Court of Appeal (Qld)|1992-04-01

Elford v FAI General Insurance Co Ltd [1992] QCA 41 (1 April 1992)

This is an appeal against a judgment in the sum of $1,010,797.12 given in favour of the respondent, suing as the executrix of the estate of her husband, who died on 5 September 1983. The action was brought by the respondent on her own behalf as widow and on behalf of three children of the marriage between the deceased and herself, as dependants; two of those children were aged five and three years respectively when their father died and the third was a posthumous child. The appellant says that the damages, which were assessed by the late Senior Master Horton Q.C., were fixed at too high a figure because the judgment was based on an unduly generous assessment of the value of the lost dependency. As will appear, it was common ground that, in part, the assessment was based upon an arithmetical error, but counsel for the respondent contended that neither that circumstance, nor any other consideration put forward on behalf of the appellant, justified interference with the award.

The deceased met his death in an accident which took place at Dalrymple Bay coal terminal facility near Mackay, a project on which the deceased had been employed as a civil engineer. The general tenor of the evidence was that the deceased was a promising young man (born on 6 June 1956) who would have been likely to do well in his career. That was the view the Master took and that approach to the matter was not seriously challenged. It was argued in effect that, nevertheless, the Master had taken an exaggerated view of the deceased's financial prospects and that a fairer assessment would have been about 25% less than the figure awarded.

Before coming to a consideration of the points taken on the appeal, it is convenient to mention a point which was not. The Master assessed damages on the basis that no allowance should be made for the prospects of remarriage of the respondent who was, like her late husband, 27 years of age at the date of death. The respondent gave evidence of a disinclination to remarry and that she could not see herself remarrying. It was suggested by counsel for the respondent that commonly only a very small allowance is made for the prospect of remarriage in such cases. If this is so, it is difficult to accept that there is any proper basis for the practice: see Jones v. Schiffmann [1971] HCA 52; (1971) 124 C.L.R. 303 at 308. No doubt, it is sometimes difficult to assess the prospects of remarriage, but for that reason some attention should be paid to the kinds of statistics which were relied on and not challenged in the present case. On the basis of them, one would expect that a 27 year old widow would be quite likely to remarry. Apart from statistics, it is evident that remarriage of young widows is fairly common.

It is true that an individual plaintiff widow might have a very small chance of remarriage, but it can hardly be that widows receiving awards of damages are peculiarly unlikely to remarry; one would be inclined to suspect the existence of the contrary tendency.

It was thought desirable to comment on this aspect of the case, although the notice of appeal took no point about remarriage, nor were we invited to amend the notice. The case must therefore be decided on the assumption that the Master's conclusion about remarriage was correct.

The principal ground of attack on the Master's orders was that the findings as to the level of earnings the deceased could have attained had he not died were too generous. The basic difficulty about the point is that, although the deceased was set upon a particular career, there was a great deal of uncertainty as to what he would have earned had he continued to follow that career, namely as an engineer working for a company engaged in the construction of large engineering projects. Still more, of course, was there uncertainty as to what the deceased might have achieved had he undertaken some quite different employment or ventured into business on his own. Despite this, the Master, properly as we think, did not simply make a global estimate of these lost earnings, but tried to take a mathematical approach, some details of which appear below.

