MARINE MINISTERIAL HOLDING CORPORATION v NAGLE & ANOR

THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40848/98 DC 73/95

MASON P POWELL JA HODGSON CJ in Eq Tuesday 15 August 2000 MARINE MINISTERIAL HOLDING CORPORATION v Robert Melville NAGLE & Ors JUDGMENT 1 MASON P: The first respondent (the plaintiff) was injured at the Goodwood Island Wharf on 14 September 1992. He was a customs officer with the Australian Customs Service (ACS). At the time of the accident he was on the wharf and attempting to board the vessel "MV Hunte". There was no gangway down so he tried to get on board by other means. He stepped towards the stern onto what he believed to be a stringer. The distance was less than a metre. In fact he stepped onto a loose chock which rotated. He fell and was pinned up to his waist, suffering injury to his back. 2 The plaintiff sued two defendants. The first defendant Chynhale Pty Ltd, t/a Yamba Shipping (Yamba) operated the vessel and occupied the wharf under a licence agreement with the Maritime Services Board (MSB), the registered proprietor of the wharf. The first defendant is the second respondent in the appeal, but it did not appear at the hearing. The second defendant is the appellant in this Court and is the statutory successor to the MSB's liabilities. 3 The trial judge accepted the plaintiff as to his version of the accident. The plaintiff could have insisted that the gangplank be lowered, but he decided to board the ship the way he did in circumstances where Yamba's employee had told him that a quick turnaround of the vessel was expected. He was unaware of the precarious danger of the wharf, in particular the capacity of the chock to rotate (due to being secured with only one bolt). 4 As owner and occupier of the wharf, the MSB was held liable with respect to defects which were or should have been known and which should have been repaired in the exercise of due care. Yamba was also held liable to the plaintiff in consequence of its conceded "partial occupation" (RB 44) of the wharf and area where the accident occurred and its failure to have pressed the MSB to repair the wharf. It was held that there was always a real likelihood that somebody would stand upon the buffers or chocks. It would have been simple to have secured the chocks with two bolts and/or provide an appropriate warning. 5 The plaintiff therefore obtained a verdict against each defendant. However, his damages were reduced by 20% for contributory negligence. Damages were assessed at $293,667. Each defendant was held liable to meet the judgment in equal proportions and a claim by the appellant for full indemnity pursuant to a contract between the MSB and Yamba was rejected.

Issues on appeal 6 The appellant challenges: 1. the inadequacy of the finding of 20% contributory negligence;

2. aspects of the assessment of economic loss, especially those based upon a finding of 50% incapacity stemming from the accident;

3. the rejection of the contractual indemnity claim against Yamba; and

4. the rejection of the submission that the plaintiff failed to mitigate his loss by joining the Commonwealth of Australia as a defendant.

Contributory negligence 7 The appellant submits that the 20% reduction was inadequate. It relies upon the plaintiff's extensive experience in and around wharves (he had been boarding ships for 10 years) and his capacity to have insisted that the gangway be put down. 8 Part of this challenge seeks to overturn the findings that Yamba was expecting a quick turnaround of the vessel and that the plaintiff had been made aware of this by Yamba's employee, Mr Turner. The contemporaneous records, notably the log of the wharf, raise strong doubts about the plaintiff's evidence about a phone call the day before the accident, but this does not significantly affect either the thrust of the plaintiff's story or his credibility. This was a classical situation where the trial judge was entitled to prefer the evidence of the plaintiff, as he did. The matters relied upon by the appellant as tending in the opposite direction do not show appealable error. In particular, I find it unremarkable that the plaintiff omitted this detail in giving medical histories; and the contemporaneous records are not inconsistent with an expected "quick turnaround" (whatever that really meant in the context) nor with prompt customs clearance being a matter of importance. 9 The trial judge's reasons were (RB 47): Quite clearly, in my view, the plaintiff did not have proper regard for his own safety. He stood upon chocks in circumstances that they were untested, their stability unknown and used that as an unusual means of moving himself onto the stringers and ultimately the MV Hunte for the purposes of gaining access to that vessel. To do this, in my mind, when it was possible to arrange for the gangplank to be lowered, amounts to significant contributory negligence. It may be that he was trying to be of assistance to the first named defendant but he still owed a duty of care to himself. In this regard [he] failed. I am of the view he is 20 per cent responsible for the injury sustained and the damages he recovered will be reduced by this amount.

