Plaintiff v Defendants

Supreme Court of Victoria|2007-04-17|Before: Cavanough J

Insurance - Liability insurance - Policy covering farming business, including leasehold farm, taken out by farmer - Endorsement in favour of landlord of leasehold farm - Construction of policy and endorsement - Liability in connection with "your" business - Whether cover restricted to tenant's farming business - Landlord negligently injures visitor while repairing fence on farm - Whether particular fencing work done in connection with tenant farmer's business - Condition requiring insured to take reasonable precautions to prevent bodily injury - Construction of condition - Whether condition complied with - Subjective test - Onus of proof on insured - Onus discharged despite objectively dangerous mode of working - Damages - Assessment - Hand injury to 10 year old child - Pain and suffering and loss of enjoyment of life - Loss of earning capacity - No work history - Whether appropriate to take into account average weekly earnings - Variations from average.

(a) Was the fencing work within the cover extended to Mr Lawless under the policy?

(b) Was the "reasonable precautions" condition complied with by Mr Lawless?

(c) What is the measure of damages?

9 In short, my answers to those questions will be:

(a) Yes.

(b) Yes.

(c) $540,000.

10 It follows that, save perhaps in relation to costs, I do not need to decide whether the cover arranged with CGU by the Boultons for Mr Lawless fully met the requirements set out in the lease. Even if it did not, there was no loss suffered by Mr Lawless on that account. I will return to the question of the costs of the third party notice against the Boultons in due course.

Background[1]

11 In dealing with the issues in this case it is important to understand something of the background and general circumstances of the members of the families involved, especially Anthony Tilley and Graeme Lawless.

12 Anthony has grown up in difficult circumstances in various parts of Gippsland. His mother, Leannee Tilley, was one of a family of three children whose father died when she was eleven years old. She left school at the age of seventeen, having been in a relationship with Anthony's father, Dudley Tilley, since she was about sixteen. She began living with Dudley Tilley when she was about twenty-one in 1989. He was working as a plant operator. He had two children from a previous marriage. Anthony's brother Shannon was born in May 1991 and Anthony was born on 22 June 1992. A sister, Evelyn, was born in 1994 and Anthony's parents married in 1996. Anthony's father suffered a heart attack in 1998 at the age of fifty-seven and since then he has been unable to work and has received a disability support pension. More recently he has lost the use of his legs and has been confined to a wheelchair. Anthony's mother and father separated in early 1999. She was then about thirty-one years old and has since received a supporting parent's pension. She stayed with her children in a shelter in Bairnsdale for about two weeks after the separation and the children were in foster care for about a month. Anthony attended Bairnsdale Primary School while they were living at the shelter and then Omeo Primary School while he was in foster care. His mother then brought him and his siblings to live in a caravan park in Rosedale and they were there for about two weeks during July 1999. They then moved into a rented house in Rosedale. Anthony enrolled at Rosedale Primary School, and remained a student there until he completed Year 6 in 2005. In the meantime, his mother had had another child, Anthony's brother Callum, who was born in 2000. Anthony and his brother Shannon would stay with their father from time to time, especially on weekends. In about November 2005 Anthony and all of his siblings were again placed in foster care, this time with the E.W. Tipping Foundation in Traralgon. Anthony remained in foster care until about December 2006, when he went to live with his father (and Shannon) in Sale. His two younger siblings are still in foster care. Anthony began his secondary education at Sale College last year and is now a Year 8 student there.

13 Graeme Lawless was born in 1951. He is by no means a well-educated or widely experienced person. Indeed he is entirely illiterate. He has lived his whole life in the house on the farm where the accident happened. The farm is a flat property of about 112 acres. Graeme's own father had owned the property and had run it as a dairy farm. Graeme commenced helping his father with the farm chores, including tractor driving, as a small boy and continued to work there as he grew older. In 1988 Graeme's father died and, after paying out certain relatives, Graeme inherited the property.

14 At about the same time, Sandra Lawless began living with Graeme at the property. She brought with her her daughter Donna, who is the sister of Anthony's mother Leannee. Donna was about 13 years old at that stage. She is now about 32 years old. She has continued to live at the farm with her mother and step-father. She is epileptic and has received a disability pension for her epilepsy since about 1990.

15 Graeme and Sandra Lawless continued to run the property as a dairy farm until the mid-1990s. Then the Murray-Goulburn Co-operative stopped collecting milk from the farm and the dairying operations ceased. Mr Lawless was in debt. In 1997 he decided to lease the farm out to the Boultons, save for the farmhouse and its immediate surrounds. Under the lease he was paid a total lump sum of $17,000 in advance as the rental for a term of 16 years. This sum was enough to pay out his debts. From time to time, both before and after the cessation of the dairying operations, Mr Lawless worked as a fencing contractor in the district. He also did fencing work on his own property. He continued to do so from time to time after granting the lease to the Boultons. Indeed the lease contained an acknowledgment by Mr Lawless that the fencing on the property was in a poor state of repair and that the re-fencing of the property would remain the sole responsibility of Mr Lawless. The Boultons ran cattle on the leased area. Despite the terms of the lease, the Boultons informally permitted the Lawlesses (including Donna) to make use of a small part of the leased area (about 1/2-3/4 of an acre) near the farmhouse for their own purposes. The Lawlesses kept fencing equipment there, together with a tractor, a chook shed, Donna's pony and various other bits and pieces. They also kept a few cattle of their own there from time to time. Mr Lawless has been on unemployment benefits in recent years.

The first issue: Was the fencing work covered by the policy?

16 Evidence given by Mr Boulton and by a representative of CGU, Mr Spencer, called by the Boultons, establishes that the endorsement of the Boultons' multi-risk policy was arranged following a request by Mr Boulton to Mr Spencer for insurance to be effected in accordance with the requirements of the lease. Mr Boulton actually left a copy of the relevant page of the lease with Mr Spencer for this purpose. Para 1(q)(ii) of the schedule to the lease reads:

"The Lessees shall effect during the term of this Lease a Public Risk Policy with a reputable Insurance Company indemnifying the Lessor and the Lessees against Public Liability, such policy to be in the sum of $5,000,000."

However, only Section 7 of the policy, which is headed "Business Liability", was made applicable to Mr Lawless by the endorsement.

17 The endorsement reads as follows:

"Effective July 1997 Mr Graeme Robert Lawless is noted for his respective rites [sic] and interests under section 7 of this policy in regards to the property at Talbots Rd The Heart 3850."

These words have apparently been included on each renewal schedule of the policy.[2] CGU accepts that Mr Lawless has rights under the policy against CGU directly, notwithstanding the absence of privity of contract: Insurance Act 1984 (Cth) s 48; Trident General Insurance Co Ltd v McNiece Bros Proprietary Ltd[3].

18 The operative provision of Section 7 of the policy reads:

"We will pay the amount you are legally liable to pay for personal injury or damage to property due to an occurrence in connection with your business."[4]

The expressions in bold print in the policy are the subject of definitions. "Business" is defined to mean "farming, grazing, cropping or other like primary producing activities". Under the heading "Who is insured under this policy", the policy says (so far as relevant):

"The person, partnership or company whose name is set out on your schedule is insured.

The following people are also insured, as long as they normally live with you:

That person's partner,

That person's unmarried children,

...

In this policy all these people are called 'you' or 'your'."

19 The first sub-question is whether, under the policy, any cover for Mr Lawless (or for Sandra Lawless as his domestic partner) is confined to cover for liability due to an occurrence in connection with some "business" as defined. Whether or not the obligation under the lease was wider[5] (a matter I need not presently decide), I think that the cover actually obtained was very likely confined to business-related liability[6] (but, again, I need not decide that point finally either).

20 The second sub-question is whether, assuming that the cover is limited to business-related liability, the expression "your business" in the operative provision should be read as extending only to the business of the Boultons; or whether it also extends to the business (if any) of Mr Lawless. As mentioned above, CGU submits that the policy only covers Mr Lawless for liability due to an occurrence in connection with the farming business of the Boultons; and that the relevant liability was not due to such an occurrence.[7]

21 It is common ground that the policy is a composite policy, not a joint policy.[8] So it includes cover for liabilities of Mr Lawless that are several (ie individual) as well as, and as distinct from, any joint liabilities of the Boultons and Mr Lawless. On the other hand, the present question is not necessarily to be answered by determining whether or not particular references in the policy to "you" or to "the insured" are, or include, references to Mr Lawless (or to Sandra Lawless). I am inclined to think that the policy should be read as envisaging that Mr Lawless would not be conducting any primary production activities on his own account on the leased land. Mr Lawless had no legal right to use any part of the leased land for primary production or for any other purposes of his own at all. In any event, although Mr Lawless did keep a few cows in the small area near the house (unbeknown to CGU), no serious attempt was made by Mr Lawless to establish that he was conducting a business in that regard.

22 It seems to me that the policy probably should be read as covering Mr Lawless only in relation to his role (as envisaged in the lease) with respect to the Boultons' farming business.[9] Under the lease, only the Boultons had the legal right to use the land for business purposes. Hence I am inclined to think that "your business" in Section 7 means the Boultons' business, and does not include any independent business of Mr Lawless. As CGU submits[10]:

"... common sense suggests that the intention of all parties was to ensure that Mr Lawless was covered for a liability that he may incur in respect of activities undertaken by him in connection with Mr Boulton's farm. For example, in undertaking fencing work in Mr Boulton's farmed area."

Nevertheless, once again, it is unnecessary for me to rule finally on this question, because of my conclusion in relation to CGU's next submission, namely its submission that the relevant liability was not due to an occurrence in connection with the farming business of the Boultons.

23 CGU submits that, on the evidence, Mr Lawless was replacing the relevant fence wholly for his own family's private purposes and that, therefore, he was not doing it "in connection with" the Boultons' farming business. This submission in turn depends heavily on a submission that the Court should find, on the evidence, that Mr Boulton had actually instructed or requested Mr Lawless, before the accident, not to do any more fencing work on the property.

24 I do not accept CGU's submission. The evidence is against it. I make the following findings.

25 The relevant fence-line was entirely within the leased area. It ran along one boundary of the small area which the Lawlesses used with the Boultons' tacit permission. The Lawlesses did not have exclusive use even of that small area. Every two months or so, Mr Boulton would go through the area with a truck to take cattle down to the cattle yards. The Boultons' cattle grazed in the paddock adjacent to the fence-line, as well as in other paddocks surrounding the small area. Before the relevant work began, the old fence was in poor condition. The Lawlesses' cattle would go through it into the adjacent paddock; and sometimes the Boultons' cattle would go through it into the small area used by the Lawlesses, notwithstanding that there was a paucity of grass in that small area. These matters were all common ground.

26 Under cross-examination by Mr O'Dwyer SC for the defendants, Mr Boulton acknowledged that the old fence was one that Mr Lawless was obliged by the lease to repair. He also acknowledged that there was a standing arrangement that the Boultons would supply the necessary materials for fence repairs on the property and that Mr Lawless would do the work. Mr Boulton agreed that this particular fence was done in accordance with that arrangement. As far as Mr Boulton was concerned, the fence in question was just another fence that Mr Lawless was doing and putting right on the farm. Indeed it was inconvenient to Mr Boulton that the Lawlesses' cattle had been getting through the fence in question. Mr Boulton acknowledged that, to keep his farming activities intact, he would want that particular fence to be repaired. I accept Mr Boulton's evidence in those respects.

27 There was a conflict of evidence between Graeme and Sandra Lawless, on the one hand, and Mr Boulton, on the other, as to whether Mr Boulton had expressly and specifically requested Mr Lawless to repair the particular fence in question. Graeme Lawless swore that Mr Boulton had repeatedly pestered him to repair it and Sandra Lawless swore that she had heard Mr Boulton doing so. In answer to Mr O'Dwyer SC, Mr Boulton denied that he had ever stipulated to Mr Lawless that this particular fence should be repaired. I do not need to resolve this conflict. In my view, it does not matter whether there was a specific request or not.

28 Mr Thompson SC, for CGU, cross-examined Mr Boulton after Mr O'Dwyer SC had done so. Mr Thompson SC had had a prior conference with the witness, with the assent of Mr Boulton's legal representatives. It seems that there may have been some misunderstanding between Mr Thompson SC and Mr Boulton at the conference, because some of Mr Boulton's answers during his evidence appeared to surprise Mr Thompson SC. Mr Boulton agreed with Mr Thompson SC that, prior to the accident, he had seen Mr Lawless and Donna Lawless doing fencing work with the post-driver, and had become concerned, from a safety perspective, about the number of people "hanging around" while the work was being done. It was not clear where Mr Boulton had seen Mr Lawless and Donna doing fencing work, but Mr Boulton agreed with Mr Thompson SC that, for safety reasons, he "eventually" stopped Mr Lawless doing fencing on what he first called "my" property. It was not clear whether this stopping occurred before or after the accident, but what did become clear was that the stopping was only in relation to contract fencing work previously done by Mr Lawless on Mr Boulton's own farms (which were located in various places), as distinct from the repairing of fences on the land at The Heart which the Boultons leased from Mr Lawless. Indeed, when further cross-examined, by leave, by Mr O'Dwyer SC, Mr Boulton confirmed that he expected Mr Lawless to continue, pursuant to the lease, to repair and remake the fences on the leased land, and that the cessation of the arrangements concerning other fencing work had nothing to do with his continuing to do the fencing on the leased property, but only related to what Mr Boulton then referred to as "my own" property.

29 In fairness to Mr Thompson SC, the transcript of Mr Boulton's evidence was not available at the time when he was making his oral submissions on the present point, and he may have been influenced in his submission by what he had apparently expected Mr Boulton to say. In fact, Mr Boulton's evidence had destroyed the foundation for Mr Thompson's submission that Mr Lawless "must" have been doing the fencing work exclusively for his own private purposes (eg to keep his own cattle in). That submission was fundamentally based on the proposition that Mr Boulton had told Mr Lawless, prior to the accident, not to do any more fencing on the leased farm. However the transcript confirms that Mr Boulton did not tell Mr Lawless any such thing.[11]

30 After the conclusion of the oral hearing, the parties made written submissions, by prior leave, as to whether the insurance policy was restricted to occurrences in connection with the farming business of the Boultons. CGU filed a substantial written submission arguing that the policy was so restricted. I can only assume that it did so because, notwithstanding that the transcript of Mr Boulton's evidence had by then become available, CGU was persisting in the submission that, on the evidence, the fencing work was not being done in connection with the Boultons' business. However that may be, the submission is unmaintainable. Mr Boulton's evidence makes it quite clear that the fencing work was being done "in connection with"[12] the Boultons' farming business.

31 It follows that CGU's first objection to the defendants' claim for indemnity fails; and that, putting aside legal costs, any failure on the part of the Boultons to arrange insurance cover in accordance with the requirements of the lease has not caused any loss or damage to Mr Lawless.

