Qantas Airways Ltd v Lisica

Suitors' Fund Act 1951 LEGISLATION CITED: Workers Compensation Act 1987 Supreme Court Rules 1970 Uniform Civil Procedure Rules 2005

Chappel v Hart [1998] HCA 55; (1998) 195 CLR 232 Coulton v Holcombe [1986] HCA 33; (1986) 162 CLR 1 Fightvision Pty Ltd v Onisforou [1999] NSWCA 323; (1999) 47 NSWLR 473 Jobling v Associated Dairies Ltd [1982] AC 794 K-Mart Australia Ltd v McCann [2004] NSWCA 283 Malec v J C Hutton Pty Ltd [1990] HCA 20; (1990) 169 CLR 638 CASES CITED: Mallet v McMonagle [1970] AC 166 Medlin v State Government Insurance Commission [1995] HCA 5; (1995) 182 CLR 1 Purkess v Crittenden [1965] HCA 34; (1965) 114 CLR 164 Seltsam Pty Ltd v Gahleb [2005] NSWCA 208; (2005) 3 DDCR 1 State of New South Wales v Burton [2006] NSWCA 12 Watts v Rake [1960] HCA 58; (1960) 108 CLR 158 Wiki v Atlantis Relocations (NSW) Pty Limited [2004] NSWCA 174; (2004) 60 NSWLR 127

PARTIES: Qantas Airways Ltd - Appellant Mark Lisica - Respondent

COUNSEL: Mr JE Maconachie QC with Mr NE Chen for the Appellant Mr AJ Lidden SC with Mr MAJ Daley for the Respondent

SOLICITORS: Home Wilkinson Lowry - for the Appellant Brydens Law Office - for the Respondent

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40799/06 DC 572 of 2004

BEAZLEY JA IPP JA McCOLL JA Tuesday 18 December 2007 QANTAS AIRWAYS LTD v MARK LISICA Judgment

1 BEAZLEY JA: I have had the advantage of reading in draft the judgment of McColl JA. As her Honour has set out the factual matters relevant to the issues raised before this Court, I will only deal with the facts insofar as is necessary for the issues that I propose to discuss. 2 Senior counsel for the appellant submitted that there were two short points on the appeal: first, it was submitted that the trial judge, Quirk DCJ, erred in the methodology that she applied to the assessment of past and future economic loss and that her Honour also made a factual error in that assessment. This submission was principally directed to the manner in which her Honour assessed the probability that the respondent would have obtained a qualification as a "licensed aircraft maintenance engineer" (the LAME qualification). It was submitted that this was the principal error on the appeal. 3 Secondly, it was submitted that her Honour should have determined that there was a causative input to the respondent's psychiatric/psychological condition from the breakdown of his marriage and that he should only have been compensated for that element caused by the psychiatric injury. It was submitted that although there was no doubt that the respondent's earning capacity was significantly impaired because of the orthopaedic injuries that he suffered, her Honour failed to investigate the extent to which the respondent's psychiatric injury was affected by his psychiatric condition and further, failed to differentiate the extent to which the psychiatric injury itself was caused by the accident, as compared to having been caused by the marriage breakdown. In this regard, the appellant contended that her Honour found that the impairment to the respondent's earning capacity was the product not only of the orthopaedic injuries but, in some undifferentiated way, was exacerbated or aggravated by his psychiatric injury: see her Honour's findings in respect of non economic loss. 4 As becomes apparent later in my reasons, it is necessary to understand precisely the scope of this appeal. In the appellant's amended notice of appeal, challenges were made to the award of damages generally. However, they are specifically drafted to state that the challenge to her Honour's assessment of damages was made "in particular" to the awards for past and future economic loss. 5 In the Rule 35.1 affidavit, the appellant's solicitor states in para 3: "The appellant challenges her Honour's awards in respect of past and future economic loss and past and future superannuation loss on the basis that her Honour misdirected herself." 6 In para 4 of the affidavit, it is stated that factual errors were made and in para 5, there is a challenge to her Honour's methodology. In para 6, it is stated: "The appellant will argue that past economic loss should be reduced by approximately $50,000.00; future economic loss by approximately $250,000.00 and past and future superannuation by approximately $30,000.00."