10 This conclusion was well open to the judge given the nature of the duty and circumstances of its breach.

Economic loss component of plaintiff's damages 11 The plaintiff had been with ACS since 1965. He had been transferred to Coffs Harbour in December 1988 as a secondment for a limited period. In January 1992 ACS approved a one year extension on personal grounds, indicating that the plaintiff would be transferred from Coffs Harbour in January 1993. 12 The accident occurred on 14 September 1992. 13 The plaintiff took several weeks sick leave and then returned to normal duties. He was given suitable administrative work by ACS and suffered no reduction in income. In January 1993 he took six months long service leave. 14 Before the expiry of this leave, he resigned from ACS on 15 July 1993. He was then aged 44. The resignation was unrelated to the accident and based upon the plaintiff's wish to remain in Coffs Harbour, a wish unlikely to be fulfilled if he stayed with ACS. 15 The plaintiff has not had full-time employment since this time. He supported himself and his family with the supporting parent's pension from the latter part of 1993, switching to a disability pension in May 1996. 16 In November 1995 he commenced driving a taxi one day a week, but he gave this up in April 1996 due to lower back pain. In March 1996 he commenced a full time course in sports coaching at the University of the Northern Territory that was still underway at date of trial (December 1997). He was hopeful about his prospects of obtaining a training position in rugby league at Coffs Harbour although very apprehensive about his capacity to do so (Black AB 76). 17 The primary judge made the following preliminary findings about economic loss: The economic loss presents difficulties in that the plaintiff had taken six months leave of absence, not because of injury but to contemplate his future position as he was being required to leave Coffs Harbour by his employer. He did not wish to do so because of his friends and lifestyle in that town. He then chose not to continue in employment with the Customs Department for reasons not directly related to the accident. Thereafter there was the need for surgery, and I have no hesitation in finding that the plaintiff was totally unemployable for a period from about mid-1994 to about mid-1995, or a period of about a year because of his back condition before and after surgery. Thereafter, in my view, the plaintiff was fit for a range of clerical work or more sedentary type of work that does not require lifting, bending, standing, prolonged walking, climbing and the like referred to by the doctors. The difficulty in assessment is as to the use I can make of the plaintiff's earnings as a Customs officer when for reasons unrelated to this accident he would have left that employment.

18 The finding as to loss of capacity was converted into a money sum as follows:

(a) For the period July 1993-July 1995 the judge took as his starting point the comparable earnings of a customs officer, agreed at $580 per week. The plaintiff was treated as 50% incapacitated for the first year and 100% incapacitated for the second year of that period, when there was need for surgical intervention as indicated in the passage just quoted.

(b) For the period after July 1995 to date of judgment (1 October 1998) the starting point was $520, an extrapolation based upon the plaintiff's previous earnings as a customs officer, average weekly earnings and the difficulty of obtaining employment in Coffs Harbour. The plaintiff was allowed $260 per week on the basis of a 50% impairment in working capacity.

(c) For the future, $300 per week was allowed as being "approximately 50% diminution of his pre-accident earning capacity and the wages he could be earning as and of date of trial" . The period allowed was 15 years rather than the 15¼ years (the plaintiff's actual period until he turned 65) because "$300 per week is arguably in favour of the plaintiff" . Vicissitudes were also increased to 20% because of underlying degenerative changes which would have rendered the plaintiff at risk of lumbar injury in any event. 19 The appellant challenges the critical finding that the accident caused a 50% loss of earning capacity. 20 The submission has several layers, which reflect the complexity of the issue as it presented itself at trial. 21 The appellant relies upon: • the plaintiff's ability to return to work four weeks after the accident and continue his duties at ACS without loss of income until he took long service leave and left ACS so that he could stay in Coffs Harbour;

• absence of complaint of low back pain to the treating general practitioner, Dr Oliver, over ten consultations between September 1992 and August 1994;

• the plaintiff's reliance upon the supporting parent's pension in late 1993: he did not seek a disability pension until May 1996;

• the plaintiff's capacity to go on longish walks and to play golf;

• the opinions of Dr Chen and Dr Oliver as to the plaintiff's capacity to perform full-time clerical and administrative duties within certain limits (see further below);

• the plaintiff's failure to challenge Comcare's determination that Comcare had no liability for his incapacity from the resignation date of 15 July 1993;

