Gulic v Angelovski - [2018] NSWCA 161 - NSWCA 2018 case summary — Zoe

NSWNSWCA

Gulic v Angelovski

[2018] NSWCA 161

Court of Appeal (NSW)|2018-07-09|Before: Beazley P, McColl JA, Mr P

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Source facts

Court

Court of Appeal (NSW)

Decision date

2018-07-09

Before

Beazley P, McColl JA, Mr P

Catchwords

[2003] HCA 22 Johnson v Perez (1988) 166 CLR 351
[1988] HCA 64 Purkess v Crittenden (1965) 114 CLR 164
[1965] HCA 34 Robinson Helicopter Company Inc v McDermott [2016] HCA 22
(2016) 331 ALR 550 Seltsam Pty Ltd v Ghaleb [2005] NSWCA 208 Vosebe Pty Ltd v Bakavgas

Source

Original judgment source is linked above.

Catchwords

[2003] HCA 22 Johnson v Perez (1988) 166 CLR 351[1988] HCA 64 Purkess v Crittenden (1965) 114 CLR 164[1965] HCA 34 Robinson Helicopter Company Inc v McDermott [2016] HCA 22(2016) 331 ALR 550 Seltsam Pty Ltd v Ghaleb [2005] NSWCA 208 Vosebe Pty Ltd v Bakavgas

Judgment (20 paragraphs)

[1]

Solicitors: Margiotta Solicitors & Attorneys (Appellant) Yeldham Price O'Brien Lusk (Respondents) File Number(s): 2017/127347 Decision under appeal Court or tribunal: District Court of New South Wales Jurisdiction: Civil Date of Decision: 6 April 2017 Before: Gibb DCJ File Number(s): 2013/263544

[2]

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.] HEADNOTE [This headnote is not to be read as part of the judgment] The appellant was injured in a motor vehicle accident (MVA) in 2004. In 2013, the appellant commenced proceedings in the District Court against two separate firms of solicitors. Each cause of action was founded on an alleged breach of duty by the solicitors in failing to initiate proceedings within the limitation period against the driver responsible for the MVA. The primary judge dismissed the appellant's claim against the first respondent. That decision was not challenged. The second respondent accepted that it breached the duty of care owed to the appellant by failing to institute proceedings. The sole question was the value of the chance lost by the appellant. To establish his earning capacity prior to the MVA, the appellant sought to rely on a letter purporting to be an offer of employment as a driver. The primary judge found that the letter was a fabrication. The primary judge awarded the appellant $25,000 in respect of past economic loss on the basis of the respondent's concession that a trial judge in April 2009 might have awarded this amount. The primary judge declined to award damages for future economic loss pursuant to s 126 of the Motor Accidents Compensation Act 1999 (NSW) (MAC Act) or damages for domestic assistance pursuant to s 128 of the MAC Act. Her Honour rejected evidence given by the appellant's son concerning the level of domestic assistance he provided, and found that there was no need for the services that the son did provide in the sense contemplated by the MAC Act. The court held (Sackville AJA, Beazley P and McColl JA agreeing), dismissing the appeal: (1) The primary judge did not err in not directing herself to apply the standard of proof laid down by s 140 of the Evidence Act 1995 (NSW) before determining that the letter was a fabrication: [1]; [2]; [30]-[33]. (2) None of the appellant's grounds of appeal challenged the primary judge's finding that the respondent discharged the onus of adducing evidence suggesting that the appellant had little or no earning capacity at the date of the MVA. It was open to the appellant to lead evidence that despite his pre-existing injuries, at the date of the MVA he was capable of gaining remunerative employment. However, he did not take up this opportunity: [1]; [2]; [42]-[44]. (3) The primary judge correctly held that in order for the Court to award damages for future economic loss it was necessary for the appellant to satisfy s 126(1) of the MAC Act, which he had failed to do: [1]; [2]; [48]. (4) No grounds have been established for overturning the primary judge's credibility-based findings in relation to the son's evidence. Once that evidence was rejected, the appellant was unable to demonstrate a need for domestic services capable of satisfying s 128(3) of the MAC Act: [1]; [2]; [52].

