Damages - appeal on quantum - loss of earning
capacity to trial ~- loss of future earning
capacity - non-economic loss.
ROBIN DAVID HORNER v. AXEL WILLIAM HARALD NIELSEN.
F.C. No. 33 of 1979.
Franki, St. John and Sheppard JJ.
Sydney.
29 September 1980.
IN THE FEDERAL COURT OF AUSTRALIA
CANBERRA DISTRICT REGISTRY No. F.C. 33 of 1979.
GENERAL DIVISION.
BETWEEN: ROBIN DAVID HORNER
Appellant
AND: AXEL WILLIAM HARALD NIELSEN
Respondent.
ORDER
JUDGES MAKING ORDER: Franki, St. John and Sheppard JJ.
DATE OF ORDER 2 29 September 1980.
WHERE MADE : Sydney.
THE COURT ORDERS THAT:
Appeal allowed.
Order of the Supreme Court of the Australian Capital
Territory varied by the substitution of the sum of
$112,477.66 for the sum of $174,977.66 mentioned
therein.
The respondent pay the appellant's costs of
this appeal.
IN THE FEDERAL COURT OF AUSTRALIA)
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)
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CANBERRA DISTRICT REGISTRY No.FC 33 of 1979
GENERAL DIVISION
BETWEEN: ROBIN DAVID HORNER
Appellant
AND: AXEL WILLIAM HARALD NIELSEN
Respondent
CORAM: FRANKI, ST. JOHN AND SHEPPARD JJ.
249 SEPTEMBER 1980
REASONS FOR JUDGMENT
THE COURT:
The appellant, Robin David Horner, was the defendant in
an action brought by the respondent, Axel William Harald Nielsen,
un the Supreme Court of the Australian Capital Territory. The
appeal is limited to the damages awarded.
The learned trial Judge awarded a sum of $174,977.66,
made up as follows:
"Agreed special damages $ 3,153.66
Loss of earning capacity to trial 23,124.00
Loss of future earning capacity 112,500.00
Future expenses 1,200.00
Non-economic loss 35,000.00"
The injuries to the respondent resulted from a motor car
accident on 8 April 1975, when the respondent was almost 42 years
of age and was employed by a company, Dalgetys Ltd.,("Dalgetys")
as a sales representative in the liquor sales activities of the
company in the Canberra and southern district area of New South
Wales. Dalgetys did not terminate his employment until March
1977. The respondent is married with 4 children, the eldest of
whom was 20 at the time of the accident. The learned trial Judge
made the following findings:
"Immediately after the accident the plaintiff
spent six days in hospital. His less serious
injuries were considerable bruising, and
cracked ribs. His more serious injury, which
has been the foundation of all the pain and
loss which he has suffered as a result of the
accident, was damage to the cervical
vertebrae. He found that his neck was at
first immovable and very painful, and the
pain extended down into his arms. In
hospital he was immobilized and put under
sedation. After leaving hospital he was in
bed at home for ten days, during which there
was some lessening of pain and increase in
his mobility. A surgical collar was placed
round his neck while he was in hospital and
he wore it more or less' continuously
afterwards; indeed he was wearing 1t for most
of the hearing.
The principal effect of the injury was severe
and prolonged pain. During the months after
the accident the pain included severe
headache and backache with referred pain in
the groin. He waS more ar wjless constantly
under medication to relieve this pain. In
addition, he has had a great deal of
physiotherapy; indeed from the time of the
accident to the time of trial the longest
period that he was not undergoing
physiotherapy was three months; for most of
the time, he was having physiotherapy three
times a week. This was helpful in reducing
the pain."
The respondent's treatment included traction, which he
said was "desperately painful", manipulation under anaesthetic, a
myelogram, cortisone injections and rhysolysis.
The hearing of the case commenced on 24 October 1978 and
judgment was delivered on 24 August 1979. Between the accident
and March 1977, the respondent did some very limited work for
Dalgetys. For this period he was paid an amount of $7,836.80 in
respect of workmen's compensation and his salary was made up by
Dalgetys. The learned trial Judge reached a figure for loss of
earnings between the termination of employment and the time of
the trial, based upon a period of 84 weeks, of $15,288.
His Honour's judgment was given before the judgment of
the High Court in Cullen v. Trappell (1980) 29 A.L.R. 1. In
assessing damages the learned trial Judge used a figure of gross
earnings for the calculation of loss of earning capacity up to
the date of the trial and of loss of earning capacity thereafter,
and so it is clear that his Honour proceeded upon a basis now
known to be incorrect. The majority judgments of the High Court
in Cullen v. Trappell (supra) on this aspect only clarified the
existing law so that no question whether it is appropriate to
apply any change in the law to this appeal arises. The trial
Judge also, in relation to future damages, made the following
finding:
"For the future, I accept the figure of $400
per week as the amount the plaintiff would
have been earning at the time of the trial if
he had continued his employment with Dalgetys
Ltd."