The amount of the deceased's earnings with his employer, John Holland (Constructions) Pty. Ltd. ("John Holland"), up to the date of his death was, of course, common ground. The detailed evidence as to likely earnings from that date to the trial, which concluded on 14 August 1990, was in some respects unsatisfactory, but the deficiencies were not such as to give promise to the appellant of any great reduction in the total sum of damages. The principal dispute was as to the general question of the deceased's financial prospects. Evidence was given on that subject by Mr. R.J. Douglass, who had a long career with John Holland, finishing in 1986 as the Queensland Branch Manager. Mr. Douglass knew the deceased and had had extensive contact with him as a subordinate employee of John Holland. He had formed a good opinion of the deceased's ability and regarded him as part of the "core" of John Holland's staff - a person whose services would have been retained in the long term. A second witness on this subject was Mr. R.A. Barton, the State Manager (Civil Division) of John Holland, who explained the career structure within that company, so far as relevant to the deceased's case. Some of Mr. Barton's evidence would, if it stood alone, tend to make one think that the Master took too optimistic a view of his likely future. For example, he spoke of a substantial drop off in the civil engineering aspect of John Holland's work in recent years; the fact that at the end of the project on which the deceased had been engaged at the time of his death, it had proved necessary to dismiss quite a number of engineers; that John Holland employed at the date of trial very few senior engineers. On the other hand, Mr. Barton described the deceased as a good engineer and thought him quite capable of being promoted, in the long run, to State Manager of John Holland. Evidence was also called from Mr. P.J. Ryan and Mr. G.J. Whyte, the purpose of which was to illustrate the opportunities which might have been available to the deceased if he had begun to work other than as an employee - for example, as a member of a firm of civil engineering consultants.

Lastly, there was on this subject the evidence of Mr. N.G. Patterson, a member of a firm specialising in recruitment within the building, engineering and construction industries. Mr. Patterson had no personal knowledge of the deceased, but claimed familiarity with conditions of employment for engineers at various level. His evidence proved to be of particular importance, because the Master expressed himself satisfied that the deceased would have progressed - presumably meaning, would have been likely to progress - through stages set out in a report by Mr. Patterson. The Master said in his reasons:

"... I am prepared to act upon Mr. Patterson's scenario being a more conservative one than the one indicated by Mr. Douglass" (p.8).

Mr. Williams Q.C., who led Mr. T. Matthews for the respondent, submitted that the Master had accepted Mr. Patterson's evidence and that appears to be so. On the other hand, Mr. Patterson did not claim any expertise in the subject of the deceased's abilities or personal prospects and acceptance of his "scenario" must have depended on the Master's view of other evidence. It is implicit in the Master's reasons that he regarded higher earnings than those mentioned in Mr. Patterson's report as being possible, but refrained from adopting them as a basis for calculation.

Mr. Patterson gave no direct evidence of the earnings of employees of John Holland in positions similar to that which the deceased had occupied during the period after the death. His evidence was of a general kind and counsel for the appellant submitted that the Master should not have regarded at least the pre-trial loss of earnings as proved, in the absence of any precise evidence from John Holland. Although the point has some substance, it has to be kept in mind that John Holland was not the plaintiff's company. It was, one might infer, a party to the proceedings; the title included as a fourth party "John Holland-Christiani and Neilson Joint Venture (a firm)". Further, whatever evidence was called, there could be no certainty as to earnings which, had he not died, the deceased would have received up to the date of trial.

But the appellant's counsel made a particular complaint about the deficiencies in the evidence relating to items called "living allowance" and "bonus", which were allowed by the Master in his calculation of loss up to the date of trial; it is convenient to deal with those below.

It was not submitted that the Master was in error in acting upon Mr. Patterson's evidence in his report dated 31 July 1990 (just before the trial). Mr. Patterson set out estimates of the earnings of "project engineers" (the class of employee of which the deceased was a member) working in Brisbane in the years from 1983 to 1987; they range from $27,668 to $40,000 over those years. In addition, according to Mr. Patterson's evidence, a project engineer might expect to participate in a bonus scheme, to benefit from superannuation, and to receive advantages from his employment in other ways. Mr. Patterson said that in the years 1988 to 1990, a project manager (a position higher than project engineer) would expect to receive a Brisbane salary ranging from $40,000 to $55,000; the additional benefits would be at a better level than that of a project engineer. Mr. Patterson gave as his opinion that as at July 1990, a construction manager (a still higher position) could expect to receive a salary in the range of $80,000 to $90,000 plus substantial additional benefits.

Mr. Patterson was not in a position to say that the deceased would probably have become a construction manager in 1990 or occupied any of the other positions mentioned in his report. But the Master, apparently basing his view on the whole of the evidence, was prepared to assess damages on the hypothesis that the deceased would have passed through the stages mentioned in Mr. Patterson's report.

