Luke as tutor for Luke v Workers Compensation Nominal Insurer

District Court of NSW|2010-02-10|Before: Price J

A worker who suffered severe brain damage in a workplace fall was awarded damages for total loss of income earning capacity. The court also held that the Workers Compensation Act allows compensation for the cost of managing his compensation money, because his brain damage meant he could not manage his own finances. The court said that being unable to manage money is itself a loss of earning capacity, and it would be unfair if injured workers who need financial managers had to pay for that service out of their compensation for lost wages. The case established that section 151G of the Workers Compensation Act is not limited to just replacing lost pay, but also covers related losses caused by the injury.

DECISION: The matter is stood over to 17 March 2010 to deal with the outstanding issues of award for funds management, interest and cost including costs specifically reserved by His Honour Justice Price arising from commencement of these proceedings in the Supreme Court

CATCHWORDS: INDUSTRIAL ACCIDENT - Brain damage - Loss of income earning capacity - Requirement for funds management - Whether s 151G permitted compensation for loss of capacity to manage funds

Baghdadi v P & M Quality Smallgoods Pty Limited [2008] NSWSC 406 CASES CITED: Medlin v State Government Insurance Commission [1995] 182 CLR 1 Willett v Futcher [2005] HCA 47

TEXTS CITED: Professor Harold Luntz, Assessment of Damages for Personal Injury and Death, 4th ed, 2002

PARTIES: Gary Luke By His Tutor Matthew Luke (Plaintiff) Workers Compensation Nominal Insurer - A State Government Statutory Authority (Defendant)

COUNSEL: C A W Hart (for the Plaintiff) G Sarginson (for the Defendant)

SOLICITORS: Bale Boshev Lawyers (for the Plaintiff) Hickson Lawyers (for the Defendant)

1 Mr Gary Luke was injured at work on 21 December 2004. He was working as a roof tiler when he fell three metres from a roof onto a concrete surface. Liability was not in issue. The allegation of contributory negligence was not pressed. An allegation of failure to mitigate loss raised in the opening address by counsel for the defendant was not pressed.

2 The issues were (1) The extent, if any, of the plaintiff's residual income earning capacity; and (2) The liability of the defendant for the cost of management of a fund comprised by any compensation awarded to the plaintiff.

THE NATURE OF THE PLAINTIFF'S INJURIES AND DISABILITIES

3 As a consequence of the accident the plaintiff suffered wedge fractures to a number of thoracolumbar vertebrae. He fractured his left 12th rib and his skull. Scans of his head depicted haematomas, swelling and bleeding in the areas of the right frontal and temporal lobes. He suffered post traumatic amnesia for a period of 10 days.

4 He was taken initially to Singleton Hospital from which he was transferred to the John Hunter Hospital. On 31 December 2004 he was transferred to Toronto Private Hospital for rehabilitation. He was discharged from that hospital on 7 February 2005. It was apparent that the head injury was severe.

5 The plaintiff experienced an earlier, similar accident on 4 February 2004 when he fell from a roof. He suffered spinal and rib fractures in that accident and what was said to be a mild head injury. He claimed to have recovered and returned to full duties in June 2004, a claim that was not challenged. There was no suggestion by medical experts of any connection between the plaintiff's current condition and his earlier accident.

6 The plaintiff complained that as a result of the accident he continued to suffer from ongoing physical discomfort as a result of his back injuries. He said his back was improved but he continued to suffer from sharp pains in the area of his low back, aggravated by activity. He had constant numbness in his left foot and occasional numbness in the right foot. He suffered from sharp pain from time to time, extending from his right hip to his right knee. The frequency of the pain depended upon his level of activity. He suffered from sharp piercing pains in the areas of his right and left temples and the crown of his head on the left side. These pains occurred several times a week, sometimes in succession so that the area affected was painful to touch. He suffered from pins and needles from time to time in his left forearm.

7 The plaintiff's major problem, however, was the consequence of the head injury. He complained of significant short term memory loss affecting his capacity for retraining, remembering tasks that he intended to carry out and, in particular, remembering destinations to which he is driving. He suffered from dizzy spells and he gave examples of dizziness occurring when he washed his car; at physiotherapy where he is required to stand close to a wall; as a result of movement on a television screen and in particular at the Imax theatre in Darling Harbour.

8 The plaintiff also complained of difficulty in managing his financial affairs. He was awarded $135,000 as a lump sum benefit in respect of his injuries in April 2007. Of that sum he had $5,000 remaining. He remembered spending $35,000 on a car and $10,000 on two cameras. He was unable to say what happened to the balance of the fund. He remembered that some was given to a woman with whom he was in a relationship. He said this was intended as a loan but it was not repaid although the relationship has ended.

9 The plaintiff's son Matthew Luke gave evidence of the plaintiff's vulnerability to those wishing to take financial advantage of him. The result was that application was made to the Guardianship Tribunal and Matthew Luke has been appointed financial manager on behalf of the plaintiff.