After a careful examination of the evidence we do not
regard this conclusion as being open to the learned trial Judge.
For the purpose of assessing loss of earning capacity to the date
of the trial, his Honour treated the relevant date as being March
1977 and found that a gross salary of $182.00 per week was the
appropriate figure. The respondent was, in fact, employed by
Dalgetys until March 1977 and said that his intention was to
remain with Dalgetys and that he hoped to be promoted from his
position of sales representative to that of manager of all of
Dalgetys' operations in Canberra. There was little evidence about
the size of Dalgetys but it does appear that, at the time of the
hearing, it employed 7 sales representatives in New South Wales.
There was evidence that the gross salary of the respondent at the
award rate, had he remained with Dalgetys until the date of the
hearing, would have been $9,157.00 per annum, together with a
further payment of $1,500.00, making a total amount of $10,657
per annum. He would also have had the use of a car which the
company provided and maintained and for which it supplied petrol.
The trial Judge took the view that, because there was no evidence
of the value of the car to the respondent, the provision of the
car should be disregarded.
The appeal was pursued in relation to the assessment
of damages under three heads, namely:~
A. Loss of earning capacity to trial.
B. Loss of future earning capacity.
C. Non-economic loss.
In our opinion, bearing 1n mind that the approach of the
Judge to loss of future earning capacity was not in accordance
with that set out in Cullen v. Trappell (supra) and the absence
of evidence which would justify the conclusion that the
respondent would have been earning $400 per week at the time of
the trial if he had continued his employment with Dalgetys, it is
necessary to re-examine the assessment of damages made by the
trial Judge, and to vary the figure at which he arrived, if upon
a re-assessment by this court it seems appropriate so to do.
A. Loss of earning capacity to trial.
The period for which the trial Judge assessed this
aspect of damages terminated at the date of hearing and so no
allowance was made for the period from the date judgment was
reserved until it was delivered. It was common ground that the
net figure of $153.90 per week resulted when the appropriate
income tax, taking into account dependants, of $28.10, was
deducted from the gross earnings of $182.00 which the respondent
would have earned at the date of the termination of his
employment by Dalgetys. It was also common ground that the
figure of $10,657.00 per year was equivalent to an income of
$205.00 per week gross and that if the appropriate income tax,
taking into account dependants, of $35.60 was deducted, the net
figure of $169.40 resulted.The figure-of $205.00 gross was the
figure which the respondent would have been earning at the date
of the trial had he remained in the position which he held with
Dalgetys at the date of the accident.
A figure of $153.90 per week for 84 weeks 1s $12,927.60
and $169.40 per week for 84 weeks 1S $14,229.60. In our opinion,
although the figure his Honour arrived at is somewhat higher than
either of these figures, some value should be attributed to the
use of the car. Bearing this consideration in mind we do not
regard the assessment of $15,288 as excessive. To this figure
must be added the sum of $7836.80 which had been paid for
workmen's compensation prior to the termination of the
respondent's employment with Dalgetys. We would not disturb the
assessment of $23,124.00 for loss of earning capacity prior to
the trial.
B. Loss of future earning capacity.
It was agreed between the parties that insofar as 1t was
appropriate to use actuarial tables which show the present value
of a sum of money to be received over a period of time in the
future, those based on 5 per cent should be used. This avoided
the court having to consider the appropriate tables to use in the
light of the judgment in Cullen v. Trappell (Supra).
The learned trial Judge used tables based on 7 per cent
and found that the present value of $400 for 20 years was
$220,272. He reduced this figure by about 20 percent to make
allowance for the contingency of the plaintiff's death before the
age of 65 and reached a figure of $180,000. He also said:
"My assessment of all the evidence, including
that of the plaintiff himself, is that the
plaintiff has not totally lost his earning
capacity. In my opinion, a proper way, in
this case, to assess the damages for loss of
earning capacity for the future 1s to reduce
by three eighths the damages which I would
assess if the plaintiff's loss of earning
capacity were total."
The trial Judge then reduced the figure of $180,000 by
three eighths, and this resulted in the figure of $112,500. His
Honour's reasoning produced the result that, in relation to
earning capacity for the period after the date of the hearing,
the respondent was treated as having three eighths of the earning
capacity which he otherwise would have had.