• the decision in March 1996 to start a university sports coaching course and the optimism that this might lead to a new job;

• the plaintiff's concession at trial that he was fit and able to do clerical work or something like it, as long as he could get up and move around (Black AB 70 ). 22 The appellant concedes no more than about eight months significant disability, between August 1994 when there was the first complaint of low back pain to Dr Oliver and April 1995 when (following the surgery) he was admittedly able to walk a mile without significant back or leg pain. 23 A critical aspect of the economic loss claim was the plaintiff's evidence that the accident led to low back pain, first noticed towards the end of 1992. No complaint of such pain was made to the plaintiff's general practitioner, Dr Oliver, who saw the plaintiff on several occasions in 1992-1994. It was on 15 August 1994 that the plaintiff first sought advice from Dr Oliver in relation to a complaint of persisting groin pain and low back pain radiating into both legs. 24 The learned trial judge nevertheless accepted that the plaintiff had suffered a lumbar injury which ultimately required surgery (in 1995) and which continues to be a significant factor affecting the plaintiff's employability. This finding was based upon acceptance of the plaintiff generally as a witness of truth; a note of Dr Oliver of 29 September 1992 raising the possibility that groin pain then being suffered might be referred back pain (see Red AB 49, 58); the opinion of Dr Oliver given in 1996 that lumbar injury had been suffered in the accident; and the opinions of Dr Chen and Dr Wolfenden that the accident had contributed to the deterioration of the plaintiff's back condition. 25 In February 1995 neurosurgery was performed by Dr Segelov and the plaintiff was in hospital for 10 days. By April 1995 he was able to walk one mile without significant back or leg pain. 26 Dr Chen examined the plaintiff for Comcare in May 1995. She formed the view that the plaintiff had responded well to the surgical procedure with a diminution of right leg pain, and that while he may continue to have lingering intermittent back pain, it was anticipated that with appropriate rehabilitative measures his physical tolerances could improve. She was of the opinion that the plaintiff was fit to perform full-time clerical and administrative duties with restrictions from repetitive heavy manual handling and prolonged and repetitive truncal bending and twisting. 27 Dr Oliver reported in February 1997 that the plaintiff had had a good recovery from surgery and that his MRI scan was normal. He opined that the plaintiff was permanently restricted in being able to sit or stand for long periods of time, and said that he should not undertake heavy lifting or carrying or repetitive bending, or attempt to negotiate rough terrain, either on foot or in a four-wheel drive vehicle, or climb up or down ladders (these being activities encountered in his former duties as a customs officer). Dr Oliver thought it unlikely that further surgical intervention would be required although the plaintiff would require sessions of physiotherapy from time to time. 28 There was little difference in the opinions of Dr Oliver and Dr Chen and the trial judge readily accepted both. 29 His Honour also appears to have accepted the evidence of Dr Wolfenden, a neurologist who saw the plaintiff at the request of the appellant. Dr Wolfenden thought there may have been some pre-existing degenerative changes in the lumbar spine but not symptomatic, and that the incident on 14 April 1992 was probably of considerable jarring and aggravated changes in the symptoms precipitated. He was also of the view that the plaintiff was unfit for work involving bending, lifting or prolonged sitting or standing, and could only do light work where he was free to move around at will. Dr Wolfenden considered the plaintiff to have a permanent impairment of the function of his back equivalent to approximately 25% of a most extreme case and a 10% loss of the efficient use of his right leg at or above the knee. 30 In my view it was well open to the primary judge to accept the genuiness of the long term injury to the lower back in consequence of the accident. It was consistent with the accident, there was support from the September 1992 diagnosis of Dr Oliver, the plaintiff was accepted generally as a witness of truth, and the causal link was supported by medical opinion which the trial judge accepted. This aspect of the appellant's challenge fails. 31 The more difficult issue is the judge's conclusion that the primary facts supported a finding of 50% loss of earning capacity. Senior counsel for the appellant accepted in argument (Tr p21) that the critical issue pressed by the appellant is whether the medical opinion of Dr Chen, accepted by his Honour, justified the conclusion that there was an ongoing loss of earning capacity to the level of 50%. 32 Before us, the plaintiff emphasised that the task confronting the trial judge was assessing lost earning capacity as distinct from lost earnings. It was submitted that there was ample evidence that the earning capacity had been significantly affected. It was further submitted that the onus lay upon the defendants in the court below to show that alternative employment would have been available to the plaintiff, assuming (correctly, I believe) in the plaintiff's favour that the decision to give up his employment with ACS did not in itself represent a failure to mitigate damages. The plaintiff relies upon the general principles in Watts v Rake (1960) 108 CLR 158 and Purkess v Crittenden (1965) 114 CLR 164. See also Luntz, Assessment of Damages for Personal Injury and Death 3rd ed [1.9.23]-[1.9.27]. 33 The medical evidence accepted by the trial judge and the plaintiff's own admission show that the plaintiff is fit for full time clerical and administrative duties so long as he is not required to sit or stand for long periods of time. The proviso leaves a broad field of gainful employment available to the plaintiff. 34 The broad band of the plaintiff's post-operative work capacity distinguishes this case from those in which an evidentiary onus shifts clearly to the defendant to show that jobs are reasonably available for a severely disabled plaintiff. The Court cannot close its eyes to the difficulties of obtaining employment generally, especially in country centres. Nevertheless, I have concluded that, with the ultimate onus resting upon the plaintiff, the finding of 50% incapacity in the sense of diminution productive of financial loss cannot be sustained. 35 We are faced, like the trial judge, with a man in his mid-40s who gave up secure employment for reasons unconnected with the accident, in circumstances where the Commonwealth would have had a duty to continue providing suitable employment (cf Safety, Rehabilitation and Compensation Act 1988 (Cth), s40). The plaintiff has to date made virtually no attempt to find gainful employment consistent with his medical condition since the accident. Latterly, this was because he was pursuing a new career as a sports coach, despite expressed apprehensiveness about his capacity to do the physical side of such a job. In all the circumstances, the plaintiff can take very little comfort from his pattern of actual earnings as providing any real indication of his capacity to earn in consequence of his disabled condition. That capacity is untested (save (a) where the plaintiff worked without loss of income with ACS and (b) in relation to taxi driving which was unsuitable because it involved a 12-13 hour shift (Black AB 64)). 36 The plaintiff accepted that he was able to do clerical work as long as he could get up and move around. No evidence was led to suggest that clerical work was unavailable generally, or in the Coffs Harbour area in particular, that would have catered for the plaintiff's need to get up and walk around from time to time. 37 Nothing suggests the lack of necessary intellectual capacity to do a broad range of clerical jobs. The plaintiff's earlier work experience did not involve heavy physical work. 38 I have concluded that the proper level of accident-induced incapacity productive of financial loss is 25%, save for the 12 month period in 1994-95 when 100% incapacity was accepted by the trial judge. Otherwise I would not disturb the reasoning of the trial judge referable to economic loss. The parties should recalculate damages accordingly.