[4]

The proceedings

The appellant was injured in a motor vehicle accident which occurred on 2 February 2004 (MVA). By proceedings commenced in the District Court on 30 August 2013 the appellant sought damages against two separate firms of solicitors. Each cause of action was founded on an alleged breach of duty by the solicitors in failing to institute proceedings within the limitation period against the driver responsible for the MVA.
The case against the solicitors was heard in the District Court over five hearing days, from 27 February 2017 to 3 March 2017. In a lengthy judgment delivered on 6 April 2017, the primary Judge dismissed the appellant's claim against the first respondent (the first defendant in the District Court proceedings). There is no challenge to that decision.
The case against the second respondent (to whom I refer to as the respondent) (the second defendant in the District Court) was conducted on the following agreed basis: (i) the respondent breached the duty of care he owed to the appellant by failing to institute proceedings claiming damages for personal injury against the driver of the vehicle within the limitation period; (ii) had proceedings been instituted within the limitation period the liability of the driver would have been established, either by admission or by proof at the (notional) trial; and (iii) the notional trial date, had proceedings been instituted within time, was 11 April 2009.
The sole question in the District Court proceedings was the value of the chance the appellant lost by reason of the respondent's breach of duty. [2] The answer to that question depended on the quantum of damages that a Court would have awarded the appellant had the claim against the driver been heard on 11 April 2009. The appellant conceded that he could not have recovered damages for non-economic loss. Thus, the focus of the District Court hearing was on the appellant's notional claim against the driver for damages in respect of his lost earning capacity and need for domestic assistance.
The appellant's claim for damages was complicated by the fact that he had sustained injuries prior to April 2004. The appellant suffered injuries in a motor vehicle accident in 1998, in a "police incident" in 2002 and in a fall from a roof in December 2003 while employed as a brick cleaner. The primary Judge recorded that it was common ground that the appellant had been wholly disabled from working as a brick cleaner because of the injuries sustained in the fall. The appellant commenced proceedings in respect of the injuries against his employer, but it appears that the proceedings were discontinued.
The appellant's amended statement of claim in the District Court proceedings pleaded that in the three months prior to the MVA he had been a self-employed brick cleaning contractor capable of earning $1,000 per week and that by reason of his injuries was unable to return to the workforce. At the trial, the appellant relied on a letter said to be signed by a Mr Djakovic. The letter purported to certify the following: "[The appellant] was working for us on numerous jobs namely cleaning bricks with high pressure equipment and final cleaning of projects on inside and outside from app. 1998 to 2003. On about in 2004 January he did approach me seeking a light duty job and did agree for him to do driving for us picking up and delivering various materials and also some light housekeeping at job site as he has proven was able to do. As we had number of jobs spread to [sic] far apart. I believe agreement was app. $900.00 per week. I remember when was to start work [the appellant] did inform me that he has had an accident and that he will not be able to work after all."
The appellant did not call Mr Djakovic to give evidence, but the respondent did. Mr Djakovic's evidence was that he had never offered to employ the appellant and that the appellant had instructed him to write the letter. Mr Djakovic said he regretted what he had done at the appellant's request.

[6]