There is no reference to general damages. 7 The appellant, in its written submissions, states it must follow that: "… by reason of the trial judge's failure to deal with the psychiatric evidence from Dr Galambos and Dr Walden and the role of that condition in the non-economic loss finding, that the remaining assessments proceeded on a similar basis. Assessments approached in this way vested liability in the appellant for which in law it is not responsible." 8 The appellant also handed up, at the commencement of the hearing, a recalculated schedule, entitled "Damages calculation". Presumably, that schedule was intended by the appellant to comply with Pt 51 r 46(3) of the Supreme Court Rules 1970, which provides: "(3) Where the amount of damages claimed or awarded, or which should have been awarded, in respect of the death of, or bodily injury to, a person is an issue:

(a) the appellant's written submissions shall state: (i) the manner in which the damages were assessed, or in the case of trial by jury, may be supposed to have been assessed, (ii) the amounts of damages that are in issue in the appeal, (iii) briefly but specifically, the basis of the challenge, (iv) where applicable - the alternative assessment contended for, and (v) an estimate of the likely length of hearing, and

(b) the respondent's written submissions shall state: (i) the extent to which the assessment will be challenged or supported by cross-appeal or contention, (ii) any alternative assessment sought, and briefly but specifically, the basis for it, and (iii) the respondent's estimate of the likely length of hearing." 9 The Court of Appeal's Practice Note 1 further directs that: "In addition to the provisions under Part 51 r 46(3), written submissions in appeals against damages in personal injury cases, whether or not liability is also in issue, should include: · the grounds of appeal which will be argued; and · in respect of any finding of fact by the primary judge which is challenged: - the finding of fact which is challenged; - in narrative form the findings of fact which it is argued the Court of Appeal should make in substitution for the finding challenged; - the evidence and references to transcript which support such substituted finding of fact; and - where appropriate, a recalculation of financial loss, including precise particulars of claims made for components of the judgment which require mathematical calculation, such as wage loss and claims for interest." (Emphasis added) 10 Insofar as the appellant's schedule made reference to non-economic loss, there was a statement that the maximum amount that may be awarded pursuant to s 151G(3) of the Workers Compensation Act 1987 was $246,900. The schedule did not identify the amount that the appellant contended was the appropriate award of damages. Having regard to the appellant's submissions and the schedule of damages, it would have been reasonable to conclude that no challenge was being made to the quantum of damages awarded for non-economic loss. 11 During the course of the appeal, senior counsel for the appellant submitted that a significant element in the psychiatric case had been overlooked and the psychiatric case was essential, not only to non-economic loss, but also economic loss. It was submitted that if that was correct, then the psychiatric condition would have to be taken into account in the assessment of future economic loss, insofar as the respondent claimed that claim should be determined on the basis that the respondent would have become qualified and paid at the rate of a licensed aircraft maintenance engineer. He reiterated that the whole award of damages was in issue, but emphasised that it was essentially the trial judge's assessment of economic loss that was challenged.