The contractual indemnity 39 Subject to what follows, the appellant does not challenge the 50:50 apportionment as between the defendants, made in accordance with the Law Reform (Miscellaneous Provisions) Act 1946. 40 At trial the appellant sought total indemnity from Yamba, basing itself upon cl 12 of the Conditions of Hire, a formal contract which regulated Yamba's access to the wharf: The Operator [ie Yamba] is to indemnify and keep indemnified the MSB against any and all loss suffered by the MSB by reason of: (a) any and all claims, demands, writs, summonses and actions, suits, proceedings, judgments, orders, decrees, damages, costs (including legal costs), losses and expenses of any nature whatsoever which the MSB may suffer or incur in connection with the loss of life, personal injury or damage to property arising from or out of any occurrence in, upon, at or in connection with the Site occupied or any part thereof by the Operator or any of its employees, contractors, agents, customers, or customers' agents, invitees or the condition or state of repair thereof or any business carried on upon the Site;

41 The trial judge appeared to accept that this indemnity is expressed sufficiently broadly to pick up the negligence-based liability found against the appellant in the present case. I agree. 42 Nevertheless, the appellant failed to obtain the benefit of the contract because it was held to have been novated by a letter dated 8 July 1992 from the MSB to Yamba. On 1 July 1992 Yamba had written to the MSB seeking to delete clause 12 from the contract. MSB's reply on 8 July 1992 said: Thank you for your letter of 1 July 1992 in relation to the Conditions of Hire for Goodward Island Wharf. The MSB is not prepared to delete clause 12. However, I will arrange for the clause to be amended to remove liability from the Operator in the event of negligence on the part of the MSB or its agents. A revised set of Conditions of Hire will be forwarded for your signature in due course.