There is no doubt that the learned trial Judge, who had
the advantage of seeing the plaintiff and observing him in the
witness box, formed a very favourable view of the plaintiff's
pre- injury capacity and clearly accepted the truth of his
evidence. His Honour said:
"I have no difficulty in finding, on the
evidence, that before the accident the
Plaintiff was an intelligent and industrious
man, who had learned and was capable of
applying a number of skills, and in particular
was a highly successful salesman and sales
organizer, having the characteristics of
drive, energy and an engaging personality,
which that work demands."
He also said:
"The evidence showed clearly that the
plaintiff was a highly successful sales
representative, and a report on his ability
and success, made by a responsible officer of
the company, waS put in evadence; 1t was in
strikingly glowing terms."
The respondent's evidence, provided a firm foundation
for the findings concerning his ability. The trial Judge said:
"The plaintiff was born in England in 1933.
He left school at the age of 15, was employed
aS an apprentice waiter at Claridges Hotel in
London for twelve months, and he was then a
student at a hotel school in Switzerland for
two years; at this school he was very
successful. He was then, at the age of 18,
head waiter at the Mayfair Hotel in London
for nine months, after which he joined the
Royal Air Force. After failing to be
commissioned as a pilot, because of colour
blindness, he was offered a commission as
catering officer, but chose instead the
engineering side. He served in
non-commissioned ranks in the engineering
side of the Royal Air Force until the age of
22. Thereafter he was a hotel manager in
London for eighteen months and then became a
flight steward in the employ of British
European Airways, and later of British
Overseas Airways Corporation, for a total of
nine years. The plaintiff had married in
1955, at about the time that he joined
British European Airways. After leaving
British Overseas Airways Corporation, he
became a field representative for a company
which marketed animal foods. After two years
in this position, in May 1966 he came to
Australia with his wife and family, and for
seven months was a motel manager working at
various places in New South Wales and this
Territory. He was then employed as office
manager and senior purchasing officer of a
construction company which had a contract in
connection with the Canberra water supply.
He had this job for two years, and when the
company's contracts in Australia were
completed he declined an offer of employment
by the same company in the United States,
preferring to stay in Australia. He then
undertook the ownership and operation of the
Cotter Tavern Restaurant, a business which he
built up from a very small size to a much
larger size and more prosperous condition.
The business was operated by the plaintiff,
his wife, his eldest son, and one woman
employee; they operated this business for
eighteen months."
His Honour also said:
"When the business ceased because his
sub-tenancy came to an end, he took a job at
the Australian National University as
assistant manager to the catering manager.
The plaintiff worked hard and effectively and
was promoted to function manager and manager
in charge of the commercial aspects of the -
Union's activities, including the bar. There
waS an enormous and successful increase in
the business of the Union in this respect,
and there was evidence that this successful
increase was to a considerable extent due to
the energy and efficiency of the plaintiff.
The work involved long hours, considerable
physical energy, and a high degree of
initiative and inventiveness. After two
years, the plaintiff left the University
Union and became secretary/manager of the
Western District Rugby Union Club in
Canberra. The reason for his leaving the
Union was that there seemed no prospect for
advancement and the job with the Rugby Union
Club was less demanding and better rewarded.
However, after six months he left the Rugby
Union Club after a disagreement with some
Members of the board of control, and
thereupon entered on the employment in which
he was engaged at the time of the
accident...".
As a result of the accident, the trial Judge found that
he had:
",.. no difficulty in finding that his ability
to continue the work that he was doing was
significantly impaired by the injury; he could
not tolerate long periods at the wheel of a
car; he walked with some difficulty and pain;
he found concentration, even on desk work,
difficult; and he was generally unable to give
the physical and mental energy to his work
which he had given to it before the accident."
Dr. Roebuck, an orthopaedic surgeon, was the
respondent's principal medical witness, and the learned trial
Judge cited and accepted the following passage from his evidence:
"I don't think he could travel much. That
would make his neck worse. He could travel a
bit. I think he would have difficulty putting
in a full days work, even sitting or standing,
at the moment. I think he could probably do™
half a days work if there wasn't too much
travelling and I think, as I say, in a year or
two perhaps he'd get to the stage where he
could do a full days work without much
travelling. I doubt if he'll ever be able to
travel long distances in a car."
The principal medical witness for the defendant was Dr.