First issue on the appeal: failure to apply the correct methodology to the assessment of economic loss 12 The appellant submitted first, that her Honour failed to approach the assessment of economic loss in the manner required by Malec v JC Hutton Pty Ltd [1990] HCA 20; (1990) 169 CLR 638; and secondly, to the extent that her Honour made an assessment, she failed to properly take into account the evidence that established that the probability that the appellant gain his LAME qualifications, and, more particularly, the probability that he would be employed, at least in the near future, by the appellant in that capacity, were low. It is convenient, in the first instance, to consider the underlying factual basis upon which the appellant advanced this submission. 13 There were two methods by which a person could become a licensed aircraft maintenance engineer. The first involved the appellant sponsoring a person to undertake the necessary qualifications. The second was that, if the appellant did not sponsor an individual, that person could meet the cost of training personally. It appears that if the appellant sponsored a candidate, that person would be paid at the higher rate applicable for a qualified licensed aircraft maintenance engineer. Previously, the same position had applied in relation to a person who had undertaken the necessary qualifying certificate at that person's own expense. However, that had changed in the years immediately before the hearing. Mr Haines, a licensed aircraft maintenance engineer employed by the appellant, explained that the appellant no longer automatically paid those candidates who had obtained their qualifications themselves at the rate of a licensed aircraft maintenance engineer, as had been the case previously. He further explained that one method of ensuring that the appellant would accept the qualification and pay the candidate at the rate of a licensed aircraft maintenance engineer, was to obtain the approval of the manager of the department in which the candidate worked. 14 This evidence was confirmed by Mr Hespe, the appellant's Manager, Aircraft Customer Services, based at Sydney. Mr Hespe's job also included supervision and monitoring of the line maintenance program, which involved the servicing of aircraft during transit so that the aircraft could depart in a serviceable condition. The persons involved in undertaking this work included aircraft maintenance engineers and licensed aircraft maintenance engineers. Mr Hespe said that the present situation within the appellant's business was that it was not automatic that an employee who had personally obtained the LAME qualifications would have been paid at the rate for a licensed aircraft maintenance engineer. He said it depended upon demand. Mr Hespe gave evidence that in the 12 months previous to his giving evidence, his section had not employed any new licensed aircraft maintenance engineers, although he conceded that he had honoured a commitment that had previously been given to some employees who had gained their qualifications that they would be paid at the rate of a licensed engineer. He accepted that as a matter of natural attrition of the workforce, it was likely that at some stage there would be a further demand for licensed engineers. 15 The respondent had been employed by the appellant for approximately 18 years, having undertaken his apprenticeship with the appellant. At the time of the accident, he was employed as an aircraft maintenance engineer. At some time (it appears years previously), in an attempt to commence to qualify as a licensed aircraft maintenance engineer, he undertook the CASA examinations for two out of the compulsory 11 subjects necessary to obtain the qualifications. He failed both. The respondent said that in the period 2000-2002, there had been a "push" within the company to become licensed. He said he may have been "given a course by [the appellant]". He said that he had discussed the matter with his immediate supervisor. Presumably, this was a reference to being sponsored by the appellant. He said that at that time he had an accumulation of leave that he would have used to undertake a course and in this regard, he had earmarked for himself as having qualified by about 2003-2004. The respondent recognised there was a possibility that even if he had obtained his licence, he would not have been employed by the appellant as such. There was no evidence, other than the respondent's, that he would have been sponsored by the appellant. 16 The trial judge accepted the respondent's evidence as to his future intentions. She said: "This, combined with the evidence of the two witnesses [of the appellant], and an absence of any criticism of [the respondent's] work performance or skills, leads me to find that he would most probably have become qualified as a licensed aircraft maintenance engineer within a couple of years of his accident, had he not been injured. There is a small chance that something may have prevented him from either qualifying, or being paid as a licensed aircraft maintenance engineer, and I assess that possibility as only ten per cent." 17 Later, her Honour said: "As I have said, I assess a ninety per cent chance that the [the respondent] would have qualified as a licensed aircraft maintenance engineer, probably around at the beginning of 2004." 18 Leaving aside for one moment the question as to whether her Honour approached the assessment of economic loss in accordance with principles in Malec v Hutton, it was submitted that this assessment, and particularly the finding that the respondent would probably have obtained his qualifications as a licensed engineer at the beginning of 2004, did not accord with the facts. In short, it was said that the respondent had worked for the appellant for 18 years without obtaining his qualifications. He had not approached the relevant manager of his department in order to ascertain whether the appellant would sponsor him to undertake his licence qualifications. He had spent a considerable sum of money ($10,000) on obtaining qualifications as a licensed scuba diving instructor but had not taken any steps to pay for himself to qualify as a licensed engineer. 19 It was also submitted that, even if he had obtained his qualifications by the beginning of 2004, it was unlikely that he would have been appointed as, or paid at the rate of, a licensed engineer until, at least, some time later than 2004. Finally, it was submitted that when regard was had to the respondent's various activities, including his commitment to the Army Reserve, and the fact that in the period prior to his accident he had obtained his scuba diving instructor certificate, as well as becoming a licensed investigator`, it was apparent that the respondent's future did not involve him becoming a licensed engineer. Senior counsel for the appellant acknowledged that her Honour had taken into account the respondent's activities to which I have just referred, but had failed to accord them the weight that it was necessary in order to have a realistic overview of the respondent's economic case. I will return to this issue. First, it is necessary to determine whether her Honour failed to correctly apply the principles stated in Malec v Hutton. 20 It was submitted that in making her assessment of the prospect that the respondent would have become a licensed engineer, her Honour used a "probabilities historical approach" rather than a "loss of chance approach" as required by Malec v Hutton. This was said to be the central flaw in her Honour's approach. The central dispute in relation to the respondent's claim on economic loss, past and future was the prospect of the respondent being promoted. It was submitted that her Honour's approach, set out at [15] above, was considered to be wrong. It was contended that the correct approach was, in accordance with Malec v Hutton, to assess the loss of the chance that the respondent would have qualified as, and been paid at, the rate of a licensed aircraft maintenance engineer.