10 The plaintiff's evidence concerning his current condition was supported by medical reports provided by both the plaintiff and the defendant.

11 At the time of the accident the plaintiff was 53 years old, he is now 58. He had a solid working history as a roof tiler. For a period of three years between 2000 and 2003 he operated as a subcontractor to one builder through his own company Arrow Roofing Pty Limited. At the time of the accident he was an employee of Midcoast Roofing earning a weekly wage.

12 He has not worked from the date of the accident. No medical expert suggested that the plaintiff was or would ever be sufficiently fit to return to work as a roof tiler. The plaintiff said that as at the date of the accident his intention was to continue to work as a roof tiler as an employee, receiving a weekly wage, until his retirement at the age of 65.

13 He claimed that he had suffered a total loss of income earning capacity.

14 The defendant challenged both the quantum of the claimed loss and the claim of total incapacity.

15 In relation to quantum, the defendant argued that the loss should be assessed having regard to income earned, not only at the time of the plaintiff's injury but in the prior three years when he was operating through his company structure. Tax returns for this period disclosed a smaller income. It was therefore argued that I should discount the figure earned by the plaintiff at the time of injury.

16 The defendant also disputed the claim that at the time of the accident the plaintiff earned $818 net. Rather it was said that he earned about $800 per week gross or $621.36 net.

17 I rejected the defendant's arguments on this aspect.

18 The plaintiff's evidence was that he intended to remain in employment to the date of his retirement. There was no evidence from the defendant to suggest that this was not a tenable proposition and I therefore considered that there was no warrant to take account of income provided to the plaintiff through the company's structure. In any event I would need to see the company's accounts to determine the extent to which items of expenditure should be added back into the plaintiff's personal income and the extent to which dividends paid by the company should be taken into account.

19 In calculating the pre-accident income, the defendant failed to take into account non taxable allowances shown in the tax return for 2004 of $4,400. Adding this back to the sum arrived at by the defendant, one reaches a figure of $939 per week gross. Having regard to the tax free nature of the allowances I was prepared to accept the plaintiff's figure of $818 net per week at the time of the accident as a measure of his income earning capacity.

20 The past loss was claimed on the basis of the average income available to a roof tiler at the time of the accident and current construction industry rates. The figure arrived at was $825 per week net. This was a figure more favourable to the defendant than the approach that it suggested of a three percent increase per annum and it was therefore accepted.

21 As far as the plaintiff's residual income earning capacity was concerned, the evidence indicated that there were a number of alternative occupations that might be considered but the defendant acknowledged only one prospect that it considered realistic.

22 The plaintiff enjoyed photography prior to the accident. After the accident, as noted, he purchased two cameras, one of which was of a professional standard. The cameras operated digitally and the photographs taken with them were processed through a computer. The plaintiff has undertaken courses at TAFE and through the local community college where, with what appears to have been considerable dedication by teaching staff, he has managed to acquire some computer skills and an ability to process his photographs through Photoshop software programs.

23 The plaintiff described the difficulties he has in remembering instructions and in the practical application of instructions received in class to work at home. These difficulties persist notwithstanding that he has been provided with step-by-step instructions written in short, half-line sentences. Short sentences are required because, if the sentences are too long, the plaintiff is unable to remember the beginning of the sentence by the time he reaches the end. He said he could not keep up with other students in his classes.

24 The plaintiff gave evidence of the efforts that he has made to find work with established photographers without success, to sell his own photographs by attending at events, particularly at surfing events and by handing out cards that he has had printed describing him as a photographer. He agreed that he took photos at a Christmas party for Headstart, a rehabilitation provider, for which he was not paid.

25 To date he has sold photographs to a value of $50.

26 He said he has learned to watermark his photographs since he gave some surfing photographs to a contact who undertook to market them for him on his behalf through the Internet. The plaintiff said he received no payment for these photographs but he saw them on the web under another name.

27 In my view it was unrealistic to expect the plaintiff, with his reduced level of cognitive capacity, to master the levels of technical expertise required to capture, process and print professional quality photographs. Photography is an art form requiring a measure of artistic talent as well as significant technical ability. Technical ability is secured by formal training and work experience. Whatever the plaintiff's artistic ability, I was satisfied that he does not have the intellectual capacity to train to the necessary level of technical ability.

28 In addition to these impediments, the Guardianship Tribunal has been persuaded that the plaintiff required management of his financial affairs. I am left to speculate how, in such circumstances, he would be expected to manage financially working on a freelance basis.

29 I therefore considered the prospect that the plaintiff would earn any significant income from his photographic activities to be entirely unrealistic. In my view, the plaintiff is unemployable and should be compensated on the basis of a total loss of income earning capacity.

30 In calculating the amount to be paid, the defendant suggested that I apply a 15% discount to the figure arrived at to take account of vicissitudes. I am dealing in this case with a relatively short period of about six years and in the circumstances I considered it reasonable to reduce the discount for vicissitudes to 7½%.