Past economic loss

Her Honour dealt first with the appellant's claims for past economic loss. As has been noted, this assessment had to be made on the assumption that the notional trial took place in April 2009. Therefore the issue was the economic loss, if any, sustained by the appellant between February 2004 and April 2009 by reason of the injuries sustained in the MVA.
The primary Judge observed that it was "almost impossible" to form a view about the appellant's past economic loss as at April 2009: "Before he was affected by two other sets of injuries, each of which led to claims in this court of total incapacity, his highest income was $138 per week or $159 per week if a period of employment … is taken into account. That was as a brick cleaner. It is common ground that he was disabled from that occupation by his accident in December 2003. There is no evidence of any other capacity after that accident (exhibit 1 [the letter] being dismissed as a fabrication)."
The primary Judge referred in some detail to the medical evidence concerning the injuries sustained by the appellant in the MVA. The evidence included the clinical notes and other records of the appellant's hospital admission, a report of the appellant's general practitioner and reports prepared by the appellant's orthopaedic surgeon, Dr Giblin. Her Honour observed that there was "an overlap between the injuries asserted in the MVA and those in earlier accidents/incidents". Her Honour pointed out, however, that the radiology reports revealed no fractures or dislocation as a result of the MVA. Dr Giblin had initially reported that the appellant's right arm had been fractured but in a later report accepted that he had been mistaken.
The primary Judge said that: "Plainly the 2004 motor vehicle accident had some effect in extinguishing what little residual working capacity the [appellant] possessed after the December 2003 fall … The difficulty lies in identifying what, if anything, was the [appellant's] earning capacity."
After citing a passage from the judgment of Basten JA in Vosebe Pty Ltd v Bakavgas (Vosebe), [4] her Honour stated that the respondents "had discharged their onus on the [appellant's] medicals as well as their own". This statement appears to be a reference to the principle referred to in Vosebe, [5] that a defendant who seeks to show that the plaintiff's incapacity is due in whole or in part to a pre-existing condition bears the burden of adducing evidence probative of that fact.
The primary Judge said that the appellant had "identified no capacity once the fabricated offer is disregarded". Her Honour rejected entirely the appellant's submission that he should be awarded a sum of $241,200 plus superannuation in respect of past economic loss as there was "not a jot of evidence that could support [the claim]".
Her Honour nonetheless awarded the appellant $25,000 for past economic loss on the following basis: "Ignoring that the evidence realistically establishes that the plaintiff had no transferable skills and no residual capacity, applying Dr Giblin's 80/20 ratio [6] to the maximum earning capacity evident (before either the 2002 incident or the December 2003 fall) would yield a very small sum for the 268 weeks between the 2004 motor vehicle accident and the date of the notional trial. Applying that rather unrealistic hypothesis, on the face of the plaintiff's income as revealed in his income taxation returns (exhibit G), and rounding up, I could have found a lost capacity of about 20% of $140 x 268 (i.e., $7,504) or 20% of $160 x 268 (i.e., $8,576). It is not necessary to consider whether that unrealistic hypothesis should be applied. The defendants made a greater concession, conceding that a trial judge in April 2009 might have awarded the plaintiff $25,000 for past economic loss, inclusive of any superannuation. Perhaps so. Be it unlikely or generous or not, I have accepted that concession, and treated that concession of $25,000 as the sum that a trial judge would have awarded in the nominal trial in April 2009." (Footnote and emphasis added.)

[7]

Future economic loss

The primary Judge pointed out that s 126 of the Motor Accidents Compensation Act 1999 (NSW) (MAC Act), as in force in 2009, applied to the appellant's claim for future economic loss. Section 126 provided as follows: "(1) A court cannot make an award of damages for future economic loss unless the claimant first satisfies the court that the assumptions about future earning capacity or other events on which the award is to be based accord with the claimant's most likely future circumstances but for the injury. (2) When a court determines the amount of any such award of damages it is required to adjust the amount of damages for future economic loss that would have been sustained on those assumptions by reference to the percentage possibility that the events concerned might have occurred but for the injury. (3) If the court makes an award for future economic loss, it is required to state the assumptions on which the award was based and the relevant percentage by which damages were adjusted."
The appellant claimed that he should receive $182,000 as a "cushion" in respect of future economic loss on the basis that, but for his injuries, he could have earned $500 per week for seven years as a minibus driver or a driver of other vehicles. The primary Judge identified a number of difficulties with this claim, independently of the appellant's fabrication of the letter from Mr Djakovic: "• There is no evidence that the [appellant] held a commercial driving licence of any type, although he said that he had held licences to drive semi-trailers and buses in Croatia in the early 1980's before migrating to Australia. • There is no evidence that the [appellant] was capable/able to work as a driver, bearing in mind his complaints of relevant injuries before the 2004 motor vehicle accident. • There is no evidence that the [appellant] was able to do a job such as this on the open market, given his injuries, actual capacity and lack of command of English. • There is no evidence of the earnings for such a job on the open market."
In her Honour's view, the appellant's claim for economic loss was doomed by Mr Djakovic's repudiation of the letter purporting to offer the appellant employment as a truck driver. Apart from the fabricated document, there was no evidence to support the appellant's claim: "The [appellant] satisfied the court of nothing at all by way of assumption about future earning capacity. The evidence is consistently and overwhelmingly that the [appellant] had effectively no earning capacity before the 2004 motor vehicle accident. The [appellant's] 'most likely future circumstances but for the injury' in the 2004 motor vehicle accident were total incapacity and unemployment. There is no basis for any award for future economic loss as at the date of the notional trial."