Malec v Hutton 21 In Malec v Hutton, Deane, Gaudron and McHugh JJ, at 640, identified the issue on the appeal as being: "… the valuation of a plaintiff's damage, caused by the tortious conduct of the defendant, after it is found that it is more likely than not that the damage would have occurred in any event as the result of conditions or events for which the defendant is not legally responsible." 22 In Malec v Hutton, the plaintiff, a labourer in a meat works, contracted acute brucellosis during the course of his employment. Brucellosis has two possible sequelae. One is in the development of depressive illness. The other is the development of an organic condition that results in a degenerative like condition in the spine. The trial judge had found that the plaintiff had contracted brucellosis sometime between 1975 and 1977 as a result of the defendant's negligence, but by 1983, the condition was no longer present. However, by 1982, the plaintiff had developed symptoms in his cervical and lumbar spine. He had also developed a neurotic illness. The trial judge was not satisfied that the cervical and lumber condition was a consequence of contracting brucellosis, but was satisfied that the neurotic condition was "precipitated by brucellosis". Nonetheless, he found that the neurotic condition from which the plaintiff was suffering as at the date of trial, was not related to the brucellosis that he had contracted in the period 1975-1977. 23 On appeal, it was held that the neurotic condition was caused by depression induced by the acute brucellosis. By majority, it was also held that by reason of the plaintiff's personality it was: "… likely that [by the age of 44] the development of symptoms from his deteriorating back condition would have produced a similar neurotic condition even if he had never contracted the brucellosis." 24 Accordingly, it was held that the plaintiff was not entitled to economic loss beyond his forty-fourth birthday. The High Court said that the appellate court thereby erred in so limiting his economic loss. In doing so, the High Court distinguished between the approach to the assessment of damages in the case where an event has or has not occurred, and that which must be undertaken where it is alleged that an event would or would not have occurred, or might or might not yet occur. It is necessary to set out their Honour's explanation, at 643, of the correct approach in the latter case in full: "The future may be predicted and the hypothetical may be conjectured. But questions as to the future or hypothetical effect of physical injury or degeneration are not commonly susceptible of scientific demonstration or proof. If the law is to take account of future or hypothetical events in assessing damages, it can only do so in terms of the degree of probability of those events occurring . The probability may be very high - 99.9 per cent - or very low - 0.1 per cent. But unless the chance is so low as to be regarded as speculative - say less than 1 per cent - or so high as to be practically certain - say over 99 per cent - the court will take that chance into account in assessing the damages. Where proof is necessarily unattainable, it would be unfair to treat as certain a prediction which has a 51 per cent probability of occurring, but to ignore altogether a prediction which has a 49 per cent probability of occurring. Thus, the court assesses the degree of probability that an event would have occurred, or might occur, and adjusts its award of damages to reflect the degree of probability . The adjustment may increase or decrease the amount of damages otherwise to be awarded. See Mallett v McMonagle ; Davies v Taylor ; McIntosh v Williams at pp 550-551. The approach is the same whether it is alleged that the event would have occurred before or might occur after the assessment of damages takes place." (Citations omitted; emphasis added) 25 In determining how that approach was to be applied to the facts in Malec v Hutton their Honours stated, at 644-645: "It is impossible to conclude, however, that it was 100 per cent certain that the plaintiff's back condition and consequent unemployability would have precipitated a similar neurotic condition. On the evidence and the findings of the majority of the Full Court, the chance that a similar neurotic condition would actually have resulted from these two events occurring may well be thought to have been far from overwhelming. True it is that the plaintiff developed a neurotic condition as the result of contracting brucellosis. But that disease resulted in suffering which was prolonged and severe. It by no means follows from what occurred as the result of his contracting brucellosis that there is an overwhelming likelihood that another event or other events would have precipitated a similar neurotic condition. First, there was a substantial chance that, even if the plaintiff's back had made him unemployable, he would have gone through life without suffering from a neurotic condition similar to his present condition. Secondly, in determining the chance that unemployability as the result of his back condition would have similar neurotic condition, it is necessary to bear in mind that more than one probability is involved. There is the degree of probability that the plaintiff would have become unemployable in any event as the result of his back condition and there is the degree of probability that the happening of that occurrence would have precipitated a neurotic condition. When those probabilities are combined, the chance that the plaintiff would develop a neurotic condition decreases exponentially. If, for example, and only by way of illustration, there was a 75 per cent probability of his becoming unemployable by reason of his back condition even if he had not contracted brucellosis and a 75 per cent chance that that unemployability would have caused a similar neurotic condition, there was only a 56.25 per cent chance (75 per cent x 75 per cent) that, if he had not contracted brucellosis, he would have developed a similar neurotic condition." 