Cullen v Trappell

I would allow both the appeal and the cross-appeal and reduce the amount of the judgment to $125,322. Since the matter was in the nature of a test case, I would order the appellant to pay the respondent's costs.

I have had the advantage of reading the reasons for judgment prepared by Gibbs J. I am in entire agreement both with his statement of principle and with its application to the facts of this case. I accordingly agree with the order which he proposes.

I agree with the judgment of Gibbs J. in Atlas Tiles Ltd. v. Briers [57] to the extent to which it deals with the question whether British Transport Commission v. Gourley [58] should continue to be followed in Australia. Being of opinion that the decision should continue to be applied in this country, I agree with the reasons for judgment prepared by Gibbs J. in the instant case.

I would therefore allow the appeal and the cross-appeal and reduce the amount of the judgment to $125,322. The appellant should be ordered to pay the respondent's costs.

The argument in this appeal focused on the question whether income taxation should be taken into account in assessing the future economic loss of a personal injury plaintiff. As there is a danger of dealing with the question in the abstract (and because the appellant suggested that the amount awarded by the Court of Appeal was, viewed as a whole, excessive), I will briefly state the facts, which are taken mainly from the findings by the trial judge and the Court of Appeal.

On 9th August 1974, the plaintiff, aged thirty-two, stopped on a highway while travelling from Sydney to Perth to assist another motorist whose car had broken down. He was injured when a semi-trailer struck that car. He had left school at fifteen, entered the printing trade when he was about twenty-two as a general hand, and advanced by seniority. Until shortly before the accident, he was working as a rotary printing press machinist for John Fairfax & Sons Ltd., a large, well-established firm, and earning $8,449 per year; he held an executive position in his trade union. He led a very active life, and for some years had been an official in motor racing. He was married, with two young daughters. His wife was employed as a typist with Qantas. After flying to Perth to investigate prospects, he and his wife decided to move there. He had secured a position as a rotary printing press machinist with another large and well-established newspaper firm, Western Australian Newspapers, and had found a suitable house available for purchase at $20,000. He sold his house and possessions in Sydney, bought a new car, and had enough money to finance the purchase of the new house.

His injuries were very severe: bilateral comminuted fractures of the shafts of both femurs, a fracture dislocation of the left ankle, fracture of the right wrist, an injury to the stomach with internal bleeding, severe shock, pain, headaches, extreme bruising and soft tissue damage to the lower abdomen. He was treated at Hay Hospital and Griffith Base Hospital. He remained in hospital for over eight months until 15th February 1975 and suffered considerably. Both legs were in traction in Thomas splints. When his fractures did unite, his legs were deformed. He first walked with a frame, and was discharged on crutches. While he was in hospital, his wife obtained a flat for herself and the children in Griffith. After he came out of hospital, his wife had to nurse him; he could not attend to his own toilet requirements. He attended a physiotherapist daily. Because his wife had to drive him and look after him constantly, she was unable to work.

They stayed in Griffith until April 1975 then continued on to Perth. In Griffith, his family had been living on social services and his savings which were now eroded (social services were $57 per week; the rent was $40 per week). His job in Perth was gone and he was financially unable to purchase the home. He was still using a walking stick and treatment for his legs was continuing. His left leg was bent. He tried to work but his leg became so painful that his doctor decided to rebreak the leg and reunite it with a pin. This operation resulted in a good alignment. He was in hospital for four weeks; after discharge he wore a caliper for about two months with crutches, and then used a walking stick for two months. In June 1976, he entered Melville Rehabilitation Centre.

