Major Carpets Pty Ltd v Marandos [2018] VSCA 133

PRACTICE AND PROCEDURE - Consent orders allowing appeal and remitting proceeding for rehearing - Relevant considerations for whether consent order remitting proceeding for rehearing should be made - Disposition having resource implications for administration of justice - Need to identify error - Need to ensure error made at first instance not replicated on rehearing - Consent orders made - Matter remitted for rehearing by different judge.

1 On 26 March 2013, Andrew Marandos (the plaintiff) was injured in the course of his employment with Major Carpets Pty Ltd (the defendant). The plaintiff was lifting a trolley which was carrying a cabinet when he twisted and suffered sudden pain across his lower back.

2 By an originating motion filed in the County Court on 20 June 2016, the plaintiff sought leave, pursuant to s 134AB(16)(b) of the Accident Compensation Act 1985 ('the Act') to commence a proceeding at common law claiming damages in respect of his injury. The plaintiff relied upon paragraph (a) of the definition of 'serious injury' contained in s 134AB(37) of the Act. He sought leave to commence a proceeding in respect of both pain and suffering damages and pecuniary loss damages.[1]

3 The plaintiff's proceeding was heard on 8 February 2018. The plaintiff was the only witness to give oral evidence. Issues of the plaintiff's credibility were raised by the defendant in cross-examination, and in submissions to the judge.

4 On 14 February 2018, the judge granted the plaintiff leave to commence a proceeding claiming both pain and suffering damages and pecuniary loss damages.[2]

5 The defendant seeks leave to appeal from the judge's order granting the plaintiff leave to commence a proceeding for pecuniary loss damages. No complaint is made by the defendant in respect of the judge's order that the plaintiff have leave to commence a proceeding claiming pain and suffering damages. The defendant's proposed grounds of appeal are as follows:

1. His Honour erred at [67] in finding that an arithmetical calculation in respect of the areas of employment identified in the evidence, places [the plaintiff], at 20 hours per week, with a loss of work capacity at 40 per cent or more.
2. Alternatively, his Honour erred by failing to give adequate reasons for his finding that an arithmetic calculation in respect of the areas of employment identified in the evidence places the respondent, at 20 hours per week, with a loss of work capacity of 40 per cent or more.

6 In his written case, the plaintiff concedes that leave to appeal should be granted and the appeal should be allowed. The plaintiff accepts that, to the extent that the judge concluded that the plaintiff had a capacity to work as a customer service manager or project manager for 20 hours per week, and that this satisfied the 40 per cent loss of earning capacity requirements of s 134AB(38)(e) and (f), the judge erred. Contrary to the judge's conclusion,[3] an arithmetic calculation, based on the wage rates in evidence, did not place the plaintiff 'at 20 hours per week, with a loss of work capacity at more than 40 per cent'.[4]

7 The parties have now filed minutes of consent orders in this Court. The consent orders provide for a grant of leave to the defendant to appeal, the allowing of the appeal, the setting aside of the judge's order granting the plaintiff leave to commence a proceeding claiming pecuniary loss damages, and the remittal of the plaintiff's application to commence a proceeding for pecuniary loss damages for rehearing before a differently constituted court. In support of the proposed consent orders, the parties filed a joint memorandum signed by senior and junior counsel for the plaintiff and senior and junior counsel for the defendant.

8 Even though the orders now sought are sought by consent, as has been said before, they cannot be made unless this Court is satisfied that the judgment under challenge, and the orders made pursuant to it, are wrong - or at least sufficiently problematic to warrant that they be set aside and a new hearing ordered.[5] As this Court pointed out in Newton v Geelong Ethnic Communities Council Inc,[6] the Court must:

be affirmatively satisfied that the proceeding should be remitted to the County Court for rehearing. Any such disposition by this Court has resource implications for the administration of justice ... and involves costs to the community. In addition, it is desirable, in the interests of justice, that if the matter is to be reheard, any error made at first instance is not replicated.[7]

9 I therefore turn to consider for myself, albeit briefly, whether the proposed remission to the County Court is appropriate.

10 The plaintiff's case at first instance was that he had no present or future work capacity. If that case was accepted then it followed that the plaintiff had suffered a loss of earning capacity of greater than 40 per cent. The judge, however, rejected this case. The judge found it to be inconsistent with the evidence of the plaintiff's holiday trips to South East Asia.[8]

11 The evidence before the judge was that, at the time of the hearing, had the plaintiff remained as a warehouse supervisor, he would have been earning $64,921 gross per annum.[9] It followed that, in order to satisfy the 40 per cent loss of earning capacity requirements of s 134AB(38)(e) and (f) of the Act,[10] the plaintiff had to establish that he had a capacity to earn no more than 60 per cent of this figure - that is, $38,952.60 gross per annum.