The second issue: the "reasonable precautions" condition

32 CGU submits that Mr Lawless is not entitled to be indemnified by it in relation to any liability he may have to the plaintiff, because, it submits, he is in breach of a special condition in the policy which (so far as it is relied upon) provides:

• take all reasonable precautions to prevent:

• comply with, and ensure that your employees, servants and agents comply with, all laws, by-laws, regulations and recognised standards for the safety of persons or property."

33 The pleaded particulars of this allegation, as amended at the hearing, are:

"The defendants removed a guard from the post driver in contravention of the contents of the Instructions Manual for the equipment and operated the machinery with contumelious disregard for the safety of others in breach of recognised safety standards.

Further, the Defendants operated the post driver knowing that the plaintiff was in the immediate vicinity thereof without any or any due regard for his personal safety."

34 Conditions of the present kind have been the subject of considerable judicial attention. CGU, in its outline of submissions, asserted that the legal position was as follows. A condition of this type is a condition precedent to the liability of CGU to indemnify under the policy.[13] The insured bears the onus to prove compliance with the condition.[14] It is accepted that, for the condition to apply, there must be more than mere negligence. There must be recklessness, of a type outlined in the following cases: Fraser v B.N. Furman (Productions) Pty Ltd[15]; Legal and General Insurance Australia Limited v Eather[16]; Albion Insurance Co Ltd v Body Corporate Strata Plan No 4340[17]. The insured must prove that he did not perceive the existence of the danger or, if he did, that he took steps to try to avoid it and was not indifferent to it.[18] For an example of a case involving a machinery guard when the condition was breached, see Norwich Union Insurance Co Ltd v R & W Products Pty Ltd[19].

Onus of proof

35 Mr O'Dwyer SC, for the defendants, submitted that the insurer, rather than the insured, bears the onus of proof in relation to conditions of the present kind. He acknowledged that Kaye J had rejected a submission to that effect at first instance in Body Corporate Strata Plan No 4303 v Albion Insurance Co Ltd[20], but submitted that important authorities to the contrary from various jurisdictions had not been cited to Kaye J. He pointed out that the question had not been re-argued in the appeal to the Full Court in that matter. I would agree with Mr O'Dwyer SC that it is arguable that Albion Insurance was wrongly decided in relation to the onus of proof. It seems to me that there is force in the argument to that effect put forward by Sutton in Insurance Law in Australia (3rd edition)[21], to which Mr O'Dwyer SC referred me. However, I would only be justified in refusing to follow the decision of Kaye J if I considered it to be clearly wrong. I am not of that view. Moreover, in Verna Trading Pty Ltd v New India Assurance Ltd[22] Kaye J, with whom McGarvie J agreed[23], said[24]:

"It is established law in the states of Victoria and New South Wales that the burden of proving compliance with or fulfilment of a condition precedent under a policy of insurance is borne by the insured."

His Honour cited four cases in support, including his Honour's own decision in Albion. It seems that Ormiston J (as his Honour then was) also agreed with Kaye J on this point[25], although it is not clear that there was any debate about it in Verna. In these circumstances I will proceed on the basis that the onus of proof of fulfilment of the relevant condition was on Mr Lawless.

Construction of the "reasonable precautions" condition

36 As mentioned above, CGU asserted in its written outline of submissions that "recklessness" on the part of the insured, of a type outlined in three specified cases, would bring about the application of the "reasonable precautions" condition, and that the insured "must prove that he did not perceive the existence of the danger or, if he did, that he took steps to avoid it and was not indifferent to it". A passage in the judgment of Glass JA of the Court of Appeal of New South Wales in Eather, supra, was cited in support of this formulation.

37 In my opinion these submissions involved error in that they did not pay sufficient regard to the decision of the Victorian Full Court in Albion Insurance, supra, notwithstanding that Albion Insurance was referred to.

38 There is no suggestion that the "reasonable precautions" condition in the public liability policy under consideration in Albion Insurance was relevantly different in its wording, or that Albion Insurance is otherwise distinguishable for present purposes. The leading judgment in Albion Insurance was given by McGarvie J, with whom Anderson J agreed. Young CJ delivered a short concurring judgment. I am afraid that it is necessary to set out a lengthy passage from the judgment of McGarvie J, commencing with a paragraph in which his Honour was comparing the test adopted by Diplock LJ in Fraser v B N Furman (Productions) Pty Ltd[26] with the test which had been adopted by the trial judge, Kaye J, in Albion Insurance itself. McGarvie J said:[27]

"Diplock, LJ stated in similar terms the test which he applied. It was whether the failure to take precautions, or the particular measure taken in altering the machine 'was done recklessly, that is to say, with actual recognition of the danger to employees which was entailed, and not caring whether or not that danger was averted': ([1967] 1 All ER) p. 907. Diplock, LJ held that there would have been no breach of the condition in that case because the employer had not recognised the danger.

The trial Judge held, and this was accepted by both parties on the appeal, that the knowledge, state of mind and actions of the managing agent of the body corporate, Mr. Wilson, were those of the body corporate.

The learned Judge held that the body corporate had complied with the condition, because Mr. Wilson's state of mind was not such that he did not care whether leaving the railing in its dangerous state might cause injury to be suffered by others. The test that was applied by Kaye, J. was applied by Roskill, J. in a similar way in W. and J. Lane v Spratt, [1970] 2 QB 480, at p. 493.

I consider that the principle of construction applied by Diplock, LJ in Fraser v B. N. Furman (Productions) Ltd. is the appropriate principle to be applied in this case. It is to be borne in mind that the task of this Court is not to apply a principle of law derived from that case. It is to determine the legal effect of the condition in the policy issued to the body corporate, by application of the appropriate principles of construction.

Under the policy, the insurer agreed to pay to or on behalf of the body corporate all sums to the extent of $500,000 which the body corporate should become legally liable to pay for compensation in respect of bodily injury.

The words used by the insurer in the condition in the policy 'The Insured ... shall take all reasonable precautions to prevent bodily injury ...' present difficulties of construction. The words by their ordinary meaning would require the insured to take such precautions as should reasonably be taken so as not to be negligent or in breach of duty as an occupier of premises, to a person sustaining bodily injury. That construction would be repugnant to the commercial purpose of the contract of insurance for the reasons advanced by Diplock, LJ. Another possible construction is that the condition requires the insured to take such precautions as the insured realizes should reasonably be taken to prevent bodily injury. That construction would also be repugnant to the commercial purpose of the contract. Frequently an occupier of premises recognizes a danger and resolves to take specific reasonable precautions but, through delay or neglect, has not done so before bodily injury occurs. It would cut a great swath from the practical adequacy of cover under a public liability policy if the condition deprived such an insured of the right to indemnity. If the purpose of the condition were to protect the insurer where the failure to take reasonable precautions was not due to causes such as delay or neglect, but due to a deliberate decision to expose himself to the risk of bodily injury occurring, because he did not care whether it occurred or not, that would be consistent with the commercial purpose of the insurance contract. An insurer, insuring an insured against liability for breach of duty causing bodily injury, naturally seeks to limit the indemnity to liability for the actions or inactions of the insured while the insured is motivated by the ordinary human desire to prevent bodily injury to others. The very existence of the insurance cover which removes from the insured the financial responsibility for paying damages, may lead a callous insured person to have no concern whether others sustain bodily injury. Diplock, LJ said that the purpose of the condition in the policy before him was 'to ensure that the insured will not, because he is covered against loss by the policy refrain from taking precautions which he knows ought to be taken': at ([1967] 1 WLR) p. 906; ([1967] 3 All ER) at p. 61. It would be consistent with the commercial purpose of the contract if such a condition also deprives of insurance cover an insured person who deliberately leaves a recognized danger in existence in the vindictive hope that someone who uses the premises will sustain bodily injury.

The words in the present condition were chosen by the insurer. As it is necessary to give them a construction other than their ordinary meaning, the ambiguity inherent in them is to be construed against the insurer. If there are several constructions which the words could be given and nothing to indicate that one of those constructions is the intended one, the construction least favourable to the party who prepared and presented the contractual document to the other party, is to be adopted.

Construed in accordance with these principles, the words require the insured to establish that it was not due to a lack of desire and concern to prevent bodily injury from a recognized danger, that it failed to take reasonable precautions to prevent the bodily injury which occurred. The insured is in breach of the condition if, through a lack of concern and desire to prevent bodily injury, he deliberately adopts a course of action or inaction which he realizes exposes him to the risk of someone being injured by the recognized danger. There are many possible ways of the insured establishing compliance with the condition. In a particular case the insured may establish compliance with the condition by showing one or more of the following things: that he did not recognize the danger or the extent of the danger of bodily injury; that particular precautions would not have been reasonable in the circumstances; or that he did not think of a particular precaution or did not regard it as reasonable or practicable in the circumstances. The insured may, as the body corporate did in this case, rely on the evidence of the circumstances and the steps taken, to show that whatever errors of judgment may have led to particular reasonable precautions not being taken, the failure to take the precautions was not due to a lack of desire and concern to prevent bodily injury. No doubt there are other ways of an insured showing compliance with the condition. Whether particular evidence establishes compliance with the condition will always depend on the circumstances of the case.

Diplock, LJ treated the insurer as bearing the onus of establishing breach of the condition. In this case it is common ground that the insured bears the onus of establishing compliance with the condition. Bearing that in mind, the construction which I have adopted is consistent with the principle of construction which Diplock, LJ applied. The test which Diplock, LJ propounded is not whether the insured who recognizes a danger, takes no measures or takes measures which he knows to be inadequate to avert it. The test is whether the insured deliberately courts the danger by refraining from taking any measures or by taking measures which he knows to be inadequate to avert it. The word 'deliberately' indicates intentional, considered action or inaction. The verb 'court' suggests action or inaction which invites the danger of accident. The test requires more than a recognition of the danger and failure to take any measures or any measures known to be adequate to avert it. It requires that this be due to a deliberate decision to court the danger.

With one exception, the construction I have adopted is consistent with the cases which have considered Fraser v B. N. Furman (Productions) Ltd. The exception is Roberts v State Insurance General Manager, [1974] 2 NZLR 312 where the condition in the policy required the insured to take all reasonable steps to safeguard a motor vehicle from loss or damage and to maintain it in efficient condition. Counsel for the parties agreed that the test was whether the insured had been reckless. McMullin, J. declined to follow Fraser v B. N. Furman (Productions) Ltd. He applied the meaning given by Megaw, J. to the word "recklessly" when it was used in a shipping contract. Megaw, J. held that a party who was grossly careless could act recklessly without actual recognition of the danger: Shawinigen Ltd. v Vokins and Co. Ltd., [1961] 1 WLR 1206; [1961] 3 All ER 396.

As Diplock, LJ defined what he meant by the word 'reckless' the use of the word added nothing to his reasons. A large part of the appellant's submissions on this appeal was based on the meaning to be given to that word. I consider, with respect, that the only ambiguity in the statement by Diplock, LJ of the principle of construction is introduced by the use of that word. The meaning given to the word does not correspond with what the House of Lords has recently decided to be its ordinary meaning: R v Caldwell, [1982] UKHL 1; [1981] 2 WLR 509; [1981] 1 All ER 961; R v Lawrence, [1981] 2 WLR 524; [1981] 1 All ER 974. In my respectful opinion there is no place in the relevant principle of construction for either the word 'reckless' or the concept of recklessness.

The construction I have adopted is likely to correspond with the expectations of the parties to the contract of insurance. Such a condition gives efficacy to the transaction. Its most important function is to confine the indemnity to liability for breaches of duty by the insured which are not caused by the fact that the insured has insurance cover.

To show that it has complied with the condition the body corporate also has to establish that within the meaning of the condition it took all reasonable measures to keep the premises and fittings in a condition of proper maintenance and repair. It will establish this if it shows that it was not due to a lack of desire and concern to prevent bodily injury that it failed to take reasonable measures by way of maintenance and repair. In the circumstances of this case, this part of the condition does not need separate consideration. If the body corporate shows that it complied with the condition so far as taking all reasonable precautions is concerned it will thereby show that it complied with it so far as reasonable measures by way of maintenance and repair are concerned.

The construction of the condition which I have adopted renders ineffective the ground of appeal that on his findings of fact the trial Judge should have held that the conduct of the body corporate constituted recklessness."

39 The judgment of Young CJ confirms that it is inappropriate and misleading to seize upon the word "reckless" used by Diplock LJ in Fraser so as to apply an objective test of gross carelessness. Rather, according to Young CJ, the test is "whether the insured deliberately courted a danger which he recognised by refraining from taking any measures to avert it".[28] Diplock LJ had explained what he meant by "reckless", namely "made with actual recognition by the insured himself that a danger exists, and not caring whether or not it is averted". In response to an argument that Kaye J had erred because the "not caring" phrase in Diplock LJ's test should be taken to mean "indifferent to the consequences which may ensue having regard to the danger", Young CJ said[29]:

"Even on that test I should have thought Kaye J would have reached the same conclusions, but be that as it may, the appellant's argument in my opinion again tends to attempt the construction of Diplock LJ's judgement as though it was a statute rather than look at the test as a whole and apply it to the condition in question."

40 It is true that in Eather Glass JA said[30]:

"The insured person will not be in breach if he shows either that he did not recognise a danger that existed or that perceiving its existence he took some action to avoid it and was not indifferent to whether the danger was averted or not [citing Fraser]."

However, this was but a brief paraphrase of Fraser at the end of a short concurring judgment the main thrust of which was to explain why Glass JA agreed with McHugh JA that the approach adopted in Fraser to the interpretation of a "reasonable precautions" condition in a public liability policy should also be adopted in relation to such a condition in a loss of property policy. The perils of paraphrase are well known. There is no reason to think that Glass JA intended to modify the approach adopted in Fraser, or indeed to depart from anything that was said in Albion. McHugh JA himself described Albion as being part of a "formidable line of authority", his Honour having just said[31]:

"In Albion Insurance Co Ltd v Body Corporate Strata Plan No 4303 the Full Court of Victoria construed a condition in a policy which required the insured to 'take all reasonable precautions to prevent bodily injury' in accordance with the principle expounded by Diplock LJ in Fraser v B N Furman (Productions) Ltd. McGarvie J, with whose reasons Young CJ and Anderson J agreed, said (at 344-345) that an insured was in breach of the condition 'if, through a lack of concern and desire to prevent bodily injury, he deliberately adopts a course of action or inaction which he realizes exposes him to the risk of someone being injured by the recognized danger'. His Honour went on (at 345) to give illustrations of possible ways in which an insured might establish compliance with the condition. Thus he might show:

'... that he did not recognize the danger or the extent of the danger of bodily injury; that particular precautions would not have been reasonable in the circumstances; or that he did not think of a particular precaution or did not regard it as reasonable or practicable in the circumstances'.

