Was the judge in error: decision
37 The object of damages awarded for tortious injury is to put the plaintiff in the same position, so far as money can do so, as he would have been in if he had not been injured.
38 Damages for economic loss are conceptually for loss of earning capacity (see for example Medlin v State Government Insurance Commission (1995) 182 CLR 1 at 4, 16; Husher v Husher (1999) 197 CLR 138 at 143). Damages are not recoverable unless the loss of earning capacity has been or will be productive of financial loss (Graham v Baker (1961) 106 CLR 340 at 347; Medlin v State Government Insurance Commission at 3). In effect, the lost earning capacity is valued according to the earnings it would have brought to the plaintiff.
39 In recognition of the object of the award of damages, it is necessary to allow, amongst other positive and negative contingencies, for the contingency that the lost earning capacity would have been lost in whole or part from a cause independent of the defendant's tortious act. The earnings which the lost earning capacity would have brought to the plaintiff would have been more or less according to the duration and extent of its exercise, and there would be over-compensation if the lost earning capacity were valued regardless of the possibility that it would otherwise have been lost. Since the court acts on facts rather than speculation where it can, if prior to the hearing there has been an event which would independently have caused loss in whole or part of the lost earning capacity, that event must be taken into account in determining the duration or extent of the exercise of the lost earning capacity and so in arriving at the plaintiff's damages.
40 This was the reasoning in Jobling v Associated Dairies Ltd and the judgment of Windeyer J in Faulkner v Keffalinos. It is compelling, however difficult it may sometimes be to apply it to the facts. Conformably with it, a plaintiff's damages are assessed according to the fact rather than the contingency that his earning capacity is later wholly lost from the independent event of death (Jaksic v Cossar (1966) 2 NSWR 581) or illness (Jobling v Associated Dairies Ltd), or lost for a period of time from an independent event such as a heart attack (Bridge Printing Pty Ltd v Mestre [1999] NSWCA 342). The known contingency in Leschke v Jeffs (1955) QWN 67 was the plaintiff's imprisonment for ten years, which was regarded as diminishing his earning capacity while in prison and on the labour market after his release: it could alternatively be seen as going to the exercise of his earning capacity. As was said by Windeyer J in Faulkner v Keffalinos at 85 -
"The impairment of a faculty, such as a capacity to earn money, is not like damage to property. The capacity has no value unless it be exercisable. It is only while, and for so long as, it can be exercised that an impairment of it can produce a pecuniary loss. It is for this reason that in assessing damages for the destruction or reduction of earning capacity an allowance must ordinarily be made for the contingency - if in the particular case it is seen as a reasonable possibility - of interruptions of a man's working life by periods of unemployment, sickness or accident. If in fact any of such things occurs before the assessment has to be made, what would have been allowed for as a possibility has become an actuality: the risk of an interruption of earnings has materialised and a hypothetical deduction to be made in the computation of damages has crystallized. It is therefore a mistake to think of damages recoverable for the consequences of the first accident as diminished by the second accident. So far as the damages result from the impairment of earning capacity, the second accident merely supplies a measure of one thing that must be taken into account, namely the risk of an accident."
41 In my opinion, the same must go for the fact rather than the contingency that the plaintiff's earning capacity is wholly or partially lost from a later independent accident. It would be absurd to take account of the contingency of death or illness when hypothetical but refuse to take account of it when a known fact, and similarly for the contingency of accident.
42 In Luntz, Assessment of Damages for Personal Injury and Death, 4th ed, para 2.6.12 it is suggested that the second accident does not merely supply a measure of the risk of an accident, because "[t]he first accident has changed the situation, so that the contingencies relate to the hypothetical world without the first accident, whereas the second accident occurs in the real world as modified by the first accident". In this way the learned author distinguishes between a subsequent natural condition such as the illness in Jobling v Associated Dairies Ltd, and a subsequent accident.