26 Brennan and Dawson JJ agreed with the majority judgment ,subject to their own observations as follows. Their Honours referred to Mallet v McMonagle [1970] AC 166, where Lord Diplock said at 176: "The role of the court in making an assessment of damages which depends upon its view as to what will be and what would have been is to be contrasted with its ordinary function in civil actions of determining what was. In determining what did happen in the past a court decides on the balance of probabilities. Anything that is more probable than not it treats as certain. But in assessing damages which depend upon its view as to what will happen in the future or would have happened in the future if something had not happened in the past, the court must make an estimate as to what are the chances that a particular thing will or would have happened and reflect those chances, whether they are more or less than even, in the amount of damages which it awards." (Emphasis added) 27 Their Honours stated, at 640, that it was undesirable that damages be assessed on the footing of an evaluation expressed as a percentage. Their Honours then said that: "Damages need not be assessed by first determining an award on the footing that the hypothetical situation would have occurred and then discounting the award by a selected percentage. Damages founded on hypothetical evaluations defy precise calculation." 28 Senior counsel for the appellant submitted that her Honour's approach was erroneous because, rather than assessing the degree of probability that the respondent would have qualified as a licensed aircraft maintenance engineer and have been paid for at the rate for a licensed engineer, she found, in effect, as "an historical fact", that the respondent would have become so qualified, and then deducted a vicissitude for the possibility that he may not. 29 It was submitted that the error is demonstrated when it is recognised that a finding on the probabilities is not a finding of a "100 per cent chance". Rather, it is a finding that there was more than a 50 per cent chance, say, a 60 per cent chance that the respondent would have become qualified. It was submitted that that finding was then converted by her Honour into a 100 per cent chance, from which she deducted a 10 per cent possibility that the "100 per cent chance" may not happen. 30 It was submitted that that was a very different approach from making an assessment as to the probability that an event (in this case the attainment of the qualifications as a licensed engineer) would have occurred or might occur. In brief, this submission amounted to a contention that the trial judge in this case had made the same error as had been the subject of correction by the High Court in Malec v Hutton. 31 If the matter was left at that passage of her Honour's judgment, the appellant's submissions would have some attraction. However, I am not satisfied that her Honour made such an error. The judgment has to be read as a whole and allowances must be made for any infelicity of expression. This is more particularly so when a judgment is, as was the case here, delivered ex tempore. As I have set out above, her Honour, at 13, specifically stated that she assessed "a ninety per cent chance that the plaintiff would have qualified as a licensed aircraft maintenance engineer, probably around the beginning of 2004". That is a direct expression of the approach required by Malec v Hutton. Her Honour repeated this at 22-23, when she stated that she had found "a 90% probability that the plaintiff would have become a licensed aircraft maintenance engineer". 32 I accept the argument of senior counsel for the appellant, that to understand her Honour's judgment in this way, overlooks the initial alleged error of converting a probability into a 100 per cent chance and then deducting a 10 per cent possibility. Nonetheless, for the reasons I have given, I have considered that her Honour did not make that error. I consider that her Honour was aware that she had to assess the probability of the future event occurring and did so. Rather than reading the first passage in the judgment about which complaint is made in the way the appellant contends, I consider that her Honour was assessing the likelihood that the respondent would have obtained his qualifications as a licensed aircraft maintenance engineer and the probability of his doing so was not absolute, but a 90 per cent chance. 33 My conclusion that her Honour did not make the error is reinforced by her finding (at 10) that the respondent was "a very ambitious and driven man and … someone who wished to further himself and to increase his income". This finding was made in respect of the claim for economic loss arising out of his inability to continue to work as a scuba diving instructor or as a private investigator, but nonetheless was a statement of the impression that her Honour had formed of him, an impression which she said was consistent with the impression that had been gained by the medical witnesses in the case. 34 Accordingly, I am of the opinion that no error has been shown in that aspect of her Honour's judgment. It is a different question, however, as to whether her Honour's assessment of the "90 per cent chance" was erroneous, in the sense of falling outside the undoubtedly wide range available in making an evaluative assessment. I will deal with this issue below, because the question raised by the "second issue" is also relevant to that question.