His Honour held (at 347) that the state of mind of the relevant person 'was not such that he did not care whether the railing in its dangerous state might cause bodily injury to others'. Accordingly, the condition was not breached."

41 McHugh JA summarised his view of the matter as follows[32]:

"In my opinion the words 'you are to take all reasonable precautions to avoid or minimise injury, loss or damage' mean that the insured must be concerned to protect the property from loss or damage and must take such steps to protect the property as he thinks are reasonable having regard to dangers which he recognises."

42 It is clear from the above that there are at least two substantial errors in CGU's outline of submissions in relation to the construction of the "reasonable precautions" condition. First, as McGarvie J said[33], there is no place in the relevant principle of construction for either the word "reckless" or the concept of recklessness. The use of the word distracts attention from the true test which is wholly subjective, not objective, being a test whereby the insured is in breach of the condition if "through a lack of concern and desire to prevent bodily injury he deliberately adopts a course of action or inaction which he realises exposes him to the risk of someone being injured by the recognised danger".[34] Second, on the proper construction of the condition, despite what Glass JA said in Eather, it is not the case that where the insured perceives the existence of the danger he or she must take steps to try to avoid it. As McGarvie J said[35]:

"The test which Diplock, LJ propounded is not whether the insured who recognizes a danger, takes no measures or takes measures which he knows to be inadequate to avert it. The test is whether the insured deliberately courts the danger by refraining from taking any measures or by taking measures which he knows to be inadequate to avert it. The word 'deliberately' indicates intentional, considered action or inaction. The verb 'court' suggests action or inaction which invites the danger of accident. The test requires more than a recognition of the danger and failure to take any measures or any measures known to be adequate to avert it. It requires that this be due to a deliberate decision to court the danger." (My emphasis).

43 In his closing address, senior counsel for CGU continued to rely on - indeed he repeatedly emphasised - what he described as the "test" outlined by Glass JA in the above-quoted passage at p 403 in Eather "as to what specifically an insured needs to prove".[36] Indeed CGU's whole approach to this case seems to have been much influenced by that passage. However, as I have said, the true test is not identified there. Nevertheless I need to consider whether, on the true test and on the evidence, Mr Lawless did or did not discharge the onus of proving that he complied with the "reasonable precautions" condition. CGU did not place any separate reliance on the "recognised standards" part of the special condition.

Compliance with the condition: findings of fact

44 For the purposes of the Albion Insurance test, I am satisfied on the evidence that Mr Lawless did not recognise the relevant danger or, at least, the extent of it. Further and in any event, I have no hesitation in finding that it was not due to a lack of desire and concern on the part of Mr Lawless to prevent bodily injury that he failed to take reasonable precautions to prevent the injury to Anthony Tilley. Similarly, I am fully satisfied that he did not make a deliberate decision to court the danger to Anthony.

Some further history

45 To explain these conclusions, it is necessary to refer again to the matters set out above under "Background" (none of which was in dispute) and to add some further history based mainly on evidence given by Mr Lawless, and, to some extent, by Sandra and Donna Lawless. Although Mr Thompson SC made a major attack on Mr Lawless' credit and also attacked the reliability of the evidence of Sandra and Donna, to all of which I will return, the particular matters about to be mentioned were not controversial save in one or two respects which will be indicated. As Mr O'Dwyer SC submitted, the history is important to show that particular farming activities, which may seem horrendously dangerous to visitors from the city, or even to some local people, may be viewed quite differently by the people involved.

46 As mentioned above, Mr Lawless has lived his whole life on the farm. He himself was driving tractors on the farm from the age of 7 years, an activity that some people might regard as highly dangerous for a child but which was apparently regarded with equanimity in his family circle. He has been involved in fencing work for decades. He did fencing work on the farm with his father. His brother Noel began work as a fencing contractor in the district at the age of 16, and from time to time Graeme went out fencing with him. Graeme then began to do contract fencing in his own right.

47 Until the 1970s post-drivers were unknown to Mr Lawless. Previously, he and other fencing contractors used post-hole diggers. These were power-driven augers, operated by means of a tractor. A post would be placed in the hole, and earth would be rammed into the post. Then post-drivers were invented. They too were power-driven. They were operated hydraulically by means of a tractor. They incorporated both an auger and a heavy mechanical hammer. A smaller hole could be drilled. The post would then be driven in tight with the hammer. There was no need to ram any dirt in. It was all done mechanically. This was a great boon to farmers and fencers. It meant that instead of taking half an hour for each post, it would only take a few minutes. Mr Lawless first used a post-driver in the early to mid 1970s. He would borrow it from a certain family friend when it was needed. This occurred a couple of times a year. Mr Lawless put in about 200 or 300 fence posts with it. It did not have any sort of guard or safety cage. To ensure that the post went in straight, it was necessary to hold and manoeuvre the post. So it was a two person job. Both the person operating the controls and the second person would manually hold the post while it was being driven in with the hammer. Mr Lawless had never had an accident with the borrowed post-driver and has never heard of anyone else having had an accident with it.

48 In the mid-1980s, Mr Lawless purchased a new post-driver of his own. It was different in some ways from the borrowed one. It was a "Lyco" brand. The original instruction manual for the machine is in evidence. It includes a photograph of the post-driver as it was when purchased. The photograph shows a large cage-like guard at the back of the machine below the raised hammer. It also shows a person operating the controls in one hand and holding a bar in the other. The bar is attached to a chain. The chain goes around the back of the fence post. The manual, the guard, the bar and the chain were all supplied with the post-driver. The hammer weighs 500 lbs.

49 Being illiterate, Mr Lawless was unable to read the manual, and no-one ever read any of it to him. However, there were plenty of similar machines in the district. He had watched another fencing contractor, one Neil Bristow, using one and had thus learned how they worked. The dealer who sold Mr Lawless the post-driver also told him all about it, and helped him fit it to his tractor. Mr Lawless brought the post-driver home to the farm that day (in the mid-1980s) and has continued to use the self-same machine ever since. Graeme's brother Noel, the fencing contractor, also bought a Lyco post-driver shortly after Graeme did.

50 As soon as he purchased the post-driver, Mr Lawless removed the guard. He did so because he believed (and still believes) that it is not possible to operate the machine satisfactorily with the guard on. If the guard were on, the bar and chain would have to be used. They do not keep the fence post straight. The hammer will hit the post sideways and may split it. All the other fencing contractors of whom he knows have also taken off the guards, including his brother and Mr Bristow. Mr Lawless has continued to operate the machine without the guard ever since he acquired it in the mid-1980s. Mr Thompson SC put to Mr Lawless that the purpose of the guard was a safety purpose, namely to prevent people putting their body between the hammer and the fence post, but otherwise CGU did not challenge any of the propositions set out in this paragraph, and I accept them.

51 Mr Lawless said that between the mid-1980s and July 2002, he did an estimated seven or eight jobs per year as a fencing contractor. The jobs ranged between 50 and 200 fence posts each. This would work out at between 350 and 1600 fence posts per year, a total somewhere between approximately 5,000 and approximately 27,000 posts over the period of 15-17 years (but see below).

52 During that period, both his wife Sandra and his step-daughter Donna had assisted him with fencing, both on the farm and at outside jobs. No-one else had assisted him. The usual procedure was for Graeme to position the post with directions from Sandra, and then Donna would take over from Graeme and hold the post while Graeme backed the tractor up to the post. Graeme would then get out of the tractor and come around to where the control levers of the machine were. He would operate the control levers with one hand while using the other to help Donna hold the post straight. He would give it a "light tap" for a start, to make sure everything was alright. [He added, at this point, " ... and if there was anybody around I used to tell them to all stand back".]. Then he proceeded to pull the hammer down and make sure it was hitting in the middle of the post. Next he would take it up about halfway and drive it down a little more and then take it right up to the top and let it go to "belt the post in".

53 At this point of his evidence[37], Mr Lawless was asked directly by his counsel how many posts he had put in like this during the period prior to 2002. He answered "I suppose roughly around a thousand". Obviously this figure is much less than even the minimum total figure of 5,000 mentioned above. I think that Mr Lawless is more likely to be right about the minimum job size (50). On that basis, even if on average he only did, say, four jobs per year rather then seven or eight, the total number of fence posts would be approximately 3,000. I am inclined to think that the true total figure is closer to 5,000 than to 1,000, and may be much higher than 5,000.

54 Mr Lawless said, and I accept, that before the accident he had never had any trouble with his post-driver. There had been no accidents and no-one had been hurt. Mr Lawless also said that he had never heard of anyone hurting themselves. He was later cross-examined by Mr Thompson SC to the effect that Mr Boulton had said to him on a number of occasions prior to the accident that he, Mr Boulton, was concerned that it was dangerous for Donna to be holding the fence-posts.[38] Mr Lawless denied hearing this from Mr Boulton. I prefer Mr Boulton's emphatic evidence in this respect. Later, during cross-examination by Mr O'Dwyer SC, Mr Boulton testified that he himself had "heard of so many accidents". The context of this statement indicates that he may have been intending to convey to the Court that he had mentioned this information to Mr Lawless as well. On the other hand, this was by no means clear, and, given that Mr Thompson SC (who had had the benefit of a prior conference with Mr Boulton) did not put to Mr Lawless that Mr Boulton had said anything to Mr Lawless about previous accidents, I accept Mr Lawless' evidence that he had never heard of anyone hurting themselves with a post-driver. CGU had every opportunity to investigate whether there had in fact been prior accidents with post-drivers, and, if so, whether publicity had been given to such accidents, but it called no evidence of that kind.[39]

The circumstances of the accident

55 I turn now to the circumstances and events leading up to the accident. Evidence about this was given principally by Anthony Tilley and Graeme Lawless, but also, to a lesser extent, by Shannon Tilley, Sandra Lawless and Donna Lawless.

56 In my view, both Anthony and his brother Shannon were truthful witnesses doing their best to be accurate. No party suggested the contrary. Mr O'Dwyer SC submitted that I should prefer the adults' recollection over that of the boys, but for reasons I will explain I would put more weight on the boys' evidence.

57 Based mainly on Anthony's evidence, I make the following findings about the events surrounding the accident.

58 In the months before the accident, Anthony would visit his grandparents at the farm frequently. He used to stay there overnight on most weekends and would also go there during school holidays. He would help feed the chooks and the cows and would do other farming chores. He occasionally rode the pony. He would ride in the tractor with his grandfather. He liked rounding up the cows. He would help with mowing the lawn. He was a big, tall boy for his age.

59 Before the accident, Anthony was quite close to his grandparents. He enjoyed working on the farm and in particular he enjoyed working with his grandfather. He did jobs out there not because his grandparents made him do them but because he wanted to do them. He wanted to be helpful. He enjoyed riding on the tractor with his grandfather. He liked machinery. He felt that he was loved by his grandparents; that they were caring for him; that they were concerned about looking after him; and that they certainly would not do anything to hurt him.

60 Anthony had seen his grandfather operating the tractor and post-driver about two or three weeks prior to the accident. He came to the farm again a day or two before the accident. His brother Shannon was already there. The others there were his grandparents and his Aunt Donna. On the morning of 2 July, his grandfather got the tractor ready with the post-driver attached to the back of it. In the meantime, Anthony and Shannon carried a fence post up to where the fencing was being done. At least two fence posts were then put in without incident. The first of these was held steady by Sandra and Donna Lawless while Graeme operated the controls. Shannon stood somewhere nearby. The second post was held steady by Donna and Anthony while, again, Graeme Lawless operated the controls. They then turned to the third post. Again, both Donna and Anthony were holding it. They were facing the back of the tractor. Donna was standing to Anthony's right and Graeme was standing to Donna's right, operating the controls. Sandra and Shannon were nearby, but further away from the post-driver.

61 As a post is driven in, the top of the post naturally tends to get closer to the hand(s) of the persons holding it. Also, the hammer tends to "bounce" a little as it strikes the top of the post. On this occasion, on about its third descent onto the third post, the hammer bounced and Anthony's left hand slipped into the space between it and the fence post. The hand became caught and was crushed.

62 Anthony looked at his hand. He noticed in particular that his little finger had been struck. His hand was bleeding. His grandparents obtained a cloth and put it around his hand. They took him straight Sale Hospital. Initially, Anthony was not so much in pain as in shock. The hospital records show that he underwent two operations and remained in hospital for six days, although Anthony felt that he had been there for about three weeks. (When he gave this evidence, he may have been thinking of his regular follow-up visits as an outpatient, which did occupy a further two weeks.) He was in a lot of pain in hospital. He does not remember much about it. His whole family visited him in hospital. His grandparents, Graeme and Sandra, came every day. I will come back to the nature of the injuries and their effects when I turn to the question of damages. Anthony has been back to visit his grandparents at the farm since the accident, but has not seen much of them.

63 It is true that, in answer to Mr O'Dwyer SC (putting his instructions from the Lawlesses), Anthony gave a number of non-committal responses concerning the circumstances of the accident. Among other things, he accepted that he could be wrong about the number of posts that had been put in that morning before the accident. It might have been seven rather than two. He said: "I can't remember".[40] Further, when it was put to him that he had not been holding any posts before the last one, he said: "I'm not sure".[41] Again, when told that Graeme, Sandra and Donna would all say that they were unaware that he was holding the last post, he responded: "Not sure".[42]

64 However, when cross-examined subsequently by Mr Thompson SC, Anthony was quite firm in his recollection that he and Donna had held the last two posts. He agreed twice that he had a clear memory of this.[43] He was also able to say that it would take about 10 hits for a post to be driven in completely and that he recalled holding the second-last post for all of that time. He was able to remember other details, such as the distance between the posts. So far as the litigation is concerned, Anthony had no good reason to invent, or to stick by, what he said. Whether or not Anthony had held any posts, negligence on the part of Mr Lawless, at least in the sense of failing to keep a proper lookout, could never have been in any real doubt. Indeed, if anything, Anthony's evidence about the lead up to the accident was potentially detrimental to the prospect that CGU would be required to stand behind any judgment that Anthony might obtain. Despite Anthony's youth, the shock of his injury and his non-committal answers to Mr O'Dwyer SC on some points, I am satisfied that his recollection that he was holding both the second-last post and the last post is reliable.

65 Further, Anthony's evidence was supported to some extent by that of his brother Shannon. Shannon's evidence was generally vague, but he did indicate that, just before the accident, Anthony was involved in trying to keep the last post straight.[44] He agreed that Anthony was usually very keen to get in and help. He indicated that Anthony was not alone in "pushing" the post, but was not sure whether it was Sandra or Donna or both who also took part. Shannon did not actually see the hammer come down on Anthony's hand. However, he saw what had become of his brother's hand and this caused him to scream.