31 The amount allowed in summary therefore is as follows:

Past economic loss $223,080 Past superannuation $24,538 Future loss $239,806 Future superannuation $23,332 Fox v Wood component $15,600 Total $526,356.

32 It was not suggested by the defendant that management of the plaintiff's fund would not be required but the claim was resisted on two bases. Firstly it was argued that no figure was proposed by way of compensation to meet this expense. The plaintiff's son gave evidence that he proposed to seek investment advice but he did not provide details of the structure proposed to manage the fund and of the fees that might be involved. I was satisfied that this could be appropriately dealt with when the amount of the fund was known and appropriate advice could be taken.

33 Secondly, the defendant claimed that the court was limited by the provisions of s 151G of the Workers Compensation Act 1987 to awarding the amount calculated as the actual income loss and that an award for funds management was not permitted.

34 When looking at the Act I noted that s 149 defined the term damages as any form of monetary compensation and s 151G provided: (1) the only damages that may be awarded are: (a) damages for past economic loss due to loss of earnings and (b) damages for future economic loss due to the deprivation or impairment of earning capacity.

35 The plaintiff's submissions noted reference in the Hansard record of debate on the second reading of the amending bill to the retention of common law damages for lost earnings. The plaintiff also drew my attention to the statement of principle of the High Court in Willett v Futcher [2005] HCA 47 at [51] to the need to assess common law damages so as to put the plaintiff as far as possible in the position he or she would have been but for the defendant's act of negligence.

36 The plaintiff argued that the mandatory application of the 5% discount tables provided for in the workers compensation legislation applied on the basis of an expectation that a plaintiff would manage an award through investment. It was therefore appropriate to allow for management where the plaintiff, through the defendant's negligence, lost the capacity for self management. Finally the plaintiff argued that the loss of capacity for fund management in itself was a loss of income earning capacity.

37 The defendant in response argued that the cost of fund management was a separate head of damage, such as that described by McHugh J in Medlin v State Government Insurance Commission [1995] 182 CLR 1 as a future need, the value of which was quantifiable. Alternatively it was argued that it was a pecuniary need as dealt with by Professor Luntz in Assessment of Damages for Personal Injury and Death 4th edition. It was said therefore that this head of damage was separate from the loss of capacity to earn income through personal exertion.

38 I was told that the only decision on this provision of the Workers Compensation Act was that of Acting Judge Patten in Baghdadi v P & M Quality Smallgoods Pty Limited [2008] NSWSC 406. Justice Patten's decision arose out of a cross claim by the plaintiff's employer to recover compensation under s 151Z of the Act. On the question of whether the amount allowed to the plaintiff for funds management fell within the terms damages for past economic loss due to loss of earnings and damages for future economic loss due to deprivation or impairment of earning capacity Patten J said at [105]: The phrase "due to" is wide. It is perhaps a matter of expression but given that the legislature must have contemplated the situation of a very seriously injured plaintiff I think the expression is wide enough to encompass funds management where the negligence of the employer creates the need for the management as occurred in this case.

39 The defendant argued that this determination was made by his Honour without the benefit of detailed argument and that it was made in the context of a cross claim so that it should be given little weight. The plaintiff described the decision as persuasive.

40 I preferred the plaintiff's approach on this issue for the following reasons: (1) Notwithstanding that it was dealt with in short compass by Justice Patten in Baghdadi , the reasons given for his conclusion were clearly sensible and tenable and highly persuasive; (2) The decision not to allow for funds management would lead to a situation where plaintiffs injured to the point where they were incapable of funds management would be disadvantaged over those not similarly incapacitated because they would be required to use part of their lost income to the acquisition of management services. Looked at in this way it supports the plaintiff's argument that this incapacity in itself is a form of impairment of income earning capacity. (3) The terms used to describe the limited damages that remain available under the Act were referred to in the Hansard reports as common law damages for lost earnings, in s 49 as damages, in s 151G itself as damages due to loss of earnings or due to deprivation or impairment of earning capacity. The legislature was presented on these occasions with the opportunity to state clearly and unequivocally that only the actual or projected amount calculated to be lost wages was to be awarded. It did not do so. I therefore did not accept that s 151G extended only to the actual or projected lost wages or income.

41 I find that s 151G of the Workers Compensation Act 1987 extends also to damages for loss of the capacity to manage a fund.

42 In those circumstances I propose to stand the matter over to deal with the question of the quantum of funds management, any arguments relating to interest and to deal with costs including those that arise through the commencement of the action in the Supreme Court that were specifically reserved by his Honour Justice Price.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.

Outcomeplaintiff

Disposition:

Matter stood over to 17 March 2010 to deal with outstanding issues of award for funds management, interest and costs including costs reserved by Justice Price arising from commencement in Supreme Court. Past and future economic loss and superannuation awarded totalling $526,356.

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