As to the earnings up to the date of trial, the Master allowed losses calculated on the figures set out in Exhibit 41, which were based, as has been mentioned, upon promotions in accordance with the projections set out in Mr. Patterson's report. The total figure allowed was $247,716 to the date of trial. It was criticised on the specific basis mentioned above, namely that sums representing living allowances and bonuses should not have been included and also on the general basis that it made no or insufficient deduction for various contingencies, such as the risk of unemployment or death and the risk that the deceased may not have stayed with John Holland at all.

As to the former point, what the Master did was to treat the deceased as being likely to receive a living allowance of $6,435, a salary supplement of $1,138 and a bonus of $5,000 in each year up to 1 July 1990, with the exception that, in the last four years of that period, he assumed an extra $1,000 bonus. Counsel for the appellant contended, and it seems to us correct, that the basis of the bonus allowance was rather tenuous. There was clear evidence that the bonuses could not have been relied on throughout the relevant period. For example, Mr. Barton said in his evidence given in August 1990 that "last year" the bonus had been "pretty small", apparently in the region of $1,000. It appears that "last year" referred to by Mr. Barton was the year ended 30 June 1990, for which the Master assumed a bonus of $6,000.

Counsel for the appellant pointed out that although, in the period immediately prior to his death (in 1983), the deceased had received a bonus approaching that which the Master allowed, there was no sound justification in the evidence for the assumption that the bonus would have continued at that level and even a higher level up to 1990. It is our opinion that the appellant's complaint on this topic is justified; the levels of bonus assumed by the Master were not, as they could have been, supported by precise evidence as to what comparable employees received by way of bonus. The state of the evidence was such that, in our respectful opinion, the Master should have allowed substantially less than the sums of $5,000 per year and then $6,000 per year for lost bonus in those years.

The appellant also attacked the Master's assumption that the deceased would have continued to receive a living allowance of $6,435 throughout the whole of the period from the date of death to trial. The principal basis of the argument was that the living allowance was not all profit because the allowance was designed principally to compensate employees for the economic disadvantages attendant upon working at various sites away from Brisbane. It is true that some of the evidence supports this suggestion, but in our opinion the Master's view on this point should be accepted.

Next, it is necessary to consider the general complaint about the allowance for earnings up to the date of trial, namely the lack of proper consideration of adverse contingencies. Although, in our opinion, the Master's conclusion may be thought to have inclined towards generosity, he did not assume that the maximum possible earnings would have been achieved over the whole period, but based the calculations on what was described as a conservative view. As was contended for the respondent, this involved a built-in discount. On the evidence, the Master was entitled to act on the basis that there was only a slight chance of a complete cessation of earnings during the relevant period and the figures awarded were not (except as to the bonus mentioned above) extravagant.

The only other point necessary to be dealt with as to pre-trial loss is the alleged arithmetical error. When the Master calculated lost earnings between trial and judgment he, according to counsel, "looked at that figure of $6,760, concluded that 1 July 1990 to 20 August 1990 represented seven weeks, and he divided $6,760 by seven and achieved the figure of $965.71." The weekly sum of $965.71 was then used in working out lost earnings to the date of judgment. Counsel agreed that this was an error because the period to which the total referred - 1 July 1990 to 20 August 1990 - was described in the figures from which the Master worked as eight weeks. It is unclear why the period was so described.

However, what was challenged was the division of the total by seven, not the total itself. The period was, in fact, seven weeks, not eight and so the divisor of seven was appropriate, and there was no error.

In summary, there was one error in the assessment of economic loss up to the date of judgment; namely the excessive allowance of bonus. Mr. Williams pointed out on behalf of the respondent that if the bonus for the disputed period were wholly disallowed, a sum of less than $20,000 would be required to be deducted. He contended, however, that acceptance of the appellant's arguments on this point should result in no change in the award which would, even in that event, not be able to be described as a "wholly erroneous estimate" of the damages. This subject is further discussed below.