[11]

Evidence Act

The appellant's amended notice of appeal contains 17 grounds, some of which challenge the primary Judge's credibility based findings. Subject to one matter, Mr Bates, who appeared for the appellant, did not seriously contend that the primary Judge's findings could be set aside consistently with the principles for appellate review laid down by the High Court. [7] Mr Bates submitted, however, that the primary Judge erred in not directing herself to apply the standard of proof laid down by s 140 of the Evidence Act 1995 (NSW) (Evidence Act) for determining allegations of fraudulent or other serious misconduct. According to Mr Bates, before finding that the letter from Mr Djakovic was a fabrication, her Honour should have expressly taken into account the seriousness of a finding that the appellant had engaged in deliberately dishonest conduct.
Section 140(1) of the Evidence Act provides that in civil proceedings the court must find the case of a party proved if it is satisfied that the case has been proved on the balance of probabilities. Section 140(2) states that without limiting the matters that the court may take into account in deciding whether it is so satisfied, it is to take into account, among other things, the "gravity of the matters alleged".
However, the requirement to consider the "gravity of the matters alleged" does not elevate the standard of proof identified in s 140(1) beyond satisfaction on the balance of probabilities. In this case, the Court was faced with competing versions of evidence as to whether the appellant was offered a job by Mr Djakovic. The Court was required to determine, on the balance of probabilities, which version of the evidence it accepted. The appellant's version was that he had been offered a job by Mr Djakovic, while the respondent's version was that Mr Djakovic had not offered to employ the appellant. In deciding which version it accepted, the Court was not required to take into account the "gravity" of finding that one of these versions was untrue.

[13]

Legal principles

The parties' submissions did not direct close attention to the principles applying where a plaintiff who claims damages for loss of earning capacity by reason of the defendant's negligence suffered from pre-existing injuries or disabilities prior to the date the negligence occurred. Although the principles were not in dispute, it is convenient to refer to them.
Section 5D of the Civil Liability Act 2002 (NSW) (CL Act) was in force at the notional trial date. Section 5D(1)(a) provides that a determination that negligence caused particular harm requires the negligence to be a necessary condition of the relevant harm. Section 5E of the CL Act states that in proceedings relating to liability for negligence, the plaintiff always bears the onus of proving, on the balance of probabilities, any fact relevant to the issue of causation.
A plaintiff is entitled to damages for any diminution in his or her earning capacity resulting from injuries sustained by reason of the defendant's negligence. [8] But the plaintiff is not entitled to damages for the degree of incapacity that arose from conditions pre-dating the defendant's negligence. [9] It is therefore ordinarily necessary to assess the plaintiff's earning capacity prior to and following the accident. That task includes assessing the plaintiff's economic prospects at the relevant times. [10]
The plaintiff must adduce evidence that the injuries sustained in consequence of the defendant's negligence are or may be associated with his or her post-accident inability to exploit fully his or her earning capacity. Evidence of this character ordinarily establishes a prima facie case that the defendant's negligence caused the plaintiff's diminished earning capacity. If the defendant contends that the plaintiff's current diminished earning capacity is due in whole or in part to a pre-existing injury or condition, the defendant has the burden of adducing evidence to that effect. [11] The evidence must be such as to enable the court to draw an inference as to the consequences for the future of the pre-existing condition. [12] If evidence of this kind is adduced, the plaintiff retains the burden of proving that the loss of earning capacity was caused by the injuries sustained as a consequence of the defendant's negligence.
In applying these principles it may be necessary to allow for possibilities and contingencies. [13] For example, a defendant may discharge the evidential onus by adducing evidence that, had the accident not occurred, the plaintiff's ability to work might have been compromised in any event by a pre-existing condition. In such a case an allowance must be made for the possibility of a deterioration in the plaintiff's earning capacity occurring independently of the defendant's negligence. Conversely, a plaintiff whose earning capacity is diminished at the date the accident occurred may be entitled to damages that take account of the chance that his or her earning capacity would have increased but for the injuries sustained in the accident.