Andrews and the learned trial Judge said of his evidence:
"Dr. Andrews, the neurologist, called by the
defendant, was a little more optimistic about
the plaintiff's employment capability, while
agreeing essentially with Dr. Roebuck. He
suggested a period of a year or two after
which the plaintiff should be able to 'get by
quite well' but not so as to be able to do any
lifting or heavy work, or drive a motor
vehicle for long distances; and he was also
mindful of the possibility of episodes of
acute pain which would require physiotherapy
and medication. He believed that the
functional element in the plaintiff's present
condition would probably disappear in time."
We accept the findings of the learned trial Judge in
relation to the medical evidence. There is no doubt that the
respondent's capacity for work was seyerely curtailed, although
the appellant argued that a significant amount of the
respondent's trouble was caused by functional overlay.
If one seeks to assess damages under this head by
following the approach of the learned trial Judge we consider
that a figure considerably less than $400 should be chosen.
Bearing in mind the employment record of the respondent, and
allowing something for the use of the car which he had and the
likelihood of something similar continuing, we consider that a
figure of $325 gross per week, or approximately $16,900 gross per
annum, is a reasonable figure to adopt. It is interesting to
note that the appellant suggested that a figure of the order of
$300 gross per week was appropriate. If one assumes income tax
of $4,400 on $16,900, a net earning per annum of $12,500 results,
equivalent to about $240 per week. The learned trial Judge,
having taken the figure of $400 as the appropriate starting
point, decided that the respondent was capable of earning three
eights of this amount, ie, $150 per week. But both these figures
were gross figures. The figure of $150 per week gross 18S
equivalent to a net figure of the order of $125 per week when
taxation 1s taken into account. We consider that this is an
appropriate figure to use. The difference between the net figure
of $240 per week and $125 per week is $115 per week. On the
figures provided by the respondent, which appear to be common
ground, $115 per week for 20 years results in a figure of
approximately $66,500.
The learned trial Judge made an allowance for the
contingency of the plaintiff's death before 65 of 20 percent. In
our opinion, a reduction for contingencies of something less than
this 1S appropriate because of the favourable view which the
trial Judge took of the respondent's capacity, because of the
probability that in the period of two or three years following
the hearing the respondent's earning capacity would be less than
$125 per week net and to allow for the period of 10 months
between trial and judgment. Doing the best we can- with the
evidence avallable we consider a reduction for contingencies of
about 10 percent is appropriate. We would reduce the assessment
for loss of future earning capacity from $112,500 to $60,000.
C. Non-economic loss.
The learned trial Judge made the following findings:
"The plaintiff takes a large quantity of
analgesic tablets to relieve pain and to help
him to sleep. There is substantial evidence
to show that his personality is substantially
changed since the accident; he was formerly
physically strong, happy, healthy and very
energetic and equable in temperament. Since
the accident he has become a somewhat
lrritable, worried, and depressed man who has
bursts of deep depression and has difficulty
in concentrating on even purely mental work.
He is limited in the extent and amount of
physical exertion which is possible for him,
which contrasts markedly with his energy and
fondness for physical activity which was a
feature of his life before the accident."
In our opinion the figure of $35,000 for non-economic
loss 1s excessive. We consider that figure should be reduced to
$25,000.
Conclusion.
It will be seen that we would reduce the figure for the
total of the loss of future earning capacity and non-economic
loss from $147,500 to $85,000.
It 1s, of course, important to bear in mind that the
total sum should not have been arrived at in a manner which
compensates the respondent twice in respect of the same factor.
It is also desirable to appreciate, certainly in
relation to the use of mathematical tables and actuarial
evidence, what was said by Gibbs J. in Cullen v. Trappell,
(supra) at p.1ll:
"Even if actuarial material is available, the Court
cannot attain complete mathematical accuracy, and is not bound to
engage in complicated exercises 1n an attempt to do so."
Aickin J., although dissenting from the majority
judgment, expressed a warning when he said, at p.23, in dealing
with what he described as the process now used in assessing
future loss of earning capacity from appropriate tables after
"This exercise gives a figure which has, 1f I may say
so, a Spurious air of precision."
We consider that the figures we propose for loss of
future earning capacity and non-economic loss produce a result
fair to both parties.
We would vary the assessment of damages in the following
way:
Agreed special damages $ 3,153.66
Loss of earning capacity to the date
of trial 23,124.00
Loss of future earning capacity 60,000.00
Future expenses 1,200.00
Non-economic loss 25,000.00
Making a total of $ 112,477.66
We were asked not to deal with the question of costs
before we had delivered our judgments.
ITeertaify thst this acd the Terrarecn
preooding pages are a true copy of the
Reocons for Judgment herezn of his H-ncur
Mr. Justice FRANK, ST.TCHN AND