He has tried to do the work of a well and healthy man, and in this he has failed. The fact that he has failed has again caused him distress and depression. He first obtained work in a sheltered workshop where they were doing some printing work and he was able to make his own pace and do his work unhurried. First of all he had to teach himself the art of offset printing, in which he was not experienced nor trained. He did this, and after carrying on in this work for some time it was decided that the workshop would amalgamate with another. He was then working in the printing shop of the combined organisations, in which everybody else working on the printing was able-bodied, and it was a commercial printing undertaking. This meant that it had to produce work in commercial competition with other printers, and he could not stand up to that. His physical disabilities were such that if the work was difficult for him be became tired and distressed, and he had eventually to give it up. He tried to work at a garage, in a greasing pit; he tried to drive a fork lift, and he has attempted other jobs. Finally he has finished back in the sheltered workshop, where he receives a salary and allowances amounting to $104 a week after tax and this is his present situation.

His condition will not improve. Indeed, with the passage of time it is more likely to worsen. He still has a Kuntscher nail in his thigh and that will have to come out at some time, and there is a possibility - if not a probability - that he will have arthritis in the knee joint.

The injuries he has received have had a depressing effect on him mentally. He seems, looking at him in the witness box, to be doing his best to overcome that and I think he has, to a large extent. However, it goes without saying that he will never work as a printer again, and it is difficult to see what he will do. He may be able to find some skilled work that he can do which does not involve standing all day. No doubt when he receives his damages he will find something to do and some investment for the money. But he has to be assessed, I believe, as a person who has had a very considerable, if not devastating, loss of his capacity to earn. His chosen work, his skilled work, is forever closed to him, as indeed is any other work which requires him to stand all day and to move with any agility, to lift, to perform work which requires sustained effort or requires physical strength in all his limbs. He has - and I am satisfied this arose from the injuries, although he was not treated for it in the hospital having regard no doubt to the severity of his other injuries - suffered an injury to his back, and this restricts his capacity for lifting.

At the trial on 24th May 1977, his medical expenses were agreed at $9,300 and his loss of wages to trial at $14,500. Weekly earnings of a rotary printing press machinist in Western Australia were $213.70 gross, or $170 net, the tax payable being $43. His actual weekly wages were $109.87 gross, or $104 net, that is, $66 less than the net earnings of a printing machinist. The trial judge's assessment of future economic loss was based on a pre-injury working life as a machinist of thirty years which was discounted to twenty-five years; the $66 net loss over twenty-five years was discounted at 6 per cent to arrive at $45,311. To this, the judge added $40,000 for pain and suffering, loss of amenities, and loss of enjoyment of life, bringing the damages to a total of $109,111. Influenced by the plaintiff's losses (for example, a similar house would have cost $55,000 at the time of the trial) which he felt could not be recovered as damages, the trial judge awarded interest on the damages at 10 per cent from the accident to the time of trial (two years and nine months). The amount of interest, $30,005, brought the total to $139,116.

The Court of Appeal increased the amount for future economic loss to $71,282, basing this on gross wage loss rather than net, in accordance with the decision of this Court in Atlas Tiles Ltd. v. Briers [59] which was given after the trial. However, it reduced a total verdict of $137,662.

The trial judge followed the prevailing approaches to assessment which operated unjustly against the plaintiff in a number of ways. The assessment of the loss of future earning capacity is unrealistic. The calculation assumes that the earnings of a worker (in a pre-injury occupation of the plaintiff) will remain constant at $213.70 per week for the next thirty years after the date of the trial, which is absurd. This approach also ignores the probable increase in real wages reflected throughout the Australian community (these had averaged about 3 per cent per year over the twenty-five years before the trial, see Report of the Working Party on the Measurement of Labour Productivity, Department of Employment and Industrial Relations, November 1975). It also ignores increases due to normal age progression and promotion. Most people tend to progress to a higher level of pay, through promotions, seniority, or long service. There was a strong likelihood that the plaintiff would have done so. The evidence was that "in the newspaper industry everything works on seniority, so you start at the bottom and work your way to the top". As well, the evidence shows that the plaintiff had the capacity and the will to better himself. Instead of this being taken into account by way of increase in the assessment, the amount was decreased by discounting the thirty years of his probable working life as a machinist to twenty-five years (apparently to allow for adverse contingencies).