66 Shannon was quite clear and definite in remembering that, before the accident, when he and Anthony got out to where the fencing work was being done, his grandfather had told him and Anthony to stand back out of the way. I accept that evidence. It accords with other evidence given by the Lawlesses. Anthony himself accepted that his grandfather could have said this, although he himself did not remember it.

67 To the extent that the evidence of Graeme, Sandra and Donna Lawless was in conflict with the account given by Anthony of the lead-up to the accident, I do not accept their evidence. Each of them said, in effect, that Graeme was operating the post-driver in the same way as he normally did, ie, with Donna, alone, helping by holding the posts. Each said that they did not see Anthony holding any post and that the first they knew of the injury was when Shannon screamed. Sandra said that Anthony must have darted around to the position in which he was injured without any of them noticing. In my view, this version of events is inherently unlikely. The fact is that Anthony's hand was caught between the post-driver and a post. It is inherently more likely that his hand came to be there as a result of his holding the post, rather than as a random event.

68 I was not particularly impressed with Mr Lawless as a witness. Mr Thompson SC demonstrated that some of Mr Lawless' evidence about the way in which he was operating the post-driver on the day in question was in conflict with what he had told an investigator from CGU some four years earlier. Under cross-examination, Mr Lawless appeared to be somewhat defensive and hostile. However it was difficult for Mr Lawless to do himself justice in the witness box because he had obvious difficulty in understanding some of the questions that were put to him and because he is quite inarticulate. As I have already mentioned, he is in fact illiterate. As indicated in more detail below, I accept that Mr and Mrs Lawless were close, loving grandparents to Anthony and Shannon. However it seems from the evidence that, since the accident, the boys' parents have prevented them from having much contact with their grandparents and Donna. It would only be natural if Mr Lawless were greatly distressed by the serious injury to Anthony's hand, by the knowledge that he had been involved in the events that led to the injury, by the loss of connection with his grandchildren and by the express or implied criticism that, I infer, has come his way from Anthony's parents and perhaps others. One can understand that Mr Lawless might well have convinced himself that he could not have been responsible for what had happened. This, together with some lack of attention at the time, the suddenness and shock of the accident and the passage of time, may have clouded Graeme Lawless' perceptions and recollections of the relevant events.

69 Sandra Lawless gave evidence fairly briefly and Donna's evidence was especially brief. Apart from putting to them that their evidence was wrong and asking Sandra whether she had discussed her evidence with Graeme or Donna, Mr Thompson SC did not attack the credit of Sandra or Donna in cross-examination. However, in oral submissions, Mr Thompson SC attacked their evidence as unreliable. I would agree with Mr Thompson SC that neither of them gave evidence in an impressive way. Their demeanour was guarded and defensive. On the other hand, factors corresponding to those that may have clouded Mr Lawless' perceptions and recollections may also have clouded theirs.

70 I do not think it necessary or appropriate to conclude that any of the Lawlesses told deliberate untruths in Court. However, to the extent that their evidence was out of line with the findings I have expressed, I do not accept it.

71 It follows that, in my view, Graeme Lawless must have been aware, prior to the accident, that Anthony was helping Donna to hold the posts. Although Graeme had previously told the boys to keep back with their grandmother out of the way, he must have relented on this instruction and permitted Anthony to take part. The Lawlesses may have convinced themselves that these things did not happen, but I find, on balance, that they did.

72 Nevertheless I consider that, prior to the accident, Mr Lawless did not truly appreciate the danger which was represented by his using the post-driver in the way he did, ie without the guard, with persons holding the posts with their hands, with the children nearby and with one of them (Anthony) actually participating in the holding of the posts. I find that Mr Lawless is a person of very limited perspicacity. I infer that he was quite convinced, by what he had seen and heard and experienced in relation to the use of post-drivers over the previous 25 years, that it was not dangerous, or at least not dangerous to any significant event, to operate them in the way he usually did, or even with this 10 year old child also taking part. He had put in at least a thousand posts, which had been held by his own wife, his own stepdaughter and himself, without incident. His stepdaughter, Donna, had commenced to help with fencing while she herself was still quite young, and under the disability of epilepsy, without incident.

73 I accept that Mr Boulton had told Mr Lawless that the way he operated the post-driver (ie, with Donna holding the posts) was too dangerous and that Mr Boulton stopped giving him contract fencing work on that basis. However, it may be a measure of the strength of Mr Lawless' opinion to the contrary that, despite his impecuniosity, he was not prepared to modify the way he used the machine in order to continue to get fencing work from Mr Boulton.

74 I have considered whether the Court should infer from the fact that Mr Lawless told the children to stand back that he knew, at least, that there would be danger to the children if they came close. However Mr Thompson SC did not in terms put that proposition to Mr Lawless. Mr Lawless had said in evidence that he had asked the children to stand back because "I don't want them under my feet when I'm using machinery".[45] I accept Mr O'Dwyer's submission that this was not an admission that he knew that having children around the operation was dangerous for them (at least to any sufficient extent), but rather it reflected his view that it was inappropriate to have them around when he was trying to operate machinery because he thought they would get in his way.[46]

75 There was one other piece of evidence given by Mr Lawless which for a time made me wonder whether perhaps he did recognise the danger, at least to some extent. In evidence in chief there was this exchange[47]:

"At any time prior to the accident, did you see Anthony holding the post? --- No.

If you had seen him holding the post, what would you have done? --- I would've stopped work straight away and made sure he got out of the way."

76 This exchange was not the subject of any particular mention by any party during final submissions. I presume Mr O'Dwyer SC would seek to deal with it in the same way he dealt with the evidence referred to in the previous paragraph (ie. by saying that Mr Lawless would have perceived only inconvenience to himself, not danger to Anthony). Since I have found that Mr Lawless must have seen Anthony holding posts before the accident, I cannot accept his answer that he would have stopped work straight away had he seen Anthony doing so. Mr Lawless did not stop in fact. On reflection, however, I do not think this adds anything of ultimate significance. I need to focus on the likely state of Mr Lawless' mind as at the time shortly before the accident, not afterwards. Bearing in mind what I have already said about Mr Lawless as an individual, and about the factors that may have affected his recollection of the relevant events, the real issue is not much illuminated, in my view, by what he now says, with the powerful addition of hindsight, about what he "would" have done if he had seen Anthony holding the post.

77 In any event, it is not particularly helpful to ask whether Mr Lawless "recognised the danger" as a separate question. The elements of the Albion Insurance test are interrelated and cumulative, and must be applied sensibly to the facts of the particular case. In the present case, as Mr O'Dwyer SC pointed out, there was uncontested evidence (which I accept) that Graeme and Sandra Lawless are loving grandparents who have at all times cared deeply about Anthony.[48] There is no evidence that they requested Anthony to hold any post. They did not need his help. Indeed Mr Lawless had asked him to stay back. They were merely putting up a (single) fence. There were no budgets or other financial targets or financial constraints involved.[49] It seems to me that they simply succumbed to Anthony's boyish insistence on becoming involved. In those circumstances, I find it impossible to conclude, or even to contemplate, that Anthony's grandparents (or either of them) deliberately exposed him to a recognised danger, not caring[50] whether or not he suffered bodily injury. I reject CGU's submission that "there was that level of indifference".[51]

78 Further, this is not a case where it could be said, nor was it said by CGU, that the existence or perceived existence of insurance had eliminated, or reduced the level, of the Lawlesses' concern about the safety of the children.[52]

79 As the law in Victoria presently stands, it is true, as Mr Thompson SC frequently reminded me, that the onus was not on his client, but on Mr Lawless, to satisfy me that his state of mind met the relevant test. Mr Thompson SC submitted that the onus had not been discharged because, in fact, the situation was "perilously dangerous" and because Mr Lawless' counsel did not actually ask him to say what was in his mind before the accident and Mr Lawless did not otherwise depose to that. I accept that, objectively, Mr Lawless' mode of working was dangerous and I accept that the objective situation has evidentiary relevance, but the ultimate inquiry is as to the (subjective) state of Mr Lawless' mind. I do not consider that direct evidence from Mr Lawless as to the state of his mind was essential. Indeed, any direct questions on this topic from Mr Lawless' own counsel might well have been unhelpful to the Court, if not objectionable. It may have been very difficult to frame a proper, non-leading question on the matter. In any event, I accept Mr O'Dwyer SC's submission that it was open to me to be satisfied by inferences drawn from the whole of the evidence, and from ordinary human experience, that Mr Lawless did not recognise the relevant danger or, at least, the extent of it; that it was not due to a lack of desire and concern on his part to prevent bodily injury that he failed to take reasonable precautions to prevent Anthony's injury; and that he did not make a deliberate decision to invite or court the danger to Anthony. For the reasons already indicated, I do reach those conclusions.

80 Accordingly, Mr Lawless succeeds in his claim for indemnity against CGU.

81 It is unnecessary to determine whether Sandra Lawless was insured under the policy or, if so, whether she would have been entitled to an indemnity against Anthony's original claim against her.

Assessment of damages

82 I turn now to an assessment of the damages payable by Graeme Lawless in respect of the injury to Anthony's left hand and its consequences, being a liability in respect of which, in my view, Mr Lawless is entitled to an indemnity from CGU.

83 There is no claim for past medical expenses or other special damages relating to the past.

84 The claim made falls into two parts: a claim for past, present and future pain and suffering and loss of enjoyment of life due to the injury (non-economic loss); and a claim for loss of future earning capacity (economic loss).

85 All of the evidence relating to the nature and extent of Anthony's injury and its consequences was evidence adduced by the plaintiff himself. No other party led any such evidence.

The injury

86 There was no dispute about the physical nature of the injury, nor was there any challenge to the contents of the medical reports of the Central Gippsland Health Service, Mr Daryl Page, Mr Rustomjee, Mr Epstein and Mr Anstee, all of which were tendered by consent.

87 The Central Gippsland Health Service reported that when Anthony was admitted to hospital on 2 July 2002 he was found to have a crushed fourth and fifth finger of his left hand together with crush injuries to the medial (small finger) side of the hand. That afternoon Mr Ian Farmer, Surgeon, undertook debridement of the injuries and amputation of the fourth and fifth digits in the region of the metacarpal heads (knuckles) of those digits. The wound was partially closed. Two days later Anthony was taken to theatre again where the gap in the closure of the wound was covered with full thickness skin taken from the left palm and forearm. Recovery was satisfactory and Anthony was discharged on 8 July 2002 after referral for follow up from physiotherapy and social work. Anthony returned for review and changes of dressings on 9, 10, 11, 16 and 22 July 2002. He was referred for further follow up to Mr Daryl Page, Surgeon.

88 In a report dated 24 January 2003, Mr Page notes that on 5 August 2002 the graft was found to be well healed and arrangements were made for Anthony to undergo a course of physiotherapy to regain normal full range of movement of extension and flexion of the residual digits. On 15 August 2002 Anthony was re-examined and found to have made a very satisfactory improvement in that regard and he was advised to continue with physiotherapy. Mr Page did not see Anthony again after the consultation on 15 August 2002.

89 The accident had happened at the beginning of the school holidays, and Anthony missed a week of schooling.

90 Anthony saw another surgeon, Mr Rustomjee on 15 May 2003 for a medical report requested by Anthony's solicitors. He told Mr Rustomjee that he had a fair grip in the left hand but it was quite reduced compared to what it had been prior to the accident. Anthony also reported that when he tried to flex his left hand he experienced considerable grating in the knuckles of the index and middle fingers. He said that due to the lack of a ring and little finger, he found working on the computer difficult. He said also that he found riding a pony difficult because of the lack of grip in the left hand. Mr Rustomjee noted that Anthony was a "podgy lad" of 152.6 centimetres in height and 76 kg in weight. In addition to the amputations of the two fingers and part of the left palm, Mr Rustomjee noted a 6 cm scar on the median aspect of the hand due to the skin graft. Movements of the left thumb and index finger were full in all directions and painless. Flexion of the left middle finger was full at all the joints, but extension was limited by 20deg. at all joints of this finger. Whereas the grip in the right (dominant) hand was 25 kg, the grip in the left hand was 12 kg. Mr Rustomjee observed that the wounds had healed quite well but Anthony had been left with "considerable disability and disfigurement". He concluded:

"It is difficult to estimate what impairment this disability, will impose, in his later lifestyle. At present however it is limiting his activities at school and during leisure time.

The bodily disfigurement which he suffers following this amputation is considerable, though he seems to have adjusted psychologically to his problem. However again, in later life, it is difficult to estimate what impairment this would cause him psychologically.

I do not feel that this boy needs any further surgical treatment or other treatment to his left hand."

91 At the request of Anthony's solicitors, Michael Epstein, Psychiatrist, saw Anthony and his mother (separately) on 11 August 2003 and provided a report dated 15 August 2003. Significant parts of the history taken by Mr Epstein (none of which was in dispute) are reflected in previous findings set out above, especially under "Background". Further matters of significance, as reported to and by Mr Epstein, follow.

92 Before the accident, apart from his school work, Anthony enjoyed playing basketball. He had a number of friends at school and was a "very outgoing fearless boy". While Anthony was in hospital he was in "some pain and discomfort" but had had no nightmares or flashbacks and his mother noted that he had been very quiet. At the consultation Anthony did not seem embarrassed about the appearance of the hand. He returned to the farm on the day he was brought home from hospital as his father wanted to collect his brother. He had not been back to the farm since then. He returned to school with his hand in a bandage. He saw a school counsellor on two occasions. After the bandage was removed he had not attempted to conceal the injury from others. He had been angry at one boy who called him "chook foot" but the boy no longer did so. Other students were very accepting. Anthony had seen little of his maternal grandparents since the accident but believed that he still had a good relationship with them. (Mr Epstein gathered that Anthony's grandmother was angry with his mother (her daughter) for not bringing him to see them.) Anthony resumed playing basketball in October 2002 and had difficulty catching the ball and became very frustrated. He stopped playing after four games and had not gone back to playing basketball. He has not resumed playing any other sport.

93 Under "Current Condition", Mr Epstein said:

"The left hand is tender at times, although not painful. He denies being embarrassed by the appearance of the hand. He is frustrated that he cannot catch basketballs and his father is very careful with his use of power tools. He has friends at school and sleeps well. He has a good relationship with his siblings and with his mother. He would like to go back to the farm but is uneasy because there is likely to be an argument between his mother and grandmother.

He feels he is not restricted in his activities because of the hand. His mother feels however that he is much less outgoing and seems more concerned about hurting himself and is not involved in some activities. There have been no behaviour problems arising from the effects of this accident. He has become accustomed to the appearance of his hand."

"Anthony Tilley suffered a traumatic amputation of the medial side of his left hand in a farm accident on the 2nd July 2002. He had considerable pain and discomfort at first and appears to have made the best of the situation. He denies feeling embarrassed about the appearance of his hand but is frustrated by his limitations as far as sport is concerned. His mother has noted that he is a little more careful about the possibility of injury and tends to hang back more than he did.

