Donald v McKeown & Ors

[2004] NSWCA 285

Court of Appeal (NSW)|2004-07-02|Before: Hodgson JA, Santow JA

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Court

Court of Appeal (NSW)

Decision date

2004-07-02

Before

Hodgson JA, Santow JA

Source

Original judgment source is linked above.

Judgment (23 paragraphs)

[1]

CITATION : Donald v McKeown & Ors [2004] NSWCA 285 HEARING DATE(S) : 2 July 2004 JUDGMENT DATE : 25 August 2004

[2]

JUDGMENT OF : Hodgson JA at 1; Santow JA at 5 DECISION : (1) Appeal allowed to the extent of increasing future economic loss from $26,000 to $100,000 but not otherwise ; (2) The respondents to pay the appellant's costs.

[3]

CATCHWORDS : DAMAGES - motor vehicle accident - at time of accident appellant employed as fire-fighter with Department of Defence - inadequacy of damages - failure to consider superannuation and rent concessions for purposes of calculating past and future economic loss - failure to take account of service allowance - failure to consider opportunity for civil employment with consequent higher wage than with Australian Army - whether past and future wage loss and loss of superannuation manifestly insufficient in particular for once appellant's career in Army over - need to take into account both positive and negative contingencies for purposes of assessing future economic loss. LEGISLATION CITED : Motor Accidents Act 1988 s79A(3) Supreme Court Rules Pt 9 r27 Foster v Tyne & Weir County Council [1986] 1 All ER 567 at 570 Giorginis v Kastrati (1998) 49 SASR 371 CASES CITED : Malec v. J.C. Hutton Pty. Ltd. (1990) 169 CLR 638 Minchin v Public Curator of Queensland [1965] ALR 91 Norris v. Blake (No.2) (1997) 41 NSWLR 49 State of New South Wales v Moss [2000] NSWCA 133, 31 May 2000, unreported Nicholas DONALD (Appellant) PARTIES : Jodie McKEOWN (First Respondent) THE NOMINAL DEFENDANT (Second Respondent) NEW SOUTH WALES POLICE SERVICE (Third Respondent) FILE NUMBER(S) : CA 40782/03 A LIDDEN/ E WELSH (Appellant) COUNSEL : D J RUSSELL, SC/ J SEWELL (First Respondent) Not appearing (Second, Third Respondents) SOLICITORS : Bryden's Law Office (Appellant) Moray & Agnew (First Respondent)

[7]

25 AUGUST 2004 Nicholas Donald v Jodie McKEOWN & 2 Ors Judgment 1 HODGSON JA: I agree with the orders proposed by Santow JA, and subject to what I say below, substantially with his reasons. 2 For my part, I would give some weight to the evidence concerning the service allowance of $115 net per week, in relation to future economic loss. The circumstance that this allowance had never been returned for tax, and may properly be considered as an allowance for disturbance, does not in my opinion render it of no value; although its value should be considered as substantially less than its amount. 3 In my opinion also, the question whether the appellant would, but for the accident, have stayed in the army should not in this case have been decided on an all-or-nothing basis and then disregarded. The possibility that the appellant may have earned a higher income in civilian life should have been considered as a positive vicissitude, consistently with Malec v. J.C. Hutton Pty. Ltd. (1990) 169 CLR 638 and Norris v. Blake (No.2) (1997) 41 NSWLR 49. 4 The primary judge gave little weight to negative vicissitudes associated with the appellant's actual post-injury earnings; and the disproportion between past economic loss and future economic loss is also in this case indicative of error. 5 SANTOW JA: INTRODUCTION This appeal is on damages only, from a decision of Naughton DCJ for personal injuries suffered by the appellant, Nicholas Donald in a motor vehicle accident. Essentially the grounds are that damages were inadequate for the following reasons: (a) failure by the trial judge to consider superannuation and rent concessions in calculating a salary for the purposes of calculating past and future economic loss; (b) as raised in the appeal but not in the appellant's written submissions, failure to take account of service allowance, for purpose of that calculation; (c) failure to consider the potential for opportunity of employment in a civilian capacity as a fire-fighter at a potentially higher wage than in the Australian Army, with (d) the consequence that allowances for past and future wage loss and loss of superannuation were said to be manifestly insufficient, in particular for once the appellant's Army career was over. 6 As emerged in argument, the appellant's complaint is really best crystallised this way. No complaint is made about the award for non-economic loss of 30% of the maximum of $309,000. That, calculated in accordance with the statutory scaling, comes to $71,000. It was indeed on the generous side for what amounted in the end just to a shoulder injury, with good prospects of further amelioration by a second operation. Rather complaint is made that (a) in calculating future economic loss at $26,000, where the comparison is made between the hypothetical anticipated level of future earnings if uninjured in the army (within a range of $548 to $573 per week assuming promotion to a corporal) and the anticipated post-injury level of future earnings in a civilian position ($530 per week), the result is only a $22 per week difference; that resultant $26,000, after a discount of only 15% for vicissitudes, represents a reduction in earning capacity of only 3.5%; yet (b) in calculating past economic loss at $37,605 the loss allowed is disproportionately greater, namely around 30% to 40% of the plaintiff's earnings. 7 Thus the complaint is that in calculating future economic loss, it is assumed against the plaintiff that without injury (the hypothetical calculation) there would have been no positive upside to his earnings, in particular by changing over to a better earning position in civilian life. Whereas, in calculating his actual earning position with injury, his full civilian earnings are now taken into account, but with no greater than 15% allowance for negative vicissitudes. In particular nothing is allowed for the possibility of his having future employment difficulty because he is carrying an injury.

