the remainder of his working life, the restricted work duties that will apparently be available in his new job, or an equivalent position, will remain open to him.
120Having regard to the specific constraints on the plaintiff's future working activities, as has been canvassed by the medical experts whose reports were tendered, and which are unchallenged, I consider that the plaintiff's own evidence on his future work difficulties was overly simplistic. I consider this to have been in keeping with my own assessment of him as a stoic under-stater of his problems. In this context, I consider that the plaintiff has most probably understated the difficulties ahead of him, and was lacking a full insight, probably because of misplaced optimism. I take that view because the plaintiff's evidence on this subject was relatively brief and sparse, and did not specifically address the concerns over work duties that had been expressed by the medical experts who had assessed him, particularly Dr Couch, Dr Harrison and Dr Giblin.
121In coming to that view, I do not wish to be understood as being critical of counsel for the plaintiff, who has probably assumed that the unchallenged nature and content of the medical opinions on work restrictions, allowed him some scope for economy of questioning on this issue during the evidence in chief. The light touch of cross-examination on that evidence, from the defendant's perspective, was also understandable. However, I must assess the evidence on this issue as a whole.
122The plaintiff has stated that he understands that his new employment will be for a salary of $47,500 per annum gross, plus the statutory superannuation entitlements. That sum is $1500 per annum more than his last salary in the employment of the defendant. Assuming no allowable tax deductions apply, a salary of $47,500 per annum gross is, according to the currently applicable tax scales, the equivalent of $750 per week net after taking into account the applicable tax rates, and the 1.5 per cent Medicare levy. I consider this sum of $750 per week net to be the relevant background yardstick for assessing the plaintiff's claim for future loss of earning capacity. It is in this context, and against the background of the evidence I have reviewed, that the claim for damages for future loss of earning capacity has to be assessed.
123The plaintiff's employment circumstances, but for his injury, would most probably have been that he would have stayed in regular employment with the defendant, or in a similar position, but with the retained option of exercising his right to seek portability or transfer of his employment to other jobs if he chose to do so. This could occur for salary reasons, better working conditions, or some other reason personal to him.
124The change in the plaintiff's circumstances brought about by the injury was that not only did he have an extended period of absence from his employment, but on his return to work it became clear, based upon unchallenged medical opinion, that he was no longer suited to a range of pre-injury jobs he had been hitherto able to pursue and carry out without difficulty. It was in that context that he has sought alternative employment with an apparently understanding employer. One relevant aspect of that change in the plaintiff's employment has been that he has demonstrated a higher earning capacity than for that which he was deriving earnings whilst employed by the defendant. However, just because he secured that higher paid employment after his injury does not mean that the plaintiff does not continue to suffer a loss of earning capacity.
125The principles by which a claim for loss of earning capacity should be assessed are well settled and can be shortly summarised. If the plaintiff can demonstrate he has suffered an impairment to his earning capacity, insofar as an award of damages can achieve this, he is entitled to an award that places him in the same position he would have been in if he had not been injured: Haines v Bendall [1991] HCA 15; (1991) 172 CLR 60. Where there is only limited information available to identify a precise monetary basis for projecting a future loss of earning capacity, an assessment of that loss of capacity is nevertheless required, including, where appropriate, the award of a buffer sum: State of NSW v Moss [2000] NSWCA 133. In making such an assessment, it is necessary for a court to be satisfied that the claimed loss of capacity was likely to result in an actual financial loss: Graham v Baker [1961] HCA 48; (1961) 106 CLR 340; Medlin v State Government Insurance Commission [1995] HCA 5; (1995) 182 CLR 1.
126In this case it is clear on the plaintiff's own evidence, and on the medical evidence, that his previously unrestricted ability to work has been adversely affected so as to impair his future earning capacity. So much is plain from his description of his continuing work restrictions and the time line that will lead him to have extensive time off work for an operation to arthrodese his right ankle. Even after he has that operation, he will still be subject to the medically assessed work restrictions identified by Dr Couch. His impairments will remain permanent, and I consider these circumstances justify an assessment of an economic loss buffer in this case.
127On an analysis of the medical evidence, I have already identified, I consider that the 3 stepped buffer approach to the assessment of the plaintiff's claim for damages for future loss of earning capacity, as was submitted on behalf of the plaintiff is the preferred approach. In my view, given the specificity of the medical evidence, which identifies different periods of relevance to the issue of the plaintiff's future earning capacity, I consider this approach to be the more preferable to the single spanned buffer approach advocated by the defendant's submissions.
128In the first step, in practical terms, it is apparent what must be valued is the risk to the plaintiff's earning capacity between the present time and the ensuing 2 years, which is the time I consider it more probable than not he will have his right ankle arthrodesed. In those 2 years, as was predicted by Dr Giblin and the other medical experts, the plaintiff will probably continue to experience a timeline of deteriorating symptoms as has already occurred between the time Dr Giblin and Dr Harrison first saw him, and the times they re-examined him for the purpose of providing their revised reports. In my view, the deterioration on that timeline noted by Dr Harrison, provides a proper basis for reasonably inferring that the deterioration will continue to the time of operative intervention.