Thus, the assessment of his future economic loss on the basis of twenty-five years of either a net loss of $66, or gross loss of $104, is unjust to him. The injustice is compounded when the notional wage loss is discounted by 6 per cent. That discount rate is a reflection of inflation. To ignore the probable effects of inflation on future earnings or expenses while taking it into account by adopting inflated interest rates when assessing the present value of those earnings or expenses is clearly an injustice to injured plaintiffs.

The trial judge adopted the net wage loss, that is, he deducted tax from the plaintiff's actual earnings and from his notional earnings (if uninjured). However, although he took tax into account in assessing the value of the losses, he did not take it into account in assessing the value of the amount awarded as restitution for those losses. Thus, he measured the plaintiff's loss by using the amount of $66 per week clear of tax, but in purported restitution awarded a sum to restore the $66 a week which would be liable to tax. The extent to which it is liable is not easy to calculate because there is an element of capital as well as income in the notional figure of $66 per week. In this Court, the defendant conceded that, if tax were taken into account on the sum awarded, the 6 per cent discount should be reduced to 4 per cent (4.08) to allow for 32 cents in the dollar income tax so that a net loss of $66 per week would be assessable at $54,430 instead of $45,311 awarded by the trial judge (that is, an increase of 20 per cent). Even so, this adjustment does not take account of the effect on the rate of income tax of probable increased earnings from investment of the amount ($40,000) awarded for pain and suffering, etc., or on part of that amount. Although an injured plaintiff should be able to treat such a sum as solatium and spend it freely without necessity for investing it, the practicalities of life (especially for plaintiffs who are given inadequate awards for their economic loss) are that they must invest it. When income from other components of an award is taken into account in serious personal injury cases, the effect of considering tax may sometimes be to increase the amount which otherwise would have been awarded for the loss of future earning capacity.

The theory of taking tax into account is quite logical if it is applied in assessing the value of the restitution as well as of the loss; in practice, however, as in this case, it is applied only to the assessment of the loss. The assessment at the trial was typical of assessments after British Transport Commission v. Gourley [60] and before the decision of this Court in Atlas Tiles Ltd. v. Briers. The fact that tax is not taken into account in assessing the value of the sum awarded as restitution for loss of earning capacity means that the supposed restitution is illusory. By this, I intend no criticism of the trial judge who dealt with the case in accordance with the prevailing practice. For the reasons I gave in Atlas Tiles Ltd. v. Briers (briefly, that the theory is too difficult to apply in practice, and therefore is applied incorrectly and unfairly towards injured plaintiffs), I remain of the opinion that Gourley's Case should not be followed.

The assessment of the plaintiff's loss of earning capacity from the trial for the rest of his working life at $71,000, let alone $54,000 or $45,000, is a grave injustice to him. In the result, he, like many other plaintiffs in serious personal injury cases, has received an unjustly low assessment of damages because of the techniques used to depress damages.

The appeal should be dismissed. I agree with Gibbs J. that the cross-appeal should be allowed in respect of the interest.

This appeal comes before the Court by way of special leave to appeal from the decision of the Court of Appeal of the Supreme Court of New South Wales. Special leave was granted so as to enable the Court to reconsider its decision in Atlas Tiles Ltd. v. Briers [61] . I do not need to set out the facts of the present case which are fully stated in other judgments. Nor do I need to refer to the facts or in detail to the judgments of the members of the Court who heard the Atlas Tiles Case.

This Court is free to re-examine its decision in the Atlas Tiles Case and is also free to differ from the decision of the House of Lords in British Transport Commission v. Gourley [62] . We are not bound by that decision nor by the decision in the Atlas Tiles Case but we must pay close attention to the reasoning in both those cases, including therein the reasoning of those who dissented from the respective decisions. The decision of the House of Lords has been the subject of much discussion in textbooks and learned journals and its correctness in principle has been the subject both of vigorous attack and of equally vigorous support.