[14]

Applying the principles

As has been noted, the primary Judge referred in some detail to the medical evidence relating to the injuries sustained by the appellant in the MVA. In particular, her Honour quoted lengthy extracts from reports prepared by Dr Giblin in June 2005 and March 2017. [14] Mr Bates relied heavily on Dr Giblin's opinions and criticised her Honour for not making findings based on those opinions.
In the June 2005 report, Dr Giblin recorded that as a result of the appellant's fall in December 2003 he sustained a fractured wrist, fractured ribs and soft tissue injuries to his shoulder and lower back. Dr Giblin apportioned the appellant's injuries as to 80 per cent to the fall and 20 per cent to the MVA and concluded that the appellant's injuries had stabilised. In his March 2017 report, Dr Giblin stated that the appellant's injuries in 2004 had two new "anatomical sites", namely the right ankle and left shoulder but that his injuries included damage to the cervical spine and lower back. Dr Giblin pointed out that the appellant had a history of injuries from 1998 to 2002 and earlier which involved the cervical spine. Dr Giblin attributed 90 per cent of the appellant's wrist injury and half of the injury to the cervical spine to the fall in December 2003. Dr Giblin attributed the whole of the injuries to the applicant's left shoulder and right ankle to the motor vehicle accident.
The primary Judge was plainly aware from Dr Giblin's reports and other medical evidence that the appellant suffered injuries in the MVA that were additional to his pre-existing conditions. Although the discursive nature of the Primary Judgment does not make it easy to follow, I interpret her Honour's reasons as indicating that she proceeded on the basis that the appellant suffered the injuries in the MVA recorded in Dr Giblin's reports.
The problem confronting the appellant, as identified by the primary Judge, was not the absence of evidence that he had sustained injuries in the MVA or any difficulty in determining the extent of those injuries. Nor was the problem the absence of evidence that those injuries were capable of diminishing such pre-accident earning capacity as the appellant had. The problem was that her Honour found that the respondent had discharged the burden of adducing evidence capable of demonstrating that by reason of the appellant's pre-MVA injuries he had little or no earning capacity. The evidence satisfied her Honour (and indeed was not in dispute) that at the date of the MVA the appellant was totally disabled from pursuing his previous occupation as a brick cleaner. There was also evidence, referred to by the primary Judge, that the appellant lacked command of English and (as Dr Giblin's reports showed) had sustained significant injuries as the result of the incidents pre-dating the MVA.
None of the appellant's numerous grounds of appeal challenged the primary Judge's finding that the respondent discharged the onus of adducing evidence suggesting that the appellant had little or no earning capacity at the date of the MVA. To counter the evidence adduced by the respondent, it was open to the appellant to lead evidence demonstrating that despite his pre-existing injuries and his inability to work in his previous occupation as a brick cleaner, at the date of the MVA he was capable of gaining remunerative employment. It was also open to him to adduce evidence that even if he had no residual earning capacity in February 2004, his circumstances might have changed thereafter and his chances of gaining employment improved. Had the appellant adduced such evidence he could have submitted to the primary Judge that damages should be assessed on the basis that but for the MVA he had at least a prospect of obtaining remunerative employment and that the injuries sustained in the MVA deprived him of that chance.
The appellant did not take advantage of the opportunity. The primary Judge found that the appellant was "bereft" of any evidence about his earning capacity following his fall in December 2003, other than the spurious letter from Mr Djakovic. Specifically, the appellant had not adduced any evidence that he was capable or might have been capable after his fall of working as a driver, the occupation he claimed was available to him as an alternative to brick cleaning. The primary Judge's finding is hardly surprising since the appellant's case at trial rested almost entirely on the letter from Mr Djakovic. No doubt there were good forensic reasons for the appellant not to adduce evidence in support of an alternative case of the kind Mr Bates attempted to construct on the appeal. But the alternative case requires evidence to support it.