As to the assessment of lost earnings after 20 May 1991, the date up to which pre-judgment earnings were calculated, the Master assumed a weekly lost sum of $950 until the age of 60 years. The reasons contain no specific explanation of the figure of $950. It is a little less than the sum of $965.71 mentioned at p.10 of the reasons, being the Master's calculation of the loss up to the date of judgment. Both counsel treated the $950 as being an estimate of long term future earnings. So considered, the figure cannot, in our opinion, be assailed. A number of negative factors were pointed out on behalf of the appellant: the chance of unemployment; the possibility that the deceased might, for some reason, have accepted government employment which would, on the evidence, have been likely to produce a substantial reduction in earnings; the prospect of disability and so forth. The principal answer made to these contentions - and we think it a correct one - was that if the deceased had been as successful in his profession as the Master thought probable, his earnings must have risen substantially above the net figure of $950 which was adopted. It was a figure which left out of account the prospects of substantially higher earnings and that, we think, adequately balanced the adverse contingencies to which the appellant's counsel referred.

It is necessary to add that in the written submission on behalf of the appellant, mention was made, as if by way of complaint, of the Master's failure to discount the calculation for the prospect of remarriage. Presumably, had he done so, the Master would have taken that into account after calculating the value of dependency. He expressly made no allowance for remarriage but, as we have mentioned, the appellant's counsel disclaimed any attack on the assessment on that ground.

The next category of submissions made on behalf of the appellant may be briefly discussed. It was contended that in fixing the proportions which he used to calculate dependency, the Master erred on the side of generosity. This was supported by a contention that the respondent plaintiff would have been likely to earn a substantial sum. The Master's finding was directly to the contrary and there was evidence to support it. For broader reasons, counsel suggested that the Master's assessment of the proportion of dependency was wrong. There appears to us to be little substance in this. The Master found that the deceased "would have had a very large call on his net wage to support and educate his family for the standard that both [he] and his wife had enjoyed". He found, as we have mentioned, that the respondent would have contributed little to the family income, that his principal recreation was spending what available time he had with his family and that (in effect) his mode of living was such as to free most of his income for family purposes. The Master thought that boarding school fees would have had to be paid for the three children and that there might be expense of accommodating the children in Brisbane during their university days.

The lost earnings assessed to the date of judgment totalled $319,310 made up as follows:

The Master estimated that about 80% of that sum, namely $255,448, would have been contributed to the deceased's family and the $255,448 was apportioned 60% to the respondent and 40% equally between the three children.

From that date on, the Master assessed the losses of the various dependants in a way which is set out in detail at p.19 of the reasons and need not be repeated here; the total future loss of the four dependants was assessed at $635,277 and special damages were agreed at $3,876.60. Interest was allowed in sums totalling $98,696.12 and public trustee fees were allowed in sums totalling $17,500. The total sum for which judgment was given, over a million dollars, was argued by Mr. Williams to be unassailable.

Mr. Williams contended that because the estimate made was not a wholly erroneous one, the Master's decision must stand, even if affected by errors; he referred to the decision of the Full Court in Calder v. Boyne Smelters Limited [1991] 1 Qd.R. 325.

It may commonly occur that if there is an error in the estimation of one component of the award, as there has been here, it proves unnecessary to alter the whole award because a counter-balancing error in another component can be discerned. But this does not appear to be such a case and the Court must deal with the question whether a wrong assessment of one component compels the allowance of the appeal. It seems odd that after so many years of assessing damages for personal injuries and death, there remains room for argument on that question.

It is convenient to begin with the decision of the High Court in Miller v. Jennings [1954] HCA 65; (1954) 92 C.L.R. 190. There, the appellant plaintiff had received serious injuries which had affected his capacity to earn, but the general damages were assessed at only £2700. Dixon C.J. and Kitto J. approved English authority setting out the test in cases of this sort:

"In effect the court, before it interferes with an award of damages, should be satisfied that the judge has acted on a wrong principle of law, or has misapprehended the facts, or has for these or other reasons made a wholly erroneous estimate of the damage suffered" (p.196).