From a psychiatric point of view he has a very mild Anxiety Disorder arising from the injury itself which has been manifested in some frustration at times and some concerns with regard to his safety and security. This is very minor and does not require any active treatment at the moment, although the situation may change in the future as he grows older and he may become more embarrassed about the appearance of his hand once he reaches adolescence.

His condition is stable at the moment.

It is likely that the injury to his hand may have some effect on his work capacity, depending on the type of work that he does. At present it is unlikely that it will have any effect on his social or domestic lifestyle. The question of treatment should be deferred until he is an adolescent when the appearance of his hand may cause him some embarrassment in dealing with females."

94 Mr John Anstee, Plastic and Reconstructive Surgeon, provided a medico-legal report dated 4 September 2003. It was accompanied by several photographs of Anthony's hand, taken from various angles. I have studied the photographs (as well as viewing Anthony's hand in court). The following parts of Mr Anstee's report are of present significance:

"I asked Anthony a number of questions about his injury. His answers included:

'Doesn't really bother me'.

'I can type on a computer, but a little bit slower'.

'The look of its doesn't bother me'.

Anthony does, however, admit that a very slight injury to the amputation stumps causes significant pain.

Examination

On examination I find a boy who is minimising his difficulties and who is dismissive of his problem. ... He has a scar about the amputation, measuring 85 x 65 mm and a Wolf graft donor site on the left forearm measuring 100 mm x 35 mm.

Opinion

Anthony Tilley has suffered a significant injury to the left hand and is left with an obvious deformity and significant loss of function. I believe he has a 2% loss of function in the thumb, a 5% loss of function in each of the index and middle fingers, and a 100% loss of function in the ring and little fingers. I believe he has a 32% loss of function in the left, non-dominant, hand. Although Anthony says that the injury does not really bother him, I doubt that that is the case. He certainly does have the loss of function that I have outlined and I cannot believe that his ability with a computer keyboard would do anything but reflect the left hand impairment."

95 The chart which accompanied his report showed that Mr Anstee calculated that, by reason of the hand impairment alone, Anthony had a 17% "whole-person impairment" assessed in accordance with the Guides to the Evaluation of Permanent Impairment.

96 It seems that Anthony was not seen again for medico-legal purposes until 2007. On 29 January 2007, accompanied by his mother, he was seen by Mr Murray Stapleton, Plastic and Hand Surgeon. Mr Stapleton had read the prior reports. Among other things, Mr Stapleton said:

"Asking [Anthony] what he would like to do when he leaves school, he is adamant that above all else he wants to be a diesel mechanic. I would have concern about his capacity to be employed in that regard, for mechanics who work on diesel engines are often required to lift heavy weights and perform manipulative activities which require efficiency from both hands.

It is clear from the reports you enclosed that Anthony has regained the full flexion and extension capacity of his left thumb and index finger, but the middle finger is impaired to the extent that he cannot straighten the finger. He has had what is described as a ray amputation of the ring and little fingers.

Prior to this accident, Anthony's left hand was normal.

...

CURRENT STATUS

It needs to be noted that males of this age are quite nonchalant about any injuries and indeed are embarrassed to complain in detail about the nature of any disfigurement and the difficulties associated. Therefore, I was at some pains to wait for Anthony, whose responses to questions were quite slow, to clearly articulate how he feels about his left hand injury.

1. Anthony did state that he is embarrassed about the appearance of his left hand, and well he might be.

2. He said at school the other students sometimes call him 'chook foot'.

3. Anthony is a very tall and overweight young boy, and clearly he could look after himself, but despite his bravado, his appearance clearly causes him serious and significant concern.

4. Prior to the injury Anthony enjoyed playing basketball and cricket, but he cannot now catch a ball as not only is he inefficient with his left hand but it is also painful for him to do so.

5. He said he could no longer perform a hand stand.

6. Clearly his left hand is painful when the hand is bumped.

7. He eventually told me that on a cold morning he feels as though his ring and little fingers are still there.

8. I asked him what he does with his left hand, to which he responded 'Not much'. Then I asked him how he feels about his ability to perform normal activities as a diesel mechanic to which he said 'I'm worried about that'.

9. The index and middle fingers give him a cracking sensation when he makes a tight fist.

10. His hobbies have now been significantly curtailed. He enjoys fishing and bike riding. He did explain that bike riding can be difficult for him due to the vibration in the handle bars causing his left hand to be painful.

11. Anthony's condition has stabilised.

MEDICAL HISTORY

There is no significant past medical history.

EXAMINATION

Anthony is 5 foot 10 inch tall and weighs 134 kilogram. Clearly he is profoundly overweight.

Anthony is quietly spoken. His responses to questions were very slow.

The left thumb is normal.

The flexion and extension capacity of the index finger is normal.

The middle finger whilst it flexes normally, is prevented from a complete extension to the extent of 10 degrees of the metacarpophalangeal joint and 10 degrees of the proximal interphalangeal joint.

The graft in the front of the index and middle fingers is clearly visible from a distance of 6 feet, as is the donor site scar over the flexor surface of the left forearm.

Addressing your specific instructions, I submit the following:

You have asked for my comments regarding Anthony's future employment. There is no question that as a diesel mechanic Anthony will not only have difficulty, but in a selection program of a prospective employer he would not be seen to be favoured over others who have not been so injured. I am therefore of the opinion that Anthony's employment opportunities have been severely curtailed as a result of his injury and indeed, at some stage in his life he may have to modify his ambitions for his future employment.

The next observation I have is that his slowness to the answering of questions may indicate an intellectual disability to a degree.

Therefore, I hold the view that if he has to consider other forms of employment in the future, activities such as office work, computer use and so on, that this would, in my opinion, intellectually be beyond him. However, that is for others to determine."

97 The plaintiff also tendered reports from Dr Amanda Sillcock, Occupational Physician, John Hodgson, Psychologist and Kaye Angel, Human Resources Consultant. This material was relevant mainly to Anthony's work capacities and to the claim for future economic loss, to which I will come. However, for present purposes, it is noteworthy that Dr Sillcock (who had not examined Anthony but had read all of the abovementioned medical reports and viewed the photographs of Anthony's left hand) said, in relation to Anthony's injury:

"This was a severe crush injury and resulted in amputation of the fourth and fifth fingers of the left hand. This has resulted in severe disfigurement and loss of function. I understand from the reports that there is some pain in the region of the amputation when the hand is bumped and in my experience this is a common long-term problem with this type of injury.

I understand that Anthony has had to give up a number of sporting activities and that he also has some difficulty in using a computer because of the injury to his left hand. I understand he is right-hand dominant."

98 In assessing the nature of the injury and its (non-economic) impact on Anthony, I take into account also Dr Sillcock's opinion that although Anthony should still retain the ability to pick things up using fine motor movement, he would have difficulty gripping tools such as a spanner or hammer with his left hand because of the loss of the ring and little fingers. She added that if the stump is painful, this added to the degree of difficulty as it is "quite hard to hold something with any reasonable grip when it is painful".

99 Mr Hodgson, a psychologist with a background in education and social work and with registered specialities in educational and developmental psychology and counselling psychology, was engaged by Anthony's solicitor to assess Anthony's intellectual functioning and how this may relate to possible career options. In his report, Mr Hodgson took into account Anthony's school reports, which were also in evidence before me. He noted that the school reports indicated that at times Anthony lacked confidence, did not participate as much as would have been optimal for his learning, and that as a result of his lower self-efficacy and self-confidence his motivation to participate and learn was sometimes down. (I interpolate that I infer that the accident contributed to some extent to Anthony's lack of confidence at school, bearing in mind that his mother told Mr Epstein that, since the accident, Anthony had been "much less outgoing"). Mr Hodgson interviewed Anthony and his mother. He administered a well recognised intelligence test. Anthony's full scale IQ composite score was 88, which placed him at only the 21st percentile of the population of his age. On the Processing Speed Index tests (a part of the IQ test) Anthony's score was even lower (better than only 4 out of 100 people of his age). This particular result indicated that in relation to work such as computer work where some speed was involved it was likely that Anthony would have real problems. On the other hand, Anthony's Verbal Comprehension Index (or Verbal IQ) result was 104, which placed him at the 61st percentile (ie better than 6 out of 10 people of his age). He scored at this level despite his professed dislike of reading. Mr Hodgson recommended strongly that endeavours be made to help Anthony enrich and enhance his better than average ability with verbal learning. Mr Hodgson said[53]:

"I believe that extra support to Anthony regarding his reading and writing may well present other potential career options for him."

100 Mr Hodgson made particular mention of the fact that Anthony had adopted a commendably cooperative attitude to the testing process.

101 In relation to the injury itself, Mr Hodgson said:

"In discussions in counselling with Anthony he did not show any excessive sensitivity regarding any awareness of his injuries. It should be noted the situation in which the discussion took place, that is in a one-on-one situation with his mother being in the vicinity. The real test of Anthony's sensitivity to the loss of his fingers and the other severe disfigurement in his left hand and arm will undoubtedly be as he gets a little older and interacts with members of the opposite sex. At this stage Anthony does not show any hypersensitivity to his injuries."

102 Mr Hodgson also said that in general he would concur with Dr Sillcock's opinion that Anthony would have considerable difficulty in relation to manual work, either of an unskilled, semiskilled or skilled nature. He said that his own discussions with Anthony confirmed that although on certain tasks his right-handedness meant that there was a limited disability, for many tasks (including computer tasks) "the impairment to his left hand will undoubtedly prove a considerable disability". On the other hand Mr Hodgson noted that Anthony "is a young man who wishes to use the abilities he has". Mr Hodgson expressed concern about Anthony's general level of fitness and health. Based on discussions with Anthony and the available documentation, Mr Hodgson concluded that as a result of his injuries Anthony withdrew from participation in active sports. "This withdrawal was partly related to his frustration and [sic. at?] the disabilities causing him to fumble the ball and not play as well as he might have previously, but also some reported pain as he was catching the ball". Mr Hodgson strongly recommended appropriate counselling and support to Anthony, and possibly his family, to assist him with his nutrition and exercise program. He said: "He is a big boy and there is no doubt that he is overweight".

103 Ms Kaye Angel also concluded from the medical reports that Anthony would "struggle" to perform the duties of a diesel mechanic or similar work and that he would be restricted in using a computer.

104 Anthony himself gave evidence about his injury and his counsel called Mr Stapleton, Dr Sillcock, Mr Hodgson and Ms Angel to give evidence about it and about its implications for Anthony. None of the other authors of reports was required for cross-examination. Some additional insights into the injury and its personal impact emerged from Anthony's own evidence. Subject to the experts' caution that Anthony tends to minimise his difficulties, I accept Anthony's evidence about these matters. In examination-in-chief he said:

- He did not enjoy IT at school because he was "too slow on the computer";

- He has no computer at home but he uses the computers at school "occasionally". He uses them to search the internet. He is not as fast on them as other kids;

- After he leaves school he wants to be a diesel mechanic;

- When riding a pushbike, his left hand goes numb after a while;

- He is able to grip the handlebars with his left hand the same as he can with his right;

- He is "all right" holding tools in his left hand, but he can't undo the nuts using a spanner in his left hand;

- The only sport he plays at school now is dodge ball (during PE);

- He stopped playing basketball because his left hand was "too sore";

- He can catch a basketball with two hands if it is not thrown at him "real hard". With smaller balls, sometimes he misses them, sometimes he doesn't;

- He used to enjoy basketball but, asked whether he misses it, he said "Not really";

- Other boys still call him "chook foot", both at school and outside. With some people he gets upset, with others he doesn't really mind. Shannon helps him to deal with other boys in this regard;

- He thinks about what happened in the accident "a little bit";

- He hasn't thought of doing any type of work other than as a diesel mechanic;

- He gets pain (or, at least, a feeling of coldness) in his left hand sometimes, usually in winter. He then puts his hand in his pocket to keep it warm;

- He also experiences pain when he "bumps" his hand. The pain is felt at the base of the outside of the palm.

- His two remaining fingers "crack" in the knuckles when he grips something too hard. That is painful "sometimes";

- He has difficulty gripping small things. He usually opens door handles with his right hand. He is all right using a knife and fork.

105 Under cross-examination from Mr O'Dwyer SC, Anthony said:

- In relation to his bike, he repairs the tube, changes the tyres, changes the handlebars and fixes the chain;

- He has never looked at a diesel motor or tried to do things on a diesel motor. He does not know what qualifications are required to be a diesel mechanic;

- He wants to stay at school at least until Year 10;

- In addition to bike riding, he enjoys going fishing with his friends. He uses a fishing rod. He has no problem using it;

- He was a member of a rifle club until about two years ago. He had no problem shooting a gun;

- He likes motorbikes. He has never done any work on a motorbike, but he thinks he could learn to repair one.

106 Cross-examined by Mr Thompson SC, Anthony added the following:

- He is "all right" on computers - it's just that his left hand "has to do double the work";

- He would be interested in farm work when he leaves school, or general labouring work;

- He can drive a car. He can handle a car all right with his hand;

- He would be interested in driving work, delivery work and the like;

- The pain in the hand in winter is getting less as he gets older. It is getting quite a bit better;

- The pain from bumping the hand is also getting less. "It doesn't hurt as much but it still hurts a bit".

107 Finally, in answer to Mr Young, Anthony said:

- Wearing a glove helps him, because it doesn't hurt so much when he bumps the hand. He mainly wears it when he is riding his bike.

- He doesn't wear the glove at other times because "I don't feel the need to wear it";

- When he has his hand in his pocket and bumps it he doesn't really feel it.

108 Dr Sillcock was interposed after Anthony had given evidence in chief and been cross-examined by Mr O'Dwyer SC. In chief, she adopted her report. Cross-examined by Mr Thompson SC, she was informed that Anthony had said in evidence that he was able to hold tools in his left hand but was not able to undo nuts with them. Mr Thompson SC suggested to her, on the basis of this evidence, that Anthony's problem was only with finer, "more fiddly" motor skills rather than in holding an object or gripping in a more general sense. She responded that it seemed that Anthony may be able to hold tools with his left hand, but was not able to undo anything with them. She maintained that, as a tradesman, Anthony would need to both hold and use tools, such as spanners, in his left hand, and that he would have difficulty with this. I will come back to the industrial position later. Dr Sillcock conceded that a specially made protective glove could help with the pain of bumps. She opined that, five years having passed, Anthony's level of pain or discomfort had probably stabilised by now.