The second issue on the appeal 35 Senior counsel for the appellant submitted that the trial judge failed to recognise that the psychiatric effects associated with the breakdown of the respondent's marriage has had an impact on his earning capacity. It was submitted that the evidence established that the respondent was going to suffer a psychiatric problem in any event, so that the respondent thereby bore the persuasive burden to establish that all of the psychiatric sequelae was because of the orthopaedic injuries in relation to the accident, and that he had failed to do so: see Watts v Rake [1960] HCA 58; (1960) 108 CLR 158; Purkess v Crittenden [1965] HCA 34; (1965) 114 CLR 164; Malec v Hutton. 36 A challenge was also made to her Honour's award in respect of future loss of earnings as a diving instructor. 37 There was no dispute at trial or on the appeal that the respondent suffered significant orthopaedic injuries. The trial judge referred to the dispute between the two radiologists as to whether the pathology in the respondent's left hip was a labral tear, but noted that most of the expert surgeons and orthopaedic specialists accepted that that was the case. Her Honour commented that whatever the pathology be in the hip or back, "he has, as a consequence of one or the other, a significant atrophy of his left leg". 38 Her Honour observed that all the medical witnesses had expressed the opinion that the respondent was fit for light work that did not require standing for long periods or heavy lifting. As at the date of trial, the respondent was earning $200 net per week. The respondent's counsel, Mr Lidden, had conceded before the trial judge that the respondent had a greater earning capacity than he was utilising (as at the date of trial) and submitted that his earning capacity was $450 per week. Although this was not recorded in her Honour's judgment, Mr Lidden informed the court that the respondent had submitted to her Honour that his retained earning capacity was $500 per week. There was thus little difference between the parties on that issue. The real issue raised on the appeal was the alleged failure of her Honour to properly deal with the psychiatric injury and to determine how that should have been taken into account on the assessment of economic loss.