43 The matter was taken no further, according to the evidence. There was no pleading of estoppel or evidence led in support of an estoppel. 44 The trial judge held that the letter of 8 July 1992 was a "novation", presumably intending to indicate that the letter replaced the earlier formal agreement that contained the cl 12 indemnity, or at least cl 12 in its entirety. His Honour described the terms of the letter as "precise, exact and fair" because of the substantive unfairness of the indemnity itself. 45 This reasoning cannot be supported. Fairness is not a ground for allowing an existing contract to be replaced in circumstances where the dealings between the parties did not purport then and there to vary their existing contract. The letter of 12 July was at its highest a counter offer which was never accepted. The existing agreement therefore stood unamended. 46 Accordingly, this ground of appeal succeeds and Yamba should be ordered to indemnify the appellant with respect to the appellant's liability to the plaintiff, including its liability to costs.

Relevance of plaintiff's decision not to sue his employer 47 Ground 6 of the Notice of Appeal asserts that the primary judge erred in failing to consider or adequately take into account the fact that the plaintiff failed to join his employer, the Commonwealth, in the proceedings, thereby preventing the appellant from recovering indemnity or contribution from the Commonwealth. 48 This point was taken at trial, apparently as or linked with a submission that the plaintiff had failed to mitigate his loss by making a claim under the Safety, Rehabilitation and Compensation Act 1988 (Cth). The trial judge gave the submission short shrift, and correctly so. 49 The Act severely restricts a Commonwealth employee's rights to claim compensation for work-related injuries against his or her employer. The appellant's argument really amounts to suggesting that the plaintiff was bound to launch a difficult case against the Commonwealth, in which (if successful) he would have recovered less damages than were recoverable against his chosen defendants, in order to arm one of those defendants with a right to claim contribution. Little wonder that the point has no merit. The very fact that the plaintiff was given a statutory election as to whether or not to sue his employer for so-called common law damages (see Commonwealth v Flaviano (1996) 40 NSWLR 199, Austral Pacific Group Ltd (in liq) v Airservices Australia [2000] HCA 39) emphasises the correctness of the trial judge's rejection of this argument. His Honour said (RB 57-58): One has only got to understand the onerous terms of the Safety and Rehabilitation Compensation Act to be aware that in a common law [action] against his employer for an accident occurring in 1992, the plaintiff would not be entitled to any damages for any economic loss, and his claim for damages in relation to non-economic loss is restricted to a maximum of $110,000. In those circumstances, I find nothing untoward in the plaintiff not having maintained an action against his employer, even more so, where the negligence of this case is clearly in the hands of the two [con] current defendants. And although an employer has a non-delegable duty, there is in my view no substance in counsel for the second named defendant's submission of this absence of claim being a remarkable factor.

50 The plaintiff owed no duty to his chosen defendants to join the Commonwealth. His decision not to do so did not constitute a failure to mitigate his damage.

Disposition 51 Accordingly, the appeal against the verdict in the plaintiff's favour should be upheld in part. The verdict should be recalculated in accordance with my reasons. The plaintiff should pay one half of the appellant's costs of the appeal and have a certificate under the Suitors Fund Act. The costs order below should remain undisturbed. 52 The recalculation of the verdict sum should enure to the benefit of each defendant in the court below. They are concurrent tortfeasors and the award is purely compensatory. The second respondent was a party to the appeal and s75A(10) of the Supreme Court Act authorises the Court reducing the amount of the judgment so that it corresponds with the amount of the judgment against the appellant which is to be substituted (cf Unsworth v Commissioner for Railways (1958) 101 CLR 73 at 88, 94-5). 53 The appeal on the indemnity issue, against the order in favour of the second respondent, succeeds entirely. It should carry costs with that respondent bearing a certificate under the Suitors Fund Act if qualified. The appellant should also receive the costs of cross-claim referable to the indemnity issue at trial. 54 I propose the following orders: 1. Direct appellant to file draft Short Minutes and to serve same upon both respondents within 7 days. 2. Respondents to file and serve any response to Short Minutes within further 7 days. 55 POWELL JA: I agree with Mason P. 56 HODGSON CJ in Eq: I agree with Mason P. ******************

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