109 Mr Murray Stapleton was interposed straight after Dr Sillcock. In chief he adopted his report, and went further. He said that Anthony's ability to grip was "profoundly impaired". Work as a diesel mechanic was "impossible to contemplate". Having been told about intelligence tests administered by Mr Hodgson, Mr Stapleton described Anthony as "intellectually challenged", and he agreed that Anthony would have difficulty with office work or computer work, particularly if the work was required to be done quickly. He said that "anything that involves his left hand to grip or lift, is just not within his capacity and never will be". In response to Mr Larkin (junior counsel for the Lawlesses) Mr Stapleton agreed that young people adapt and modify their behaviour better than older people who suffer the same kind of injury. But he added that "most adults with an injury like this would just, without question, would never consider working again". In response to Mr Donald (for CGU), Mr Stapleton agreed that a surgically modified glove may help Anthony by giving him a pad on his palm, bearing in mind that his palm had also been "profoundly injured". A glove may minimise his tenderness, as distinct from his pain. Mr Stapleton thought that Anthony had both tenderness and pain. Even the tenderness might not be minimised by a glove.

110 Mr Hodgson adopted and elaborated upon his report, much of which I have summarised already. So far as presently relevant, he added that Anthony may benefit from psychological counselling in the future in relation to the deformity of his hand.

The submissions on non-economic loss

111 I turn now to the parties' competing submissions concerning pain and suffering and loss of enjoyment of life (non-economic loss).

112 Mr O'Dwyer SC (for the Lawlesses) acknowledged at the outset that for a 10 year old boy, who was now 14, it was a "fairly tragic catastrophic sort of injury". He noted that Anthony seemed somewhat phlegmatic and non-demonstrative about the injury, but conceded that Anthony "would have to have a fairly high degree of suffering in relation to it generally". The injury "looks poorly", but, at this stage of Anthony's life, it did not appear to have become a "major handicap". The real issue was the future. Anthony must yet face puberty, courtship and work.[54] Anthony was not a person who was going to find outlets in much other than the physical. Mr O'Dwyer SC submitted that a range of somewhere between $200,000 and $250,000 was appropriate for this head of damage. He then went on to deal with economic loss, and I will return to this.

113 Mr Young (for the Boultons), having heard Mr O'Dwyer SC's submissions on quantum generally, indicated that he did not wish to say very much about the matter. He observed that it was obvious that Anthony had suffered "a very serious injury" and that his physical ability was going to be limited. Mr Young's further submissions related to economic loss only, to which I will come.

114 Mr Thompson SC made the following submissions about the assessment of compensation for Anthony's non-economic loss. The injury is to the non-dominant hand. There is only a partial loss of use of the left hand, which is of more significance in relation to earning capacity than general damages. At this stage it seems there are no significant personal activities that Anthony is precluded from doing, apart from not being able to use a spanner on his bike. He will be able to drive a motor vehicle. Questions of embarrassment, inconvenience, tenderness and the like do exist, but no actual, personal, physical activities are presently precluded. Anthony's own evidence indicated that the tenderness is improving. The use of a special glove (which he has not yet tried) may assist him significantly. The graft has healed well and there is good movement in the remaining digits. Mr Stapleton accepted that children adapt better to disability than adults. As Mr Epstein noted, Anthony to his credit does not appear to be overly embarrassed by the cosmetic or other effects of the injury. It is acknowledged that there will be times when Anthony will be embarrassed, and that things might change in his later teenage years. However, he is not emotionally overwhelmed by his situation.

115 I informed Mr Thompson SC that I myself had noticed that in court Anthony had tended to keep his left hand in his pocket. Mr Thompson SC said he hadn't noticed this but said that it was "understandable". However, he submitted that it had not been put, and could not on the evidence be said, that Anthony was labouring under a significant emotional disability as a result of his injury. Mr Epstein had described him as having no more than a "very mild anxiety disorder". I accept this.

116 Mr Thompson SC acknowledged that Anthony was entitled to have something included in the compensation for the trauma and pain of the event itself, the hospital stay, the physiotherapy and the like.

117 In the end, Mr Thompson SC submitted that Mr O'Dwyer's figures were surprising, and too high, although he expected Mr Mighell to suggest an even higher figure. Mr Thompson SC said that an appropriate range was $150,000 to $175,000.

118 Mr Mighell SC (for the plaintiff) submitted that the single most relevant matter was the age of the plaintiff. Anthony was 14 years old, and faced "the remainder of his life with the horrific injury to his left hand". This was particularly significant in a boy like the plaintiff who would, in all probability, face a life of manual labour. Next in order of importance was said to be the obvious trauma of the accident itself, occurring to Anthony when he was 10 years old and followed by two operations during a hospital stay that he imagined had lasted three weeks. The ongoing problem was not just the loss of the two fingers, but also the loss of part of the palm. The lost digits are integral to gripping more than the remaining two digits. Mr Mighell SC accepted that "pincer movements", such as using a knife and fork, would not be a significant issue for Anthony. However Anthony continued to experience pain in cold weather, and numbness and pain when the hand was knocked. There was the cosmetic deformity and there was likely to be concern in this regard "when girls came on the scene". Mr Mighell SC submitted that the appropriate figure for pain and suffering and loss of enjoyment of life was $250,000.

Determination as to non-economic loss

119 Mr Mighell SC's description of Anthony's injury as "horrific" was a fair description, in my opinion. I accept also Mr O'Dwyer SC's statement that Anthony "would have to have a fairly high degree of suffering in relation to it generally". Again, I agree with Mr Mighell SC that a major factor in assessing damages under this head is Anthony's young age and the prospect that he will have to face up to the injury for many years. Insofar as future or potential events are concerned, I have endeavoured to proceed in accordance with the principles set out in Malec v J.C. Hutton Pty Ltd[55]. For example, in relation to the poor cosmetic appearance of the injury, I accept and take into account the experts' evidence that this may well cause significant problems for Anthony in the future, particularly as he approaches the courtship stage, and notwithstanding that he himself does not appear to be overly concerned about it now. On the other hand, so far as disability is concerned, I believe that the impact of the injury will be felt more in relation to work activities rather than in relation to personal activities, and I am conscious of the need to avoid the potential for overlap or duplication in relation to the claim for future economic loss.[56] On the other hand, a reasonable allowance should be made for loss of enjoyment of life due to the likely impact of the injury on Anthony's prospects of obtaining and performing satisfying work. Further, I accept that there was great trauma and significant pain at and shortly after the time of the accident and I make a substantial allowance for that. On the other hand, having considered Anthony's own evidence carefully, I think that Mr Stapleton's evidence tended to overstate the degree of Anthony's likely ongoing tenderness and pain. I accept the validity of each of the points by way of mitigation advanced by Mr Thompson SC, except that he omitted to acknowledge the impact of the injury in curtailing Anthony's participation in sport, especially basketball, and in reducing Anthony's confidence generally. I regard these impacts as being of some significance for Anthony. I note that they have contributed to Anthony becoming seriously overweight, as Mr Hodgson observed.

120 Doing my best to assess Anthony's injury and its past, present and potential future effects on him by way of pain and suffering and loss of enjoyment of life, and giving weight to current general ideas of fairness and moderation[57], and placing his injury alongside, and comparing it with, the general range of damages for compensable disabilities for which compensation is, and has been, awarded in Victoria[58], I consider that the sum of $190,000 is appropriate under this head. I was not asked to award separate sums as between the past and the future and have not done so.

Future Economic Loss: Loss of Earning Capacity

121 I turn now to the competing submissions of the parties in relation to the plaintiff's claim for damages for loss of future earning capacity. It will be necessary to digress from time to time to deal with some evidence to which I have not yet referred.

122 Mr O'Dwyer SC made extensive reference to Malec v J.C. Hutton Pty Ltd[59] and State of New South Wales v Moss[60] as cases indicating the principles currently applicable to the assessment of damages for loss of future earning capacity, and in particular the concept of the loss of a chance. I have derived substantial assistance from those cases.[61]

123 Mr O'Dwyer SC submitted that, because of Anthony's youth, this was a case, like Moss, of many imponderables and that, unavoidably, there was a paucity of evidence on which a reliable estimate of Anthony's "without injury" earning capacity could be made. However he accepted that the mere fact that the quantum of damages was difficult to assess did not mean that the plaintiff was only entitled to a nominal sum. The court was required to do the best it could. I accept this.[62]

124 Mr O'Dwyer SC's suggestion[63] was that I should take what he called a "dead average" child of the same age as Anthony, work out what that child would be expected to earn, net of tax, over a lifetime (including superannuation) without the relevant injury, using published figures for male average weekly earnings; then work out the present value of that income stream by applying an actuarially calculated "delayed multiplier"[64]; and then apply any appropriate adjustment for contingencies or vicissitudes. This would produce a figure for "without injury" earning capacity, assuming that it was appropriate to regard the person concerned as "average". In the present case, Mr O'Dwyer SC submitted there was evidence to suggest that Anthony's "without injury" earning capacity may have been less than average because he had a lower than average level of intelligence and because of his disadvantaged social circumstance.

125 The next step, as suggested by Mr O'Dwyer SC, was to assess what Anthony was likely to achieve with his injury. He acknowledged that there was a fair amount of evidence on that question. Mr O'Dwyer SC was prepared to concede that there was no evidence contrary to the conclusions set out in the report of the hand surgeon, Mr Stapleton, who had made the "fairly broad statement" that: "I am therefore of the opinion that Anthony's employment opportunities have been severely curtailed".[65] Mr O'Dwyer SC submitted that Mr Stapleton and Dr Sillcock were close to each other in their views but that Mr Stapleton had an advantage over Dr Sillcock because he had examined Anthony and, to the extent that Dr Sillcock had "gone further" than Mr Stapleton, Mr O'Dwyer SC said that I should prefer Mr Stapleton.

126 I digress at this point to say that, in my view, Dr Sillcock's evidence was not quite as pessimistic as Mr Stapleton's. The conclusion in her report was that Anthony's future employment options were "considerably limited" by his injury. Moreover, whereas in the witness box Mr Stapleton seemed to become even stronger and more pessimistic in his views (as I have indicated above), Dr Sillcock said, more moderately, that Anthony "would experience difficulty with manual occupations" because "most manual work particularly trades or trades assistant type work requires the use of both hands".[66] It is true that Dr Sillcock virtually ruled out a career as a diesel mechanic for Anthony (as did Mr Stapleton) and that she also said in her evidence in chief, in relation to "possible manual type jobs" in the Gippsland area including handyman, farm worker, packer, packer/sorter, timber worker and vegetable process worker on a farm, that Anthony would have "the same difficulties as he would doing work like a diesel mechanic". However, when asked about the likely outcome of a pre-employment medical examination of Anthony, she said that her recommendation to an employer would be that Anthony "would be very limited in being able to do any of this sort of manual type work and that he would in some instances certainly be totally unfit to do it" (my emphasis).

127 Under cross-examination by Mr Thompson SC, Dr Sillcock maintained her stance in relation to Anthony's unfitness for trades-type work. Asked about warehouse work, retailing work, driving work and delivery work, she was also pessimistic, but I thought her pessimism was closely tied to a view that this work would involve a lot of lifting and a lot of bumps to the left hand, causing significant pain. I note that this evidence was given before Anthony, having been recalled to the witness box for further cross-examination, said that he would be interested in doing farm work, general labouring work, driving work and delivery work and, moreover, said that over the last couple of years the pain had become significantly less and that if the hand was bumped: "It doesn't hurt as much but it still hurts a bit". Dr Sillcock agreed that there are public and private rehabilitation and placement services for disabled people. She also conceded that the use of a padded glove would help to prevent bumping, and might open up some of the occupational areas which she had seen as limited because of Anthony's problem with discomfort or pain (albeit that a glove would not assist him to use tools in his left hand). However, I acknowledge that Dr Sillcock concluded her evidence by maintaining that, across the board, able-bodied candidates for employment would always have an advantage over Anthony in terms of employer preference.

128 I return to Mr O'Dwyer SC's closing submission on loss of earning capacity. He said that Anthony was a young man "without great mental resources" and conceded that Anthony was not a candidate for office work or computer work. Referring again to Anthony's "without injury" capacity, Mr O'Dwyer SC anticipated that Mr Mighell SC would say that Anthony had a firm ambition to be a diesel mechanic and that a diesel mechanic could earn more than average wages, but Mr O'Dwyer SC maintained that a more reasonable approach was to take the average and work from there. Mr O'Dwyer SC conceded that Anthony would have "great difficulty doing most manual work" but submitted that there was some "theoretical" manual work that he could do. As to whether Anthony was likely to obtain work within his capabilities, Mr O'Dwyer SC accepted that the expert on that issue, Kaye Angel from Flexi Personnel, was "a bit pessimistic".

129 I should deal with Ms Angel's evidence at this stage. Ms Angel had been asked to prepare a report "regarding the difficulties Anthony Tilley will face in being successfully trained or to gain work, in his desired vocation as a Diesel Mechanic".[67] In her report (to which no objection was taken) she said that Anthony would "struggle to perform the duties of a Diesel Mechanic or similar work" and would "struggle to find an employer who would be willing to risk training him as a diesel mechanic". Apart from the potential pain and aggravation of the injury to his left hand, the potential for Anthony to injure his dominant right hand from overuse would be a concern. Ms Angel would not put Anthony forward for any "heavy duty" position. Anthony would be restricted in using a computer. Living in Sale, he would be further restricted in gaining employment in any vocation because, according to Ms Angel, Sale has limited employment opportunities. In this regard, Ms Angel attached the results of an on-line inquiry made on 20 February 2007 to Australian Job Search for available positions as factory labourers, apprentices and motor mechanics in East Gippsland. Ms Angel's report stated that a newly qualified Motor Mechanic, Level 6, could be earning currently a minimum of $578.20 gross per week for a 38 hour week (according to the Vehicle Industry-Repair, Services, Retail Award). Ms Angel also stated that she had recently been advised by a manager at "First Fleet Transport" that that firm currently pays their experienced (3-4 years+) Diesel Mechanics $1,000 gross per week for a 421/2 hour week ($23.53 gross per hour). This did not include overtime. The mechanics could work 5-20 hours overtime per week. Overtime was paid at time and a half, ie $35.30 gross per hour. This made the estimated potential salary range from $1,000 to $1,706 gross per week. The worker would also receive the 9% employer superannuation contribution.

130 In her evidence in chief, Ms Angel said that a person seeking an apprenticeship as a diesel mechanic did not necessarily need to have completed Year 11 or Year 12. She confirmed that the amount set out for a Motor Mechanic in her report was the base award rate. Under cross-examination by Mr Larkin (for the Lawlesses), Ms Angel conceded that it was "probably desirable" that an applicant for an apprenticeship as a diesel mechanic go to Year 11 or Year 12, although there were exceptions. As to the overtime figures, she had not inquired how many of the diesel mechanics did overtime and she thought it depended on how busy the employer was. CGU's counsel declined to ask Ms Angel any questions. In response to Mr Young, Ms Angel conceded that, these days, it is "long odds" to get an apprenticeship of any type without first passing VCE. She also said that "most mechanic work now is done with computers as well as [manually]".