The psychiatric evidence 39 The respondent's general practitioner, Dr Ong, referred the respondent to Dr Galambos, psychiatrist, for treatment on 30 July 2003. Dr Galambos conducted an assessment of the respondent on 1 October 2003, followed by a review on 4 March 2004. Dr Galambos reported that the respondent described symptoms consistent with chronic pain disorder and major depressive disorder. In his report dated 6 July 2004, Dr Galambos expressed the view that: "Whilst [the respondent's] chronic pain disorder and major depressive disorder are likely to have developed in the context of both the workplace injury and the marital disruption, the former clearly has made a significant contribution to these conditions. He is certainly unlikely to have developed the pain disorder if not for the workplace injury. Whilst his personality structure makes him vulnerable to developing a major depressive order , he would have had his work to fall back on if his marriage had broken up. If he had retained the capacity to work, this may have compensated for the resulting distress. It was unclear to me whether there had been any association between the workplace injury and the subsequent marital breakdown." (Emphasis added) 40 Four matters are to be gleaned from this report. First, the workplace injury had made a significant contribution to the respondent psychiatric injury. Secondly, the pain disorder was unlikely to have developed but for the workplace injury. The respondent's personality structure made him vulnerable to developing a major depressive order. Thirdly, had he not been injured, it was possible that he would have thrown himself into his work and that would have compensated for the resulting distress. Finally, Dr Galambos did not make a connection between the workplace injury and the marital breakdown. It is important to emphasise that there was no diagnosis by Dr Galambos that the respondent had a pre-existing disability. Rather, he had a vulnerable personality that predisposed him to a particular psychiatric outcome should traumatic (including emotionally traumatic) events occur in the future. 41 The trial judge extracted this passage in her judgment at 14, finding that his psychiatric condition had been exacerbated by the breakdown of his marriage. 42 The appellant retained Dr Walden, psychiatrist. In her report dated 17 November 2004, Dr Walden diagnosed the respondent as suffering from an Adjustment Disorder with Depressed Mood manifesting itself more as a marked irritability rather than as overt depression, which she considered reflected the impact of personality style on his illness. Dr Walden considered that the respondent's psychiatric condition related in part to the work accident and was also significantly contributed to by the breakdown of his marriage. She reported that the respondent described: "… irritability, frustration that he cannot take part in previously enjoyed pursuits, sleep disturbance, fluctuating weight and appetite, a subjective sense of reduced concentration and poor libido." 43 Dr Walden considered that on clinical grounds, 50 per cent of the Adjustment Disorder was related to sequelae of his injury and 50 per cent to the breakdown of his marriage, which was not related to his injury. Dr Walden did not express any view as to whether the respondent's psychiatric condition had any effect on his ability to work. Dr Walden did not give any prognosis as to whether the psychiatric condition was likely to resolve. 44 The respondent contends that if the appellant wished to contend that the respondent had a pre-existing condition which would manifest itself in the future, it had an onus to establish that by evidence in accordance with the principles stated in Watts v Rake.