12 The judge accepted that the plaintiff had a capacity to work as a customer service manager, an information clerk, a receiving and despatch clerk and a project manager.[11] The evidence before the judge was that the average weekly gross wage applicable to these positions was, respectively, $1,649, $1,077, $1,299 and $1,652. In its written case, the defendant, in a table the contents of which are not disputed by the plaintiff, converted these figures to annual gross incomes as follows:

13 In concluding that the plaintiff satisfied the 40 per cent loss of earning capacity requirements of s 134AB(38)(e) and (f), the judge said:

An arithmetic calculation in respect of the areas of employment identified [customer service manager, information clerk, receiving and despatch clerk or project manager] places Mr Marandos, at 20 hours per week, with a loss of work capacity at more than 40 per cent. As such, he satisfies the criteria for economic loss consequences.[12]

14 Plainly, however, at 20 hours per week, the positions of customer service manager and project manager yielded annual gross incomes of in excess of $38,952.60 - resulting in an annual loss of earning capacity, as measured as set out in s 134AB(38)(f) of the Act, that is less than the required 40 per cent.

15 While the judge referred to evidence to the effect that, after the plaintiff underwent a functional rehabilitation program, he would have the capacity to work 15 to 20 hours a week with various physical restrictions,[13] he ultimately appears to have considered the plaintiff's loss of earning capacity by reference to a capacity to work 20 hours per week. The judge did not set out in his reasons the arithmetic calculation he actually relied upon to come to his conclusion. This may have been a product of the submissions made to him at the conclusion of the evidence.[14] In any event, I accept that the judge's statement about an arithmetic calculation at 20 hours per week satisfying the 40 per cent loss of earning capacity test was erroneous, and that the judge's conclusion that the 40 per cent test was satisfied cannot be supported on the reasons he gave.

16 In accepting that the plaintiff had established a 40 per cent loss of earning capacity, the judge accepted the evidence of Dr Horsley that the plaintiff had a work capacity 'in the range ... of around 20 hours per week'.[15] However, at Reasons [63] the judge referred to Dr Horsley's evidence that, if the plaintiff underwent a functional rehabilitation program he would be able to work 15 to 20 hours a week with various physical restrictions. At 15 hours per week, the plaintiff would satisfy the 40 per cent loss of earning capacity test. As the judge thought that a work capacity limited to 20 hours per week satisfied the 40 per cent test, he appears not to have made a finding with any greater precision than that made at Reasons [67]. Having regard to the figures tendered in evidence, greater precision was needed in the determination of the plaintiff's loss of earning capacity.

17 The issue of the plaintiff's precise work capacity is bound up with issues of the plaintiff's credibility. These issues need to be redetermined. This Court is not in a position to determine the loss of earning capacity issues between the parties. The parties agree (correctly in my view) that the matter needs to be reheard in the County Court - and by a differently constituted court from the court that originally heard the proceeding.

(1) The application for leave to appeal is granted.

(3) Paragraph 1 of the orders made in the County Court on 14 February 2018 is set aside and in lieu thereof it is ordered that the plaintiff have leave pursuant to s 134AB(16)(b) of the Accident Compensation Act 1985 to bring proceedings for pain and suffering damages in respect of injury arising out of the course of his employment with the defendant on 26 March 2013.

(4) The proceeding is remitted to the County Court for a rehearing of the plaintiff's application for leave to commence a proceeding claiming pecuniary loss damages. The rehearing is to be conducted by a differently constituted court from that which heard the proceeding at first instance.

(5) The order granting the plaintiff leave to commence proceedings for pain and suffering damages is stayed until the resolution of the plaintiff's application for leave to commence proceedings for pecuniary loss damages.

(6) The plaintiff pay the defendant's costs of the application for leave to appeal and the appeal, capped at $25,000.

19 The plaintiff will be granted an indemnity certificate under s 4 of the Appeal Costs Act 1998.

[1] As those expressions are defined in s 134AB(37) of The Act.

[2] Marandos v Major Carpets Pty Ltd [2018] VCC 74 ('Reasons').

[5] Hennes v Hobsons Bay City Council [2012] VSCA 215 [7].

[6] [2011] VSCA 59.

[10] As to which, see generally, Yirga-Denbu v Victorian WorkCover Authority [2018] VSCA 35 [70]-[73], [77].

[14] See the plaintiff's written case at [14]-[15].