131 I return again to Mr O'Dwyer SC's final submissions. He accepted that Ms Angel's evidence had not been disputed and he submitted that there was no contrary evidence in relation to this issue. He concluded by saying that there was very broad scope available to the Court in assessing both Anthony's "without injury" capacity and his "with injury" capacity.

132 The submissions of Mr Young (for the Boultons) on future economic loss were brief. In addition to what he had said about the seriousness of Anthony's injury (in the context of non-economic loss[68]), Mr Young submitted that it was obvious because of Anthony's lack of intellectual ability that it was highly unlikely that Anthony, even without the injury, would have got a job as a diesel mechanic. Indeed, said Mr Young, because of Anthony's disadvantaged background, it may have been difficult for him to carry on full time employment at all. However, the submission continued, most likely he would have done some work, of a manual nature, but not in a trade. Mr Young noted that across the Bar table it was acknowledged that Anthony appeared to be a pleasant and cooperative young man, and that that would stand him in good stead. Mr Young submitted that Anthony will work even now. Although there were obvious limitations on physical work, it should not be ruled out completely.

133 Mr Thompson SC, for CGU, submitted that the Court should depart fundamentally from the mathematical approach which had been spoken of by Mr O'Dwyer SC and which was anticipated from Mr Mighell SC. This case was very different from that of a person injured when nearing the end of their working life, where a strict mathematical approach was plainly appropriate. With a child of Anthony's age, there was a vast range of possibilities both before and after the accident. The Court could consider what may be handed up by way of figures "and perhaps take notice of them", but ultimately it was a matter for the Court to work out the capital worth of the lost working capacity. True, the Court should not merely pluck a figure out of the air. However, the Court should come to an assessment with which it was "comfortable". This would involve working out what was realistically likely to happen before and what is realistically likely to happen now and trying to work out the worth of the differential. The options were numerous and the parameters were wide.

134 Mr Thompson SC submitted that Anthony's potential to be a diesel mechanic was latched on to unrealistically in this case. Due to a combination of factors, including his IQ, his organisational abilities and attitudes to certain subjects as evidenced by his school reports, and because of his social and other background, he most likely would have been employed in an unskilled or at best semi-skilled capacity, in an agricultural or labouring occupation. He would have been capable of doing a job that involved some ancillary paperwork or computer work, but it was unrealistic to assess his potential by reference to average weekly earnings or the earnings of a diesel mechanic. Average weekly earnings "includes lawyers and stockbrokers" and a diesel mechanic is relatively highly paid. These comparisons were unhelpful.

135 As to Anthony's present situation, Mr Thompson SC submitted that Anthony presented to the psychologist, Mr Hodgson, as a likeable person who wanted to work and who was likely to try to overcome his problems to attain employment. Mr Thompson SC urged me to regard Mr Hodgson (a former teacher) as a person with a good working knowledge of apprenticeships and young people and with the theoretical training and skills to back this up. He submitted that I should give weight to Mr Hodgson's evidence in this regard and that I should view the evidence of Mr Stapleton and Dr Sillcock as "unduly negative and pessimistic".

136 Mr Thompson SC further submitted that, taking into account the assistance available for disabled people to enter the workforce, the type of work Anthony would be looking for and the Court's impression of Anthony as an individual, the Court should presume that Anthony will be in employment for the bulk of his working life, despite the injury. Anthony retains abilities. It is just that he will have difficulty with particular tasks. Some employers are more accepting than others. Anthony is not like a paraplegic. Driving or delivery work is an option. Cleaning work, general farmhand work and semi-skilled labouring work are others. Dr Sillcock was too negative in her responses to these suggestions. Anthony is right-handed. He can write. He can use a computer to a reasonable degree. He could sell cars. He is not on the employment scrap heap at the age of 14.

137 Mr Thompson SC did not put up any calculations, except as follows. He submitted that it would be useful to note what return would be obtained at present interest rates (he suggested 5 per cent) on a particular lump sum. For example, he said, $250,000 invested at 5 per cent gives a per annum return of $12,500.[69] The Court might consider that that reflected a reasonable differential in potential jobs from time to time. Likewise, a lump sum for, say, ten years out of work over Anthony's working life, at $25,000 per year, undiscounted, would give $250,000. These were merely suggested approaches. They led Mr Thompson SC to submit, finally, that the appropriate award under this head would be in the area of $250,000 or $260,000, being a capital sum which, he submitted, would be reflective of the situation in a realistic way.

138 The thrust of Mr Mighell SC's submission for the plaintiff on this issue was that the injury had largely taken away the earning capacity that Anthony previously had. The evidence indicated a boy who would have followed a manual vocation. Anthony's favourite subject at school was woodwork. He did not like the Information Technology subject he had done at school last year, and he was slow on computers. He did not read at home and the extent of his reading at school was four 15 minute sessions a week. Mr Mighell SC submitted that Anthony's desire to pursue a vocation as a diesel mechanic was "consistent" with that picture, and that the experts, while stating that to have Year 11 or Year 12 would be preferable, did not say that this was essential for an apprenticeship.

139 As to Anthony's post-injury position, Mr Mighell SC submitted that the extent of the destruction of Anthony's earning capacity was much greater than it would have been for someone who had had a wide range of occupations open to them. Mr Mighell SC relied heavily on the evidence of Dr Sillcock and Mr Stapleton in this regard. However, he accepted that Anthony was not completely unemployable.

140 Mr Mighell SC acknowledged that the onus of proof of loss or damage lies with the plaintiff, but he drew my attention to a debate in the cases about whether the "evidentiary onus" in relation to "residual work capacity" rests with the defendant.[70] Mr Mighell SC noted that no party had called any evidence to suggest that there were particular types of vocation that Anthony could still pursue. However, I note that this is a case involving a child who has never worked and in which there are many imponderables, including as to the nature and extent (if any) of the plaintiff's "without injury" earning capacity. It is therefore distinguishable, in my opinion, from the cases in which it has been said that where the plaintiff has proved he has lost his pre-accident earning capacity and has been unable to find alternative employment, an evidentiary burden is cast on the defendant to show what alternative opportunities were open, including the state of the labour market and likely earnings.[71] Mr Mighell SC acknowledged, naturally, that his opponents could rely on such limitations as the witnesses themselves expressed in their evidence-in-chief in relation to the extent of the plaintiff's alleged loss of work capacity and on such concessions as they made in cross-examination in that regard. In any event, I am not obliged to accept all or any particular part of the evidence called by the plaintiff merely because no other party led any evidence about residual work capacity.[72] Ultimately, Mr Mighell SC said that he would not be submitting that the plaintiff was totally incapacitated or that he had no residual work capacity. Rather, he submitted that there had been "a substantial loss of the plaintiff's earning capacity".

141 Mr Mighell SC handed up a two page document headed "Plaintiff's Submissions in relation to Loss of Earning Capacity". It contained a table, drawn partly from undisputed actuarial material provided by Cumpston Serjeant Pty Ltd, and partly from the evidence of Kaye Angel, showing Australian Male Average Weekly Earnings, the earnings of a Motor Mechanic Level 6, the earnings of a Diesel Mechanic (Experienced 3-4 Years) with overtime, and the same without overtime. It also set out the agreed "deferred multiplier", namely 801.4, which would be appropriate (if this approach were adopted) in relation to the period from Anthony's 18th birthday until he turns 65. It gave a figure for "without injury" total earnings, discounted by applying the deferred multiplier, for each of the four specified levels of weekly earnings. It included a worked example for $800 net per week (being 90% of Average Weekly Earnings) discounted by the deferred multiplier (801.4), plus actuarially calculated superannuation, less 15% for vicissitudes. This produced a figure of $702,195.20. Examples of "with injury" loss of earning capacity were then given, being 66% of $702,195, namely $463,448 and 75% of $702,195, namely $526,646.

142 Mr Mighell SC acknowledged that the Court was not "shackled" to the figures for average weekly earnings. Those figures might or might not be found to be of assistance. The Court might prefer to use the earnings of diesel mechanics, which would be higher. Alternatively, the Court might think that the average was too high. Indeed, Mr Mighell SC said:

"In this case two relevant reasons that [the Court] might go down from the average are of course the geographical location of East Gippsland and secondly what we know of the plaintiff before the accident and since the accident concerning his IQ. [The Court] might well form the view and could that the sorts of employment he was going to go into, but for the accident, were not the more highly remunerated forms of employment".[73]

143 However, Mr Mighell SC pointed out that in State of New South Wales v Moss[74], where the plaintiff, a female, had been injured as a 14 year old student, the Court of Appeal had proceeded on the basis that the use by the trial judge, as a starting point, of the average weekly earnings of females in New South Wales was appropriate. Mr Mighell SC also referred me to Walshe v Prest, a recent case involving a 4 year old child, in which Basten JA (with whom Giles JA agreed) said[75]:

"[14] The assessment of future economic loss in relation to a 10 year old child is an exercise which is fraught with difficulty and uncertainty. As explained by Heydon JA in State of New South Wales v Moss [2000] NSWCA 133; (2000) 54 NSWLR 536 at [71]:

'Evaluation of the worth of a loss of capacity to earn - of a lost chance to earn - is of its nature a more imprecise inquiry than calculation of a lost income. It rests on the hypothesis - that the plaintiff will have undiminished capacity - which has been rendered false by events. It does not depend on calculating the income from a particular career which is no longer possible, but in calculating the damage to a capacity to carry on various careers. It is an exercise in estimation of possibilities, not proof of probabilities'.

It is, as his Honour noted, a calculation to be carried out in accordance with the principles set out in Malec v JC Hutton Pty Ltd [1990] HCA 20; (1990) 169 CLR 638.

15. Heydon JA also made reference to the situation with young children, in terms which are apt to apply to the present case, at [84]:

'An illustration of the court's readiness to award damages for diminution of earning capacity arises when very young children are injured. Strictly speaking it would be impossible to prove that the child would have had an earning capacity as an adult or would have exploited it. But it is conventional to rely on the occupations, attitude to life and work histories of parents and other relatives ...'.

'It is much harder to value a chance where, as here, the plaintiff was a school child and the source of income lost is a professional business, not income from labour which is governed by awards or capable of establishment by reference to market rates. But since the obligation to value it cannot be shirked, deficiencies in the materials advanced may be tolerated'.

16. Those difficulties are clearest in the case of a child who has not yet finished her schooling, or even her primary schooling at the date of trial. Those difficulties do not, of course, allow the Court to abandon the necessary assessment, nor did the Defendant suggest otherwise. They do, however, limit the scope for challenge on appeal, because of the imprecise boundaries of the permissible range of damages.

17. In the absence of any basis for variation from the average, the appropriate course is to adopt as a basis for calculation the average weekly earnings at the date of judgment: see Rosniak v Government Insurance Office (1997) 41 NSWLR 608 at 624 (Mason P, Meagher JA agreeing and Clarke AJA also agreeing and adding some further comments at 628)."

Notwithstanding these observations, Mr Mighell SC acknowledged that this Court, at least, was not obliged to have regard to average weekly earnings (or to some variation thereof) at all.

Determination as to Loss of Future Earning Capacity

144 Having considered the parties' respective submissions, I think that it is appropriate to at least commence with the general approach suggested by both the plaintiff and the defendants, rather than just select some lump sum amount with which the Court is "comfortable", as suggested by CGU.

145 In this regard I am conscious that in CSR Readymix (Australia) Pty Ltd v Payne[76] the Victorian Court of Appeal, in applying certain observations made by particular members of the High Court in earlier cases, held that the adoption by the trial judge of what he called a "global approach" and what the Court of Appeal characterised as an "intuitive approach" in relation to the amount of lost earning capacity was erroneous. The factual situation here is more amorphous than in Payne, but still I think that there is enough common ground and enough reliable evidence to warrant taking a somewhat structured approach, though I am mindful of the need to ensure that the taking of such an approach does not lead to over-compensation.[77] Mr Thompson SC himself acknowledged that the Court could "consider" and "take notice of" figures of the kind suggested by the plaintiff and the defendants, albeit, apparently, only as part of some unidentified process of arriving at a figure with which the Court was comfortable. In Loveday v Austin Hospital[78], net average weekly earnings for a female in the retail industry were used by Mandie J to calculate loss of past earnings (over a period of 19 years) for an injured woman who had worked mainly in shops before her accident. I note also the reference to average weekly earnings (as defined) in s 28F of the Wrongs Act 1958, although I acknowledge that that section is inapplicable to the present case because the writ was issued before it commenced.[79] On the other hand, in at least three not dissimilar interstate cases relating to injuries to young persons with little or no work history, namely Stone v Clarence Municipality[80], West v Gilliland[81], and Hanlon v Hanlon Enterprises Pty Ltd[82], the trial judge found it impossible to assess economic loss on a "mathematical" basis. Also, in SB v State of New South Wales[83], Redlich J (as his Honour then was) accepted that the multiplier approach should not be used in that case because the plaintiff's claim was too speculative. However, while his Honour based that view in part on the fact that the plaintiff had been injured when she was a minor and had no employment history, he also took into account that she had a pre-existing psychiatric condition which impacted upon her capacity for any form of employment and that her present capacity to undertake employment was uncertain. Further, the plaintiff was 37 years old at the time of trial. The case is thus distinguishable. In any event, without using the multiplier, Redlich J did, for the purpose of assessing both past and future economic loss, have regard to average weekly earnings as set out in a forensic accountants' report.[84] I am comforted in using the mathematical approach as a guide in the present case by the fact that the New South Wales Court of Appeal did the same in the three abovementioned cases relating to injured children, namely Rosniak v Government Insurance Office[85], State of New South Wales v Moss[86] and Walshe v Prest[87], and by the fact that I was told by Mr Mighell SC and Mr O'Dwyer SC (without contradiction from any other counsel) that I was not precluded by any Victorian or other authority from doing so.

146 I note Mr Thompson SC's assertion that average weekly earnings "includes lawyers and stockbrokers", and I note that in Rosniak, supra, there was a discussion of certain statistical evidence which tended to show that there were many more people in the community who earned less than average weekly earnings than there were people who earned more than average weekly earnings. However, I will start with average weekly earnings rather than median weekly earnings, partly because there was evidence of the former but not of the latter and partly because in Rosniak it was held that without detailed expert evidence the Court should not switch from "average" to "median" as a starting point.