[8]

SALIENT FACTS 8 Mr Donald was born on 4 May 1978, and commenced employment as a fire-fighter with the Department of Defence on 13 February 1996 on a four year contract. His father had also been a fire-fighter. 9 In August/September 1998, Mr Donald unsuccessfully sought discharge from the Army and investigated joining the fire service or police service in New Zealand (applying for recruitment packs) prompted by his mother's then plans, later abandoned, to move to New Zealand (Black, T, 21). He was however not a New Zealand citizen (Black T, 21) and his reason to leave the Army to move to New Zealand related only to his mother's plans and had thus ceased. It is submitted by the appellant that he intended to stay as a fire-fighter either in the Army or externally with the civilian option being a real one, and better paid. The appellant's evidence is however relatively clear that at the relevant time, being the date of the accident, he had no intention to leave the army (Black, T, 23). 10 Early in the morning of 1 January 1999, Mr Donald was a passenger in a motor vehicle driven by his then fiancée Jodie McKeown (now wife) which drove into a parked truck on Bardia Parade, Holsworthy NSW. The trial judge did not accept Mr Donald's version of how the accident happened, finding it inherently unlikely (Red, 54). Though the trial judge made no specific credit finding in relation to the damages, this finding would tend to indicate that the trial judge would not have been ready to accept at face value, without more, the appellant's assertions bearing on, for example, allowances. 11 As a result, Mr Donald suffered injury to his left shoulder and, in the first instance, lower back. He underwent a shoulder reconstruction on 28 May 1999. 12 On 16 April 2000, Mr Donald was discharged from the army medically unfit as a consequence of his ongoing disabilities. He obtained employment for three months as a plasterer's labourer, and then as a sales representative with Plasta-Masta and later on his own account.

[11]

Principal relevant findings on damages 19 These are as follows: (a) Non-economic loss of 30% of the maximum of $309,000 = $71,000 (b) Past economic loss · Assume that Mr Donald would remain in the Army, with some elevation in rank (Red, 65D, 67I) · Insufficient evidence to justify an assumption that he would have left and pursued a career as a civilian fire-fighter (Red, 66G) = $37,695 · Net wages but for the accident after tax of $125,154 o Based on 1 ½ years as regular @ $483 p.w. net plus 3 years and six weeks as Lance Corporal @ $540 p.w., 2003 rates (Red, 67W-68F); o Actual wages of $87,459 (Red, 68J) (c) Future economic loss · Based on capitalising a net weekly loss of earnings of 5% ($22) for 40 years, discounted by 15% for vicissitudes (Red, 69S-V) · Calculation as follows will produce a just and proper valuation of loss in these circumstances (Red, 70I-P) o Net wages for Lance Corporal is $540 p.w. and for Corporal is $548.88 - $573, but with no evidence adduced as to likely, or possible, rank progression o Actual net wages was $530 p.w. = $26,000 o Difference between maximum net wage, if uninjured, of plaintiff as a corporal (about $573) compared to the plaintiff's actual net wage if injured ($530) is $43, so that "the mean" [meaning presumably the approximate mean], rounded up, is $22 o Thus: range of loss is $21.50 ($22) p.w. · Loss of future earning capacity of $17,157 plus $8,500 lump sum payment for 4 months off work before and after second operation Mr Donald should have (Red, 71D-L) · Takes into account that his business may do well and that he would not likely have made Sergeant by now, though maybe later (Red, 70Q-71C, 71Q-S).