[15]

Past economic loss

Logically the primary Judge's findings should have led to the conclusion that the appellant failed to establish that he had suffered any diminution in his earning capacity between the date of the MVA and the date of the notional trial (April 2009). On her Honour's findings, the appellant's earning capacity at the date of the MVA was non-existent and there was no evidence that his capacity might have improved after February 2004 but for the MVA.
The primary Judge's willingness to award the appellant a modest sum as damages for past economic loss at first blush is inconsistent with her Honour's findings. However, her Honour's contingent award of $8,576 was based on a hypothetical situation that was not intended to accord with her Honour's actual findings. [15] The award was assessed by reference to the appellant's pre-MVA weekly income as disclosed in his taxation returns, reduced by 80 per cent to take account of Dr Giblin's apportionment. As her Honour noted this was an "unrealistic hypothesis" but she adopted it in order to show that her calculations produced a figure less than the respondent's possibly "generous" concession. Her Honour's hypothetical assessment of damages was therefore not inconsistent with the findings as to the appellant's earning capacity at the material times.
Mr Bates submitted that the primary Judge's observation that "[p]lainly the [MVA] had some effect in extinguishing what little residual earning capacity the [appellant] possessed after the December 2003 fall" was also inconsistent with her Honour's findings that the appellant had not established that he had an earning capacity immediately prior to the MVA. I do not read this observation as intended to record a finding that the appellant retained a pre-MVA residual earning capacity. Rather, her Honour was acknowledging that if the appellant had retained a residual earning capacity, the injuries sustained in the MVA would have had some effect on his capacity. But her Honour saw the critical issue to be whether the appellant did in fact retain any earning capacity at the date of the MVA. She answered that question in the negative.

[16]

Future economic loss

The primary Judge correctly held that in order for the Court to award damages for future economic loss it was necessary for the appellant to satisfy s 126(1) of the MAC Act. Thus the appellant had to satisfy the Court that the assumptions about future earning capacity (that is, after April 2009) or other events on which the award was to be based accorded with the appellant's most likely circumstances but for the injury.
In the course of argument on the appeal, Mr Bates was asked to explain the way in which the appellant's claim for loss of future earning capacity was put to the primary Judge as an alternative to the appellant's reliance on Mr Djakovic's letter. Mr Bates said that the appellant's alternative case was that had he not been injured in the MVA, he would have undertaken some form of light industrial work or taken employment as a truck driver or something similar.
The primary Judge addressed and rejected a submission broadly to that effect. She found that although the appellant said that he held a licence to drive buses and semi-trailers in Croatia (then part of Yugoslavia) in the 1980s, he had never held a commercial driving licence in Australia. Nor was there evidence that he had been physically capable of working as a driver immediately before the MVA, bearing in mind the injuries he had already sustained, particularly to his wrist. Furthermore, the appellant had adduced no evidence as to whether he would be likely to obtain a position having regard not only to his physical limitations but his lack of command of English. Mr Bates conceded in argument on the appeal that there was no evidence of the appellant's ability to obtain commercial driving licences in Australia, nor as to the impact of the appellant's wrist injury on his ability to drive a vehicle.
A further objection to the appellant's claim for damages for future loss of earning capacity is that he gave no evidence as to what income earning activities he proposed to undertake beyond April 2009 had the MVA not occurred. Mr Bates' attempt to construct a case that would satisfy s 126(1) of the MAC Act cannot overcome the absence of evidence from the appellant on this issue.

Gulic v Angelovski

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Judgment (20 paragraphs)

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Legislation Cited (3)

Cases Cited (11)

Cited By (7)