The other authorities dealing with this subject were fully discussed by the members of the Court in the Atlas Tiles Case and have again been discussed in other judgments in the present case. I do not think that I can usefully add to the discussion of the authorities both before and after Gourley's Case.

After consideration of all the judgments in the Atlas Tiles Case and the speeches in Gourley's Case and of the argument in the present case I find myself in agreement with the reasons for judgment of Jacobs J. in the Atlas Tiles Case so far as he deals with loss of earning capacity. Like Jacobs J. I find myself unable to distinguish in principle between the problem raised in this Court in the National Insurance Co. of New Zealand Ltd., v. Espagne [63] and the problem raised in Gourley's Case itself. In Espagne's Case this Court held that an invalid pension payable under the Social Services Act 1947-1957 Cth was to be disregarded in the assessment of damages for personal injuries caused by negligence. The invalid pension was for incapacity, including permanent blindness, which had been caused by the accident in question. It was held that the pension should be disregarded both in respect of the period from the date of the accident to the date of judgment and in respect of the period after the date of judgment. As Jacobs J. said [64] :

If tax is deducted in arriving at the amount of damages it must be because it is deductible in computing, not loss of earnings, but financial or economic loss. Once that is recognized, it becomes impossible to distinguish financial or economic loss reduced because something earned would have been taken away by the state and such a loss reduced because something - a pension - is given by the state as compensation for his inability to earn. Faced with that conflict his Honour went on to observe: A different result in the two classes of case would need to be reached not on a conceptual level but on a level related to the realities, or the justice, fairness and public policy referred to by their Lordships in Parry v. Cleaver. 1. (1961) 105 C.L.R. 569. 2. (1978) 144 C.L.R. at p. 239.

Jacobs J. also took the view that in respect of loss during the period between the date of injury and the date of trial it was possible to calculate the amount of tax with reasonable certainty and without all the difficulties that are involved in Gourley's Case to which he had previously referred. He therefore concluded that in respect of that period the loss of income should be calculated on an after-tax basis. This necessarily involved the making of an assumption that the plaintiff would have remained in the same job or occupation and would have received what was the level of payment prescribed from time to time by the relevant award in the case of plaintiffs whose employment was covered by an award or like determination. In the case of "self-employed" persons and of those not so covered the process of estimation will be much less easy. This is a departure from the logical consequence of the requirement that damages for loss of earning capacity must be determined as at the date of the accident. It may well be convenient and simple in many cases but it appears to be in the nature of a "carry over" from the former notion that the subject of compensation was loss of earnings rather than loss of earning capacity. The latter appears now to be accepted as the correct approach.

It is no doubt a convenient and just procedure in many cases and it certainly is in accordance with current practice to deal with the period between the date of the accident and the date of judgment in that way. If however the general rule continues to be that no account is to be taken of increases in wages or other income due to promotion, changes in awards due to "indexation" or "work value" or other matters in estimating loss of earning capacity, this practice, though realistic, is anomalous. In this branch of the law however anomalies are by no means unknown. At least in the case of a trial held a substantial time after the accident, the use of actual wage rates and actual tax rates during that period is likely to achieve a more just result than the process of using wages and tax rates as at the date of injury.

There is a further reason, additional to those given by Barwick C.J. and Jacobs J., for regarding the use of after-tax figures as unsatisfactory which was pointed out in the course of argument in the present case. Attention was drawn to the problems which arise in the case of a plaintiff who was entitled to and received workers' compensation during the period up to the trial, but who also pursued his remedy at common law. In such a case the Workers' Compensation Act, 1926 N.S.W., as amended, provides in s. 64 (1) (a) that the plaintiff who succeeds in his common law action must repay out of the damages awarded the amount of compensation which the employer or his insurer has paid under the Act. Weekly payments under that Act are gross figures from which tax is deducted. Nonetheless the obligation under s. 64 (1) (a) is to repay the total figure which the employer was liable to pay. This would introduce an unjust anomaly in that weekly payments of compensation would be received after deduction of tax under the Income Tax Assessment Act and yet damages would be calculated upon an after-tax basis so that, in respect of the period between the date of the accident and the date of judgment, the successful plaintiff would be worse off because he would be obliged to repay the gross figure although he had received only the net figure after tax. A similar result is produced by workers' compensation legislation in each of the other States, though the procedural requirements differ.