Watts v Rake 45 As is clearly stated in Watts v Rake, the onus is on a plaintiff to prove the damage suffered. In that case, Dixon CJ observed, at 160, that: "If the disabilities of the plaintiff can be disentangled and one or more traced to causes in which the injuries he sustained through the accident play no part, it is the defendant who should be required to do the disentangling and to exclude the operation of the accident as a contributory cause." 46 Menzies J explained, at 164, that: "… it is for the defendant to prove that before the accident the plaintiff was in a condition that, without the accident, would have led to his post-accident state of health."

His Honour further observed, at 164, that a negligent defendant takes his victim as he finds him and must pay damages accordingly.

Purkess v Crittenden 47 Watts v Rake was considered by the High Court in Purkess v Crittenden. There, Barwick CJ, Kitto and Taylor JJ observed, at 168 that in Watts v Rake: "It was, in effect, pointed out that it is not enough for the defendant merely to suggest the existence of a progressive pre-existing condition in the plaintiff or a relationship between any such condition and the plaintiff's present incapacity. On the contrary it was stressed that both the pre-existing condition and its future probable effects or its actual relationship to that incapacity must be the subject of evidence (i.e. either substantive evidence in the defendant's case or evidence extracted by cross-examination in the plaintiff's case) which, if accepted, would establish with some reasonable measure of precision, what the pre-existing condition was and what its future effects, both as to their nature and their future development and progress, were likely to be. That being done, it is for the plaintiff upon the whole of the evidence to satisfy the tribunal of fact of the extent of the injury caused by the defendant's negligence." 48 In this case, there was no pre-existing condition. Rather, this was a case where the respondent's accepted psychiatric injury had two causes and the respondent had a vulnerable personality. 49 At this point it is necessary to return to the manner in which the case was run at trial, and her Honour's judgment. Senior counsel for the appellant could not state affirmatively to the Court that the case that he was now advancing on the psychiatric injury was put to the trial judge. That statement was very appropriately made. He said, however, that the cross-examination of the respondent was directed to establishing that the respondent's psychiatric condition affected his work capacity. The trial judge appears to have understood that this challenge was directed to the question of mitigation and dealt with it on that basis. If such a significant challenge is to be made to a trial judge's judgment, the Court needs to be satisfied that the matter was properly an issue raised before the trial judge. Otherwise, the principles in Coulton v Holcombe [1986] HCA 33; (1986) 162 CLR 1 apply. Nonetheless, the matter was argued on the appeal without demur from counsel for the respondent, and therefore I propose to deal with it. 50 It seems to me that the evidence in relation to the respondent's psychiatric injury raises two issues. First, her Honour found that part of that injury was due to the accident. Secondly, there was evidence that the respondent had a vulnerable personality that predisposed him to psychiatric illness. 51 The first issue raises a question of disentanglement, as discussed in Watts v Rake and Purkess v Crittenden. This was discussed in depth by Ipp JA in Seltsam Pty Ltd v Gahleb [2005] NSWCA 208; (2005) 3 DDCR 1. I do not propose to repeat what his Honour said. Although that part of the respondent's psychiatric injury that was attributable to the marriage breakdown was not strictly a pre-existing condition, it was a condition that manifested itself at the same time, but from a different event. 52 Her Honour made a finding to that effect. It, therefore, needed to be taken into account. It is not apparent that her Honour did so. It was relevant to the question of the likelihood that the respondent would have qualified as a licensed aircraft mechanical engineer. As to the second, her Honour should either have had regard to his vulnerability in the assessment of chance that the respondent would have become so qualified, or by way of a further discount reflected in the assessment of vicissitudes. However, the appellant appears to have confined its submissions to the former and accordingly, I propose to consider the matter on that basis.

New trial or reassessment 53 The question that next arises is whether there should be a new trial, or whether this Court is in a position to reassess damages. The appellant's notice of appeal seeks those orders in the alternative. Senior counsel for the appellant did not submit that this Court could not reassess damages, but his preferred position, clearly, was that it was a matter that should be remitted for re determination of damages. In my opinion, this Court is in a position to reassess. The trial judge accepted the respondent as a witness of credit and recorded her favourable impression of his work ethic. Neither psychiatrist was called to give evidence and her Honour was required to reach a determination solely on the medical reports. Leaving aside the question of general damages, I cannot see why this Court, accepting her Honour's credit finding and her favourable impression of the respondent, is not in as good a position as the trial judge to reassess economic loss. 54 It might be argued that a proper assessment of general damages would require an assessment of the respondent on the basis of demeanour. However, I am of the opinion that her Honour's judgment sufficiently deals with that matter and, the evidence as to the effect that his marriage breakdown had on him is extensively covered in the medical reports. Accordingly, I consider that it is appropriate for this Court to reassess damages. 55 In my opinion, the appellant's arguments that her Honour erred in the evaluative assessment of the probability that the respondent would have gained his qualifications and be paid as a licensed aircraft maintenance engineer, is compelling, although I would not accept the "evaluation" advanced on behalf of the appellant of 10 per cent. In my opinion, given the trial judge's findings that the respondent was driven and ambitious and concerned to increase his income, but given that part of the respondent's psychiatric injury was not attributable to the accident, I would assess that probability at 50 per cent. 56 In reaching this conclusion, I have kept in mind that Dr Walden, in particular, did not express an opinion as to how the psychiatric injury affected the respondent's ability to undertake his LAME qualifications, or how the psychiatric injury attributable to his marriage breakdown, interfered with that capacity. I have also kept in mind that Dr Walden expressed the view that the respondent's psychiatric condition exhibited itself mostly in the form of irritability. Nonetheless, commonsense would indicate that a person exhibiting signs of irritability in the circumstances discussed by Dr Walden had an impaired ability to undertake such qualifications. I have also reached this conclusion notwithstanding that Dr Galambos indicated that because of the physical injury, the respondent did not have his work to throw himself back into. I am of the opinion that the trial judge's finding as to the effect of the psychiatric injury, even on the assumption that she accepted or substantially accepted Dr Galambos' report, was such as to require her to give some effect to the fact that the respondent had a psychiatric condition, part of which was