This passage has been frequently relied on: for example, in Gamser v. The Nominal Defendant [1977] HCA 7; (1977) 136 C.L.R. 145 at 148-149. It has become clear that it is not necessary to show, in order that an appeal from an award of damages for personal injuries may be allowed, that the award is, as a whole, quite erroneous. An appellant may in some cases succeed by showing a specific error of law or fact. Here, there is no question of legal error. The issue raised by Mr. Williams' submission is whether a wrong estimate of a particular component, without more, necessarily brings success to the appellant, even if the resulting correction is a small one relative to the total award. That is a point not specifically dealt with in Miller v. Jennings. An aspect of it was discussed by the Privy Council in Lai Wee Lian v. Singapore Bus Service (1978) Ltd. [1984] A.C. 729. In considering a submission similar to that made to us, the Board said:

"But if the award for loss of future earnings, or for any of the other items, is so far out of line with what the appellate court considers appropriate as to indicate that the assessing judge has erred in principle, and if the substitution of an appropriate award for that item would make a substantial alteration in the total award, then the appellate court has the duty to make the substitution and to alter the total accordingly" (p.735) (emphasis added).

It does not appear to us that there is any necessary inconsistency between that statement and the law as laid down in Miller v. Jennings and other High Court cases which followed it. The Privy Council's view was referred to by the Full Court in Keefe v. R.T. & D.M. Spring Pty. Ltd. [1985] 2 Qd.R. 363 at 366 and there stated to be the "approach which should be adopted by this Court" - per Williams J. with whom Campbell C.J. and Connolly J. agreed.

In Humberdross v. Rapp [1991] 1 Qd.R. 353, all members of the Full Court appeared to be content to apply Keefe's case. However, in Calder v. Boyne Smelters Limited [1991] 1 Qd.R. 325, there were two substantial sets of reasons, those of Shepherdson J. and Cooper J. Each declined to follow Keefe's case, but the two judgments are not easily reconcilable with respect to the critical point with which we are concerned. Shepherdson J. said in effect that an award may be disturbed if the conditions set out in Miller v. Jennings are satisfied: see the paragraph numbered 1. on p.341. Cooper J. said:

"(b) an appellate court will not interfere unless there is shown error in the reasoning of the court at first instance which has led to an award of damages which is beyond the limits of what a sound discretionary judgment could reasonably adopt;

(d) where no apparent error can be shown, error will be inferred if the court is satisfied that the trial judge has made a wholly erroneous estimate of the damages" (p.352).

There are other questions, as to the proper approach of appellate courts to awards of damages for personal injuries or death, than those dealt with in Keefe. But it is our opinion that this Court should not be deterred by Calder from continuing to apply Keefe as authority for the view that, if a particular component of such an award is plainly an under-estimate or over-estimate and if substituting a proper figure for that component will substantially alter the total, then the substitution should be made; but if there is nothing more than a wrong estimate of one component which has no substantial effect on the total, the award stands. The pointing out of a relatively small error in one estimated component of a judgment which is in substance a sum of estimates does not necessarily make the judgment as a whole wrong. It may be that some types of mistakes, for example arithmetical errors, will require correction irrespective of their effect on the total award, but the general rule should be as we have stated.

Here, this rule has the result that the award should not be corrected on account of the indefensible estimate the Master made of the value of lost bonuses; that could only alter the award by about 2 per cent at most.

The appeal must be dismissed, and the costs of the appeal must be paid by the appellant.

MINUTE OF ORDER: The appeal is dismissed and the costs of the

CATCHWORDS: DAMAGES - MEASURE OF - APPEAL - Award disclosing error in one component - whether such an error compels allowance of appeal where total award not a wholly erroneous estimate of damage.

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Appeal dismissed, and the costs of the appeal must be paid by the appellant.

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Elford v FAI General Insurance Co Ltd [1992] QCA 41

At a glance

Court

Decision date

Source

Judgment (51 paragraphs)

Elford v FAI General Insurance Co Ltd [1992] QCA 41 (1 April 1992)

Parties