[18]

Q. Approximately 600 a week? A. Yes, putting those contributions in." 23 The net effect, according to the appellant's submissions, is that there should have been reinstated the deductions for superannuation and married quarter rent, as estimated by the appellant, to produce net earnings at the time of the accident not of $530 net per week but of $600 net per week. 24 However, as the respondent correctly points out, a separate allowance was made for both past and future superannuation by the trial judge being $3,016 for past superannuation and $1,755 for future superannuation (Red, 26). 25 Moreover, the appellant's evidence as to the alleged value of his superannuation contributions and rental benefits was at best an approximation based on a "belief"; see transcript above. There was no other evidence, or even an estimate, as to the individual value of each of those items. Thus no independent evidence was adduced by the appellant as to the value of married quarters rent. 26 Importantly, in the Plaintiff's Statement of Particulars, furnished under Pt 9 r27 Supreme Court Rules, under "Particulars of economic loss" it says at para 6: "He earned $530 net per week … A claim is made at the rate of $530 net per week." There is no mention at all of any claim to reinstate either of these items of superannuation or married quarter rent. On the final day of the hearing those Particulars at para 8 ("Particulars of additional loss of opportunity claim") were sought to be amended. The unamended first part of para 8 already claimed $55,000 gross per year ($786 net per week). This was on the basis of staying in the Army and being promoted to Warrant Officer, Class 2, as distinct from being promoted merely to Lance Corporal or Corporal (as the trial judge later proceeded (Red, 18N)). The trial judge allowed that amendment by adding a paragraph in the alternative; that the plaintiff would have pursued, but for his injuries, a civilian career as a fireman, so as to base a claim by reference to those Award rates. The allowance of that amendment was said to support the centrality of those particulars and that they had not been displaced by the way the case was argued. The amendment allowed, with the first part of para 8, reads as follows: "8. PARTICULARS OF ADDITIONAL LOSS OF OPPORTUNITY CLAIM The Plaintiff had intended to remain in the Army and accept promotion as it was offered to him. A claim is made for loss of that opportunity. The Plaintiff could have expected to earn higher incomes as he progressed through the ranks of Lance Corporal Fire Fighter to Warrant Officer Class 2. This position presenting returns approximately $55,000 gross per year to soldiers. In the alternative, the Plaintiff claims that on discharge from the army in August 2000, he would, but for his injuries, have pursued a career as a fireman. A claim is made by comparison to the Award rates of pay for firemen and the Plaintiff's actual earnings." 27 What was emphasised by the appellant in argument was "that the Plaintiff should have been promoted to a Lance Corporal soldier/ fire-fighter from December 1999" so earning an additional $60 net per week which is claimed from December 1999" [emphasis added]. 28 However, with respect to the calculation of past economic loss, the trial judge calculated this at a rate relatively favourable to the appellant for the period from 1 July 2000 to 15 August 2003. Thus with respect to the calculation of past economic loss, from the period 1 July 2000 to 15 August 2003 the trial judge assessed the potential wage of the appellant rather generously, in that the 2003 rates of a Lance Corporal were used for that entire period, when financial details for rates earlier than 2003 had not been provided; Judgment Red, 68E. 29 Taking those matters into account, I do not consider that there is on this ground sufficient basis for appellate intervention. 30 I should also briefly note and dismiss any suggestion, argued outside the Particulars, that there was any basis for adding back the net value of a service allowance, either for past or future economic loss, calculated at the net amount of $115 per week. Accepting that it was payable (Blue, 197 and cf Blue, 199 for the Airforce in similar terms), it had never been returned by the appellant for tax. That reinforces the conclusion that it simply reflected an allowance for the disturbance (or extra costs in uniform cleaning) that Army service imposed, not compensation over and above.