43 It is well established that it would not avail the respondent to suggest that, but for the mining accident, his life may not have taken the course by which he was driving at a time and place coincident with the cow (see Faulkner v Keffalinos at 86; March v E & M H Stramare Pty Ltd (1991) 171 CLR 506 at 516; South Australian Asset Management Corporation v York Montague Ltd (1997) AC 191 at 213). As Professor Stapleton convincingly shows ("Perspectives on Causation" in Horder (ed), Oxford Essays in Jurisprudence 61), this is a normative choice of a theory of individual responsibility. The learned author's distinction runs counter to the choice in the law's rejection of an inflexible "but for" test in that respect, and an accident is one of life's misfortunes equally with illness; further, impossible questions of causation would arise as to both subsequent accident and illness occurring in the world as modified by the first accident.
44 In my opinion, if it was fact rather than contingency that the respondent's earning capacity as a miner would wholly or partially have been lost from the independent event of the car accident, that was to be taken into account in arriving at his damages. It is not necessary to decide whether Baker v Willoughby is good law so far as it stands for a different result where the later independent event is tortious. No doubt strict logic does not fully govern the assessment of damages, for example as to the "but for" test; see also the differing views as to the contingency of remarriage in De Sales v Ingrili (2002) 212 CLR 338. It may be that Baker v Willoughby can be justified on the rationale of ensuring that the victim of successive tortious injuries receives full compensation, although it is not easy to see why that should be at the expense of the first tortfeasor. I am not sure it was established that the respondent was entitled to workers compensation with respect to the car accident, but even if it was there is no reason in policy for the appellant to pay more in damages because of a happenstance such as that the respondent was driving home from work at the time of the accident. So far as Baker v Willoughby rested on the workers compensation case of Harwood v Wyken Colliery Co (1913) 2 KB 158, the reliance was held to be misplaced in Jobling v Associated Dairies Ltd, and I do not think the rationale is enlivened.
45 In Godden v Metropolitan Meat Industry Board (1972) 2 NSWLR 183 it was said (at 191) that the conclusion in Faulkner v Keffalinos did not "support a view of the law consistent with that expressed by Windeyer J", and that the damages of $20,000 despite later injuries which "in effect swamped any effect that the earlier injuries might have continued to have" were an application of "a principle the same or akin to that which was enunciated by the House of Lords in Baker v Willoughby". These observations were obiter. In Faulkner v Keffalinos none of Barwick CJ, McTiernan J and Menzies J expressly referred to the plaintiff's later accident. Gibbs J referred to it, and regarded it as a contingency which had become the fact; his Honour's view of the law was congruent with that of Windeyer J. It is not clear whether the plaintiff's later injuries were regarded as tortious, and the decision was prior to Jobling v Associated Dairies Ltd; the $20,000 is explicable if it was not thought that the later injuries wholly swamped the effect of the earlier injuries. The observations in Godden v Metropolitan Meat Industry Board were also prior to Jobling v Associated Dairies Ltd. I consider that the reasoning of Windeyer J can properly be followed.
46 As I have said, the judge made no finding as to the comparative effects of the mining accident and the car accident on the respondent's earning capacity. I do not think that this was because he implicitly found that the neck and shoulder injuries did not overlap with the back injury as causes of the respondent's overall loss of earning capacity: indeed, he appears to have recognised overlap in saying at one point that the back injury and the neck and shoulder injuries both "contribute significantly to [the respondent's] mental and physical condition". The effect of the neck and shoulder injuries in independently precluding work as a miner was plainly a matter for consideration, and with due recognition of the advantages of hindsight and of reading the appellant's submissions to the judge in cold print, it was presented for consideration. Either because it was not fully appreciated at the time or because it was overlooked, it was not dealt with.
47 It may be that the respondent's loss of earning capacity from the mining accident was not wholly overtaken by the loss of earning capacity from the car accident. But that is not an answer to the appellant's submissions. Even if there were some ongoing effect of the back injury on earning capacity, it was necessary to consider whether the neck and shoulder injuries would have incapacitated the respondent from working as a miner. If they would have, continuing economic loss assessed on the basis that he could work as a miner should not have been awarded. The contingency of the car accident was known as a fact at the time of the hearing, and account had to be taken of it. In not doing so the judge was in error, and his award of damages for economic loss can not stand.