129Accordingly, in my view, during that initial 2 years, it cannot be reasonably assumed that the plaintiff will not suffer a continuing earning capacity. On the contrary, I consider that with his ongoing problems in his right ankle, and the effect that has on his gait and general mobility, it must be inferred that he is very likely to have difficulties with his new work. For a start, Dr Couch has identified that the plaintiff should not be driving for more than 45 minutes without a rest break, yet the plaintiff's new work requires that he now drive longer distances from his home to get to and from work, as distinct from the former 10 minute journey between home and his former work with the defendant.
130Then there is the significant number and the extent of employment restrictions outlined in the report of Dr Couch, which I have listed at paragraph [114] of my reasons. In view of those matters I do not think it can be reasonably assumed in favour of the defendant that the plaintiff will not have time off from his work for sick or injury leave due to these problems in the ensuing 2 years before he has the probable arthrodesis. Further, in view of what I have found to have been the plaintiff's misplaced over-optimism about his condition, I do not consider it reasonable, without having heard from the new employer, that the plaintiff's special employment circumstances, as explained by him, would continue seamlessly and without interruption until he has his arthrodesis. Further, in the circumstances, the evidence concerning the plaintiff's new employment does not necessarily suggest that employment will be secure in the short, medium or long term. I consider this period of 2 years must be cushioned with a significant economic buffer for the identified loss of earning capacity in that period, particularly since the flexibility of the plaintiff's new employment circumstances remain untested.
131In respect of that first stage I consider that the appropriate buffer should be in the sum of $10,000. I consider that the reasonableness of that component of the buffer can be tested as follows. If the plaintiff had 2 full years of uninterrupted earnings at $750 per week net, assuming no increments, he would be likely to earn income of the order of $78,000 net in those 2 years. When analysed for comparative purposes, a buffer of $10,000 is the equivalent of about 15 per cent of the plaintiff's weekly earnings of $750 per week, or $115 per week, projected at 5 per cent over 2 years (x 99.4), less 15 per cent for potentially adverse vicissitudes. Whilst the buffer has not been calculated in that way, I consider that the testing of it in this way confirms it as a reasonable amount to award to cushion the plaintiff for impaired earning capacity for the ensuing 2 years.
132The nature of the second stage of the buffer indicates that it can be identified with a greater degree of precision, and is amenable to a more definite calculation. The medical evidence disclosed that barring complications, which the plaintiff has already experienced in the course of his previous 6 episodes of surgery, and for which he has had extended time out of the workforce for nearly 2 years, he will need 6 months off work to recuperate from the proposed arthrodesis. Given the nature of the surgery and the fact that he has already had complications from the prior surgical treatment, and given he is considerably overweight and this has caused previous problems with post-operative mobility according to the medical reports, I consider that an extended period of 12 months off work rather than 6 months would be an appropriate buffer to safeguard the plaintiff against loss of earning capacity in that period.
133In this instance, this is a potential vicissitude that operates against the defendant. The calculation of $750 per week loss of income for 1 year, is the equivalent of $38,000. After allowing for a discount of 15 per cent for positive vicissitudes in favour of the defendant on this aspect, this yields the equivalent of $32,000. I consider that in his first 2 years in a new job, it would be unlikely that the plaintiff would be able to accumulate an entitlement to 12, or even 6 months, of sick leave to cover such an extended absence. As a result, I consider that this component of loss of earning capacity is bound to arise. Further, such a long absence from work due to incapacity would ordinarily give rise to a concern that his position would remain open for him for such a long period. Accordingly, I consider that the second component of the buffer should be of the order of $32,000.
134The third component of a buffer for future loss of earning capacity in this case should reflect the fact of the plaintiff's arthrodesed ankle and his altered gait. There is no suggestion in the medical evidence that the plaintiff's knee problems and back problems would abate after recuperation from the arthrodesis procedure. Neither is there any suggestion in the medical evidence that the work restrictions identified by Dr Couch would no longer apply. I consider that due recognition must be given to the fact that the plaintiff, in his 49 th year, after recuperating from his arthrodesis, and being still subject to the significant work restrictions that have been identified, will be at a very significant disadvantage as a competitor on the open labour market, as well as being difficult to place in restricted employment which caters for the identified restricted duties.
135In those circumstances, I consider that a buffer of the order of $160,000 would be appropriate for the third component. I have tested the reasonableness of that amount by recognising it to be the equivalent of 50 per cent of $750 per week, namely $375 per week, projected at 5 per cent over 16 years to age 65 (x 579.5) and discounted by 15 per cent for potentially adverse vicissitudes, and deferred for 3 years (x 0.864) to yield $159,594, rounded to $160,000. I think this is appropriate because in that final period of the plaintiff's earning years, the identified restrictions, including the effects of his ankle arthrodesis, will obviously interfere with his movements and with his ability to work. He will still be restricted, and he will obviously be difficult to place in the workforce.
136When these 3 buffer components are combined, they amount to the total sum of $202,000. Recognising that the identification of an appropriate buffer is not intended as a precise calculation, although the testing of it can appear to be so, I propose to round down the identified buffer down to the sum of $195,000. I consider this rounded down sum is an appropriate buffer to cushion the plaintiff against all of the future adverse impacts his injury related disabilities are likely to have upon him, in interfering with him exercising what would otherwise have been an unrestricted capacity to pursue his earning capacity in the future. I therefore assess the value of the plaintiff's claim for future loss of earning capacity in the sum of $195,000 .