[21]

Ground 6-8 37 Grounds 6, 7 and 8 are essentially directed at the figure arrived at to compensate the appellant for future economic loss, being an earning rate difference of $22 per week as against the higher figure pressed by the appellant. Much of this is based upon the trial judge have adopted what was submitted to be an overly optimistic view of Dr Ellis' opinion of the appellant's chances of improved function in his left arm if he underwent an open repair of his left shoulder. The evidence, consistent with the trial judge's finding, led to the conclusion that the appellant as a result of his injuries would be restricted to relatively light duties (Judgment Red, 63N and Black T, 169.10 and 169.25). 38 As the respondent points out in its submissions, we are here dealing with the assessment of damages by reference to future or hypothetical events, described as "the process of estimation of possibility"; Malec v J C Hutton Pty Ltd (1990) 169 CLR 638 at 643 per Deane, Gaudron and McHugh JJ. This is necessarily an imprecise matter of estimation, carried out within broad parameters. I consider that there is in those circumstances only limited scope for interfering with a trial judge's assessment of loss of earning capacity; see Foster v Tyne & Weir County Council [1986] 1 All ER 567 at 570; State of New South Wales v Moss [2000] NSWCA 133, 31 May 2000, unreported. The factors militating against doing so are as follows. 39 First, the respondents' submissions demonstrate that the allowance actually made was generous in some respects. First, the trial judge did not apply any deferral multiplier by reference to the time of four months calculated as being off work for the open reduction shoulder stabilisation operation. However, that is a relatively small amount. 40 Second, while the evidence is that the appellant was at risk of recurrent dislocation of his shoulder, this was if it were again injured. Following operative surgery, according to Dr Ellis: "…. [T]he chances of him being significantly better are great" (Black, T, 154). Nonetheless the improvement is not certain, nor a complete cure. The fact remains that he remains, still carrying an injury, a factor which will also weigh against him should be need to seek employment. 41 In undertaking the assessment of loss of earning capacity, the trial judge stated that he took into account matters which included the following: (a) the appellant's current level of income was received from what was a recently commenced business; (b) the proposed operation upon the appellant's shoulder would significantly increase his future earning capacity; and (c) the appellant's own evidence was that, at the relevant time being the date of the accident, he did intend to remain in the Army. 42 As to (a) above, there are inevitably risks as to future continuity and (b) is subject to the qualification that I have earlier made. 43 While the trial judge specifically noted that the appellant may have progressed to the rank of sergeant and beyond, he noted the absence of any evidence on his likelihood of promotion; Judgment Red, 70X-71B. Where a plaintiff calls incomplete evidence on a matter bearing upon a lower award for earning capacity it is difficult for him to complain; Minchin v Public Curator of Queensland [1965] ALR 91 at 93; Giorginis v Kastrati (1998) 49 SASR 371 at 395; and State of NSW v Moss (supra). 44 It would not have been difficult for the appellant to provide by way of evidence, likely detail of his own potential promotability including as to how he was regarded by his relevant supervisor. There was no such evidence. 45 The respondent emphasises that the trial judge allowed more than the current "differential" between the appellant's current income and the income of a lance corporal, $10 being the difference between his current net income of $530 and the net income of a lance corporal of $540. The trial judge's assessment took into account the current income of a corporal at the date of judgment, where the maximum net weekly wage differential between the appellant's current net weekly wage and the current maximum net weekly wage of a corporal was $43. The trial judge allowed approximately one-half of such range, in allowing $22. That amount is over double the current differential between the appellant's present net weekly wage and the net weekly wage of a lance corporal. 46 Nonetheless, giving full weight to these factors, I consider that to allow so small a differential (3.5%) is appellably wrong, in calculating future economic loss at $26,000. It is assumed against the appellant that he would not have pursued civil employment at a higher wage in ignoring positive vicissitudes in the hypothetical calculation. Moreover, negative vicissitudes for the actual post-injury future earnings are ignored such as the chance of his shoulder not improving, or the possibility that future employment may be harder to get with his injury. Malec v J C Hutton Pty Ltd (supra); Norris v Blake (by his Tutor Porter) (No 2) (1997) 41 NSWLR 49 at 72-3 per Clarke JA require proper allowance in a balanced way for both positive and negative vicissitudes and that was lacking here. I would therefore increase the allowances for future economic loss from, $26,000 to $100,000 so as to do so.