147 However, on the evidence in the present case, I think on balance that (even apart from "vicissitudes") I should apply a fairly substantial discount to average weekly earnings in endeavouring to make a fair assessment of Anthony's "uninjured" earning capacity. On the one hand, I accept that there was some slight prospect that Anthony might have become a diesel mechanic had he not been injured. But his school reports, his family circumstances and the evidence of Mr Hodgson and of Ms Angel suggest that this would have been quite unlikely. Mr Mighell SC did not submit with any vigour that I should find otherwise. However I put in the scales in Anthony's favour the small chance that he might have entered this or a similar "high level" trade or some other highly remunerated occupation and so earned more than the average. Far more likely, in my view, is that Anthony would have left school without successfully completing VCE and would have looked for manual work of an unskilled or semi-skilled kind in the East Gippsland area, such as farm labouring or factory process work or basic mechanical work. There is no evidence about present levels of earnings for unskilled or semi-skilled workers in the local area or otherwise, except the evidence in Ms Angel's report to the effect that the award rate for a base grade mechanic is $578.20 per week gross, which is agreed to represent $463.20 per week net, although it seemed to be common ground that wages in East Gippsland were generally lower than average. Anthony would have had some prospects of becoming at least a base grade mechanic had his hand not been injured. Further I think I can proceed on the basis that wage rates (including award rates based on classifications) generally tend to get higher for workers as they gain experience and skill.[88] The recent advent of the federal "Workchoices" legislation may well diminish the significance of awards, but the general proposition should hold true. Further, overtime may have been available to Anthony from time to time. Taking those matters into account, and allowing something for the chance that Anthony might have done much better, I would adopt the figure of $600 net per week for the purposes of the exercise, rather than average weekly earnings. Subject to the ordinary vicissitudes, there is no reason to think that Anthony would not have worked, or tried to work, at least from age 18 until 65 years of age.[89] Superannuation needs to be added. (The undisputed Cumpston Serjeant actuarial material included figures for superannuation based on future earnings of $600 net per week.) Having considered both "good" and "bad" contingencies, I would adopt a figure of 15%, by way of discount, for vicissitudes. Using the actuarial material, the resulting calculation for the present value of Anthony's "uninjured" earning capacity would then be -

148 Turning to the question of the extent to which Anthony's earning capacity has been lost by reason of the injury, I accept Mr Mighell's submission that Anthony has suffered a "substantial loss" of his earning capacity. I note Mr O'Dwyer SC's perhaps even more pessimistic submissions in this regard. It was, I think, common ground that Anthony no longer has (if he ever had) any realistic prospect of becoming a diesel mechanic. However I consider that there is some merit in Mr Thompson SC's submission that Anthony's pleasant and cooperative attitude (together with the potential revealed by his surprisingly good Verbal Comprehension Index Score when tested by Mr Hodgson), may assist him to overcome, to some extent, the difficulties caused by his injury. I accept also that Mr Stapleton and Dr Sillcock were, to some degree, unduly negative and pessimistic, given Anthony's own evidence about the effects of his injury, but I bear in mind that there was no medical evidence to the contrary of theirs. I also take into account that at present Anthony lacks confidence generally, a problem to which, in my view, the accident contributed and which may or may not resolve in the future. However I consider that from time to time Anthony will probably be able to obtain and perform work such as delivery or driving work or security work or farm or factory labouring work, but most likely on a casual or irregular basis and at rates of remuneration generally below what he might have achieved, over time, uninjured. I do not agree with Mr Thompson SC that I should proceed on the basis that, despite Anthony's injury, he is likely to be in (full-time) employment for the bulk of his working life. It is possible that he will be, but in my view Anthony has been rendered quite vulnerable to unemployment and underemployment as a result of his injury.

149 All in all, I consider that a reasonable estimate is that he has lost about two-thirds of his "without injury" earning capacity.

150 Accordingly, on the suggested approach (which, I emphasise, I regard merely as a guide) damages for Anthony's loss of earning capacity would be assessed at 2/3 x $523,778, ie at $349,185.33, rounded off to $350,000.

151 Taking a step back from the suggested approach, I have also asked myself, as a kind of check, whether a figure of $350,000 for Anthony's loss of earning capacity seems appropriate, proportionate and fair to all parties in all of the circumstances. In doing so, I have taken into account the possible return on investment of that sum. Further, I have asked myself the same questions in relation to the total figure of $540,000 which would be produced by adding together the proposed amounts of damages for economic and non-economic loss.[90] The answer is yes in both cases.

Other heads of damages

152 Although Mr Hodgson had given some general evidence about the costs of professional psychological counselling and about the prospect that such counselling might be warranted for Anthony at some time in the future, Mr Mighell SC did not in final submissions mention any claim for compensation for counselling costs or for any other specific or special item of damages. I assume that any such claims have been abandoned.

The Third Party Notice to the Boultons

153 As indicated above, on my findings Mr Lawless' third party notice to the Boultons falls to be dismissed. However, the parties may wish to be further heard as to the costs of that third party notice. I have not needed to make any finding as to whether the insurance cover arranged by the Boultons with CGU failed fully to match the requirements of the lease, as alleged by Mr Lawless. Further, I note that it was only on the first day of the hearing that the Boultons abandoned paragraphs 11 and 12 of their defence to the third party notice (the "reasonable precautions" point).

154 I understand from submissions made by Mr Young at the beginning of the trial[91] that the Boultons may wish to contend (either in this proceeding or elsewhere) that CGU should take some responsibility for the fact that the Boultons have been brought into this case. I note the evidence of Mr Spencer of CGU, called by the Boultons, to the effect that he told Mr Boulton that the cover did match the requirements of the lease. In any event I gather that it may be contended that the third party notice against the Boultons would not have been issued, or would have been discontinued, if CGU had not taken the point that the accident did not occur in connection with the Boultons' business. I express no view at this stage as to whether, on any such basis or at all, CGU could be called upon to pay or contribute to any costs in respect of the third party notice to the Boultons.

155 I simply note that there may be matters such as these on which the parties may wish to make further submissions if the question of the costs of the third party notice cannot otherwise be agreed.

Orders

156 Subject to any submissions from counsel as to the appropriate form of judgment or orders to give effect to these reasons, I propose to give judgment for the plaintiff against the first defendant, Graeme Lawless, for $540,000, comprising $190,000 for pain and suffering and loss of enjoyment of life and $350,000 for loss of future earning capacity. I propose to order CGU to indemnify Graeme Lawless accordingly. I will hear counsel as to any other appropriate orders, including orders to dispose of the claims against and by Sandra Lawless and the claim contained in the third party notice against the Boultons, and as to costs generally.

[1] Some of the "Background" material is derived from medical reports which were tendered by consent, rather than from sworn evidence.

[2] See, eg, page 7 of the latest renewal schedule (part of exhibit B1).

[3] [1988] HCA 44; (1988) 165 CLR 107.

[4] See page 36 of the policy. Emphasis in original.

[5] Compare Enlayde Limited v Roberts [1917] 1 Ch 109; Upjohn v Hitchens [1918] 2 KB 46; QBE Insurance Company Ltd v Dean (1985) 3 ANZ Insurance Cases 60-658; Woodfall, Landlord and Tenant [11.094]; Redfern and Cassidy, Australian Tenancy Practice and Precedents [26100]; Jess, The Insurance of Commercial Risks: Law and Practice, 3rd edition, 2001, pp 162-163.

[6] See Derrington and Ashton, The Law of Liability Insurance, [8.235]-[8.240].

[7] CGU also submits that the policy does not cover Mrs Lawless at all, but it seems to me that that matter is no longer be of any significance.

[8] See CGU's written submissions filed 6 March 2007 and see General Accident Fire and Life Assurance Corporation Ltd v Midland Bank Ltd (1940) 2 KB 388 at 404-405, referred to with approval in Federation Insurance Limited v Wasson [1987] HCA 34; (1987) 163 CLR 303 at 310.

[9] As already mentioned, CGU was made aware of the lease before issuing the endorsement.

[10] Written submissions filed 6 March 2007.

[11] See especially at p 219-220.

[12] See Derrington and Ashton, op. cit at [3-122] and [8-248] and the cases referred to in those paragraphs.

[13] Davis v Young [1986] VicRp 24; [1986] VR 203, 210.

[14] Body Corporate Strata Plan No 4303 v Albion Insurance Co Ltd [1982] VicRp 70; [1982] VR 699; Albion Insurance Company Limited v Body Corporate Strata Plan No 4303 [1983] VicRp 94; [1983] 2 VR 339; Verna Trading Pty Ltd v New India Assurance Company Ltd [1991] VicRp 12; [1991] 1 VR 129; Legal and General Insurance Australia Limited v Eather (1986) 6 NSWLR 390, 407.

[15] [1967] 3 All ER 57.

[16] (1986) 6 NSWLR 390.

[17] [1983] VicRp 94; [1983] 2 VR 339.

[18] Eather, supra, at 403 per Glass JA.

[19] (1969) 90 WN Pt 1 (NSW) 554.

[20] Supra.

[21] At 638-643.

[22] [1991] VicRp 12; [1991] 1 VR 129.

[23] At 156.

[24] At 148.

[25] At 173. See also Eather, supra (1986) 6 NSWLR 390, 407.

[26] [1967] 3 All ER 57.

[27] [1983] VicRp 94; (1983) 2 VR 339 at 343-346.

[28] [1983] VicRp 94; [1983] 2 VR 339 at 340.

[29] [1983] VicRp 94; [1983] 2 VR 339 at 341.

[30] (1986) 6 NSWLR 390, 497.

[31] (1986) 6 NSWLR 390 at 406.

[32] (1986) 6 NSWLR 390 at 407.

[33] [1983] VicRp 94; [1983] 2 VR 339 at 345-346.

[34] [1983] VicRp 94; [1983] 2 VR 339 at 344-345 per McGarvie J (my emphasis). See also Derrington and Ashton, op. cit. at [9.55] and the cases cited at footnote 213 thereto.

[35] [1983] VicRp 94; [1983] 2 VR 339 at 345.

[36] Transcript 287-290.

[37] Transcript, 155.

[38] Transcript, 175.

[39] Indeed, apart from putting in certain documents, CGU did not call any evidence at all.

[40] Transcript p 69.

[41] Ibid.

[42] Transcript p 70.

[43] Transcript p 97, 99.

[44] Transcript p 103.

[45] Transcript p 196.

[46] Transcript p 330.

[47] At p 170.

[48] Compare the industrial situation in Norwich Union Insurance Co Ltd v R & W Products (1969) 90 WN (NSW) 554, on which CGU relied.

[49] Again, compare Norwich, supra.

[50] If the test should be expressed in terms of "indifference", the result is the same: cf Albion Insurance [1983] VicRp 94; [1983] 2 VR 339 at 341 per Young CJ.

[51] Transcript p 301.

[52] Compare Albion Insurance [1983] VicRp 94; [1983] 2 VR 339 at 344.6, 346.1 per McGarvie J.

[53] Report, page 13.

[54] Putting aside, for present purposes, economic loss in relation to work.

[55] [1990] HCA 20; (1990) 169 CLR 638.

[56] Compare Royal Dental Hospital of Melbourne v Akbulut [2002] VSCA 88 at [19], [26].

[57] See Arthur Robinson (Grafton) Pty Ltd v Carter [1968] HCA 9; (1968) 122 CLR 649 at 656-657; Project Developments Pty Ltd v Mitchell [1996] VicRp 13; [1996] 1 VR 213 at 216-217.

[58] See Akbulut, supra at [16]-[19], [26]; cf Wright v Commonwealth of Australia [2005] VSCA 309 at [49]- [50]. I note that neither s 28G of the Wrongs Act 158 nor s 28HA of the Wrongs Act 1958 is applicable to this case because of the date of issue of the writ: see Wrongs Act 1958 s 28L(2)(a) and s 28LAB respectively.

[59] [1990] HCA 20; (1990) 169 CLR 638 (supra).

[60] [2000] NSWCA 133; (2000) 54 NSWLR 536.

[61] See and compare SB v State of New South Wales [2004] VSC 514; (2004) 13 VR 527 at 613.

[62] See State of New South Wales v Moss [2000] NSWCA 133; (2000) 54 NSWLR 536 at 554 [72].

[63] Mr O'Dwyer SC accepted that this Court was under no obligation to take this approach.

[64] Complying with s 28I of the Wrongs Act 1958.

[65] See para 96 above.

[66] Transcript, p 78. My emphasis.

[67] Exhibit P 5, page 1.

[68] See para 113 above.

[69] I note that such returns would be taxable as income.

[70] Arthur Robinson (Grafton) Pty Ltd v Carter [1968] HCA 9; (1968) 122 CLR 649 at 657; cf Bugge v REB Engineering Pty Ltd [1998] QSC 185; [1999] 2 Qd R 227 at [50]; Morgan v Costello [2004] WASCA 260 at [46], [99]; H. Luntz, Assessment of Damages for Personal Injury, 4th edition, 2000 at [1.9.20].

[71] Thomas v O'Shea (1989) A Tort Rep 80-251 at 68, 701; Morgan v Costello [2004] WASCA 260 at [46]. Compare State of New South Wales v Moss [2000] NSWCA 133; (2000) 54 NSWLR 536 at [66]- [71].

[72] Bugge v REB Engineering Pty Ltd [1999] 2 QB 227; Luntz, loc. cit.

[73] Transcript p 368-369.

[74] [2000] NSWCA 133; (2000) 54 NSWLR 536, supra at [23]-[27], [89]-[91].

[75] [2005] NSWCA 333 at [14]- [17].

[76] [1998] 2 VR 505 at 508, 513-514.

[77] Compare Arthur Robinson (Grafton) Pty Ltd v Carter [1968] HCA 9; [1968] 122 CLR 649 at 658-659.

[78] [1999] VSC 180.

[79] Wrongs Act 1958, s 28L(2)(a).

[80] Supreme Court of Tasmania, Wright J, 17 February 2003, unreported, BC9300181.

[81] Supreme Court of Queensland, Cullinane J, 18 October 2005, unreported.

[82] [2004] NSWSC 930 at [121].

[83] [2004] VSC 514; (2004) 13 VR 527 at 613.

[84] At 614, [625] and 615, [627].

[85] (1997) 41 NSWLR 608.

[86] [2000] NSWCA 133; (2000) 54 NSWLR 536.

[87] [2005] NSWCA 333.

[88] See, eg, Papadopoulos v Fabian Trial Pty Ltd [1998] VSC 125 at [111].

[89] Compare Papadopoulos v Fabian Trial Pty Ltd [1998] VSC 125 at [118]; Hussan v Keppel Prince Engineering Pty Ltd [2006] VSC 412 at [142]. I was not invited to perform alternative calculations on the basis that Anthony would have entered the work force before the age of 18, but I take into account generally this possibility.

[90] Compare Arthur Robinson (Grafton) Pty Ltd v Carter [1968] HCA 9; (1968) 122 CLR 649 at 657-661; Gamser v Nominal Defendant [1977] HCA 7; (1977) 136 CLR 145 at 149-150, 158-160. I have even taken into account the prospect of investment at a rate somewhat higher than the 5% posited by CGU.

[91] Transcript pp 17-18.

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