Notwithstanding that the process of calculating separately monetary loss for the period between the date of injury and the date of judgment has long been the practice, and that indeed in some cases rules of court require that it be treated as "special damage" for which particulars are to be given, it is, as it seems to me, not really defensible in logic. It is plainly inappropriate in a number of cases when coupled with the view that only the after-tax figure should be used, whether calculated accurately with the benefit of hindsight or by the rough and ready method of using the "take-home pay", when the situation requires instalment deductions ascertained by examination of the relevant tables of deduction for a person having the same number of dependants as the plaintiff.

It amounts in practice to treating the period between the date of the injury and the date of the judgment as if it represented temporary incapacity, for which an after-tax figure may be defensible. It also involves treating permanent incapacity as though it relates only to the period subsequent to judgment. This is not readily reconcilable with the view that loss of earning capacity occurs at the moment of injury, though its extent may not be capable of ascertainment until a later date.

Logically indefensible though this practice is, it has become the settled method of calculation, but the use since Gourley's Case of after-tax figures is truly appropriate only where the damage suffered is temporary loss of earnings rather than the loss of earning capacity. It may however be justified by long usage as a step in the estimation of the capital sum appropriate to compensation for loss of earning capacity, but if that is its purpose no real justification remains for using an after-tax figure. If it is in fact used care must be taken to ensure that it does not distort the total figure ultimately arrived at for loss of earning capacity.

The law with respect to the mode of assessment of damages for personal injury has in recent years gone through a process of both refinement and elaboration which has however introduced what appear to me to be in principle serious anomalies. This however is not the occasion for an attempt to rationalize and restate the law in relation to the mode of calculation or estimation of damages for personal injury, even if it were desirable.

The process now used is primarily to take a plaintiff's weekly or other periodic wages or salary as at the date of the hearing, and to subtract from it in the case of partial incapacity the weekly amount which he is able to earn at the date of the hearing. The next step is to calculate the total sum which would be received if that figure represented actual earnings for the balance of the working life of the plaintiff. From the total figure so calculated a reduction is made for what were originally called contingencies but which are now usually referred to as "the vicissitudes of life" and then a chosen discount rate is applied in order to calculate from the appropriate tables the present value of that series of periodical payments. This exercise gives a figure which has, if I may say so a spurious air of precision.

The choice of the rate of weekly earnings as at the date of the trial is, as I have said, a departure from logic which requires the ascertainment of the loss as at the date of the accident itself. It may perhaps be a survival of the earlier approach which was to regard the loss as a loss of earnings, rather than a loss of earning capacity. Such a loss up to the date of hearing reflects generally the changes in the wage rates between the date of accident and the date of the hearing. In respect of that period both inflation and other factors producing increases in monetary wage figures are thus taken into account.

To make as a matter of course an adjustment for unfavourable contingencies which may operate to reduce the estimate for the future, rather than to advert to both favourable and unfavourable contingencies is a departure from logic. However it is not customary to make allowance for the prospect of promotion to a more highly paid position, whether as a result of obtaining higher qualifications by reason of experience or of training either "on the job" or by undertaking appropriate courses and thereby acquiring new skills, at all events in the absence of evidence of such a possibility. These of course are imponderables, as are the risks of illness or redundancy. With due respect to those who have thought otherwise it appears to me that there is no sound basis for supposing that there is always a preponderance of bad luck over good luck. No statistical material has been put forward in support of that proposition. Not all contingencies are adverse nor all vicissitudes, i.e. changes, for the worse. I prefer the view expressed by Windeyer J. in Bresatz v. Przibilla [65] and in Teubner v. Humble [66] where he said:

"No just complaint can be made of the base figure so arrived at by his Honour" [the trial judge]. "But he reduced it by a third, having regard to what he described as "the usual deduction of one-third to one-quarter for contingencies" [67] . This, of course, would be quite correct if he thought that the "contingencies" that he foresaw for the appellant in the future justified such a reduction. But I find it hard to understand why there should be a convention that in all cases one is to take off a third for bad luck, or rather for the balance of future bad luck over future good luck. And, with respect, I am unable to agree in his Honour's reasons for refusing to make any allowance for what he said was the probability that the appellant's rate of pay would have gone up had he remained in his employment until he reached the age of sixty-five. His Honour said that the increases that "might fairly have been expected" "may have done no more than follow the fall in the purchasing power of money and may well not have represented any increase in real terms". But the very fact that wages measured in money go up as the value of money declines is one of the reasons why damages assessed in money have gone up so much in recent times. If damages are to be given for the incapacity to earn wages in the future they should be assessed having regard to the monetary wages that might have been earned in the future. The method adopted produced only the present monetary value of future receipts of wages assumed to continue at the same rate." 1. (1962) 108 C.L.R. 541, at pp. 543-544. 2. (1963) 108 C.L.R. 491, at pp. 508-509. 3. [1962] S.A.S.R., at p. 123.

The decision of this Court in O'Brien v. McKean [68] excludes the effect of inflation from the calculation in so far as it relates to the period beyond the date of the hearing.

All these aspects indicate what appears to me to be a tendency to be selective in the factors which may affect future earnings and therefore enter into the calculation of the value to be attributed to the loss of earning capacity. One can readily understand an unwillingness to complicate the calculation, or more properly the estimation, by including other factors which though logically relevant are difficult to evaluate but this does not seem to me to justify an allowance for adverse contingencies but not for favourable contingencies.

When one comes to consider the question of tax there will be many cases in which its estimation even at the rates prevailing at the date of the trial will present great difficulty. No doubt the case of a plaintiff whose only income is his wages or salary presents a situation where calculation of his tax for a full year as at the date of the trial is relatively simple but only relatively so. His tax will depend not only on the relevant rate but also on both allowable and concessional deductions under the tax regime current in the year of income during which the accident occurred and the rates and deductions in each year up to the date of the hearing. In this exercise the trial judge has the valuable aid of hindsight although even then it may be impossible to calculate accurately what allowable or concessional deductions or rebate would have been available over the whole of the then current financial year if the accident had not occurred. Further complications arise when the weekly deductions under the P.A.Y.E. system change in the course of a year of income either to slow down or to accelerate the rate of deduction so as to produce a particular result over the whole of year of income, as has been not uncommon. It has been said that to take the weekly or monthly pay rate as at the date of hearing is to give the plaintiff an advantage, i.e. an advantage in the sense that changes in rates of wages due to inflation or to re-assessment of "work value" would have been reflected in the most recent awards or determinations of wages so that a higher weekly rate is used. To deny the benefit of some estimate of future adjustment on the same basis is, if I may say so with respect, illogical, though no doubt it makes the task much simpler. Though inflation cannot be regarded as having the same inevitability as death and taxes there have been periods in which reasonable predictions can be made by those with the relevant expert knowledge. No doubt long-term averages may be calculated from past figures and current short-term estimates of the rate of inflation are frequently made by qualified economists. Such estimates are no less a matter for expert opinion than the duration of disabilities, the prospects of their disappearance and the degree of permanent disability, all of which are commonly the subject of expert medical opinion. With due respect I see no reason in principle why such evidence should not be admissible and given, whatever weight the trial judge or the jury think appropriate to give it in the light of other relevant material. However authority is against that view. The result is one which in my opinion works unfavourably to a plaintiff.

It has been frequently observed that it is curious that no question of the influence of tax upon damages for loss of earning capacity, or loss of earnings, was raised until 1949, and that no mention of tax in relation to wrongful dismissal was made prior to 1933, with no decided case between 1933 and 1949. It has however to be remembered that in England prior to 1933 the usual mode of trial for claims in negligence for personal injury was by jury and that after the legislative changes made in that year it became the almost invariable rule that such cases were tried by a judge sitting alone. In Australia it is only in the State of Victoria that it is still usual (though not invariable) for such trials to take place before a jury. It appears to me to be not unnatural that the refined calculations which have come to be involved in the ascertainment of loss to be attributed to impairment or destruction of earning capacity would have been thought generally unsuitable in a trial before a jury. Moreover a jury neither gives reasons for its verdict nor dissects the total and attributes individual figures to each of the elements which enter into the total damage suffered by the plaintiff. Since the decision in Gourley's Case [1] where the trial has to be by jury, appropriate directions must be given by the trial judge as to the manner in which they should take account of the incidence of tax. However it is seldom, or perhaps never, that it is possible to tell to what extent a jury will have attempted the kind of calculations which are now usually employed by judges sitting alone. No doubt they are given both in addresses and in the trial judge's summing up instructions and sample calculations but when the result emerges as a combination of items some of which are exactly calculable, some of which are capable of estimation and some of which represent no more than a value judgment, such as pain and suffering or loss of amenities of life, it can be but seldom that it is possible to say that the jury has made, or wrongly failed to make, any allowance for future tax in their calculations, assuming the result to have been arrived at by calculation. Where trials of claims for personal injury are by judge alone, dissection is not only possible but is almost invariable; indeed in some cases it may be mandatory - see Fire and All Risks Insurance Co. Ltd. v. Callinan [2] in which the trial judge did not dissect, at least as between economic and non-economic loss. The Full Court of the Supreme Court of Queensland remitted the case back to the trial judge for such dissection to be made for the purpose of enabling an appropriate award for interest to be made and that decision was upheld on appeal by this Court. It may well be that it is only since the legislation making the award of interest either permissible or mandatory, according to the particular State legislation, that dissection has become common but it remains impossible in cases of trial by jury.

The effect of all these factors has been to convert what is usually a major item in damages for personal injury, i.e. loss of earning capacity, into a matter of calculation upon specified assumptions rather than a matter of judgment in the light of all the factors, calculable and incalculable. This might perhaps be a just and satisfactory basis, if all factors likely to affect future earnings in monetary terms could be the subject of arithmetical calculations upon some assumed and just basis.

When the nature of the calculation required necessarily excludes some factors which may operate so as to increase the monetary figure placed upon the loss of earning capacity, there appears to me to be no sound basis for introducing what was in 1955 a further unfavourable factor contrary to what had been the established practice. That practice had been established either by a general recognition that rates of tax were irrelevant to the valuation of what was in substance a capital asset, or in accordance with the series of decisions in England, below the level of the House of Lords, to that effect. Such a change appears to me not to have been justifiable unless it had been part of a process of complete restatement which would require account to be taken of all factors which may according to ordinary probabilities affect in one way or another the amount of actual earnings in real terms. In a system which has developed on what may be described as a series of assumptions individually justifiable but collectively incomplete the introduction of a significant unfavourable factor without re-appraising the position of other real, though perhaps less readily calculable, factors is not justifiable.

There is, as it seems to me, an air of unrealilty in the assumption that the plaintiff's wages would remain static at the figure appropriate at the date of the trial and that the rate of tax would likewise remain static for perhaps thirty years.

The decision in Gourley's Case itself, when viewed with the benefit of hindsight demonstrates how unsafe the latter assumption may be. An examination of the rate schedules of the Commonwealth Income Tax Acts of the last ten years will demonstrate how radically they have changed in that period of time. It is not to be supposed they they will remain as they now are for an indefinite period. The manner in which the indexation of the tax scales has been introduced, varied and suspended, is another example which demonstrates that the automatic application of the rates of tax current at the date of trial is likely to be an unreliable guide.

The above considerations are of a very general character and they do not deal directly with the basis expressed for the decision in Gourley's Case [3] , namely, that damages are compensatory only, a principle which is not challenged. The need, which is inescapable, for a judgment to take the form of a single sum of money as a once for all compensation for the totality of the loss suffered by the injured plaintiff makes its ascertainment more a matter of judgment than of calculation, though such a judgment must be formed after an examination of such estimates and calculations as can reasonably be made. The fact that a judgment must be for a single lump sum is itself confirmation that it is proper to treat loss of earning capacity as in the nature of a capital loss. That is not a wholly accurate description because the usual sense in which that term is employed is in relation to disposable assets, but such assets when part of an income earning business or activity are employed in the generation of income. In this sense there is an analogy with a capital asset involved in the conception of earning capacity which is normally employed in the production or earning of income. It has an enduring quality which enables its useful employment throughout the working life of the individual, and no doubt it can be properly said that, like the more usual form of capital assets such as machinery, it suffers from depreciation with the passing of time and for many (but not all) of the population has a calculable end point by reference to customary ages of retirement. Its value in money to an injured plaintiff must reflect in part its productive capacity, of which some measure is provided by current earnings and some by prospects of future earnings, as well as other factors. The value of other forms of capital assets is unlikely however to be directly affected by the individual tax position of the particular owner for such items have substantially standard prices and values on the open market, influenced by costs of manufacture, as well as profitability.

Gourley's Case involved a relatively uncomplicated situation where figures had been agreed on the two assumptions, either that tax was taken into account or it was not. Approximately half the relevant period until the assumed retirement from the firm had already gone by, so that no question of an assumption that the tax rates would remain constant for a long period of time arose.

The general tendency appears to have been to disregard matters which are in truth not capable of precise estimation notwithstanding that they are both relevant and probable. This however is to proceed on the footing that damages are a matter of arithmetic only, not of judgment in the light of all the circumstances. All the circumstances must be examined, those the consequences of which are capable of calculation and those whose existence and consequences are predictable but not capable of arithmetic calculation, though monetary compensation must be provided for them.

All these considerations point to the conclusion that the use of after-tax income, whether calculated roughly or as exactly as may be possible, as at the date of the trial is to use what is only one consideration as if it were an exact measurement. A figure for loss of earning capacity can properly be arrived at only by reference to a number of factors, most of which involve an exercise of judgment and not mere arithmetic.

Accordingly I am of opinion that this appeal should be dismissed, even though the Court of Appeal reached its conclusion by giving to mere calculation an undue weight, but in a manner which effected a reasonable balance when the adverse treatment of the other factors to which I have referred is taken into account.

In 1955 the House of Lords delivered its decision in the case of British Transport Commission v. Gourley [4] . That decision sparked a wide ranging controversy which eventually found expression in the decision of this Court in Atlas Tiles Ltd. v. Briers [5] . In that case by a majority decision the Court determined that the rule in Gourley's Case should no longer constitute the law for Australia.

This case requires the Court to reconsider its decision in the Atlas Tiles Case. In doing so, it has had the benefit of detailed written submissions from the parties.

Each of the Justices who constituted the Court in the Atlas Tiles Case delivered detailed reasons for the conclusions to which they came. Collectively, the judgments in that case amount to a thorough and comprehensive review of the issues that are involved. In the circumstances, I do not think that anything is to be gained by my writing a detailed opinion. The matter has been so fully canvassed that I am unable to contribute any fresh material to the debate.

It suffices for me to say that I agree entirely with the dissenting views expressed by Gibbs and Stephen JJ. in the Atlas Tiles Case.

There were a number of other questions to be determined in this case. With regard to these questions I have had the advantage of reading the reasons prepared by my brother Gibbs. I agree with those reasons.

I would therefore allow both the appeal and the cross-appeal, and make an order in the terms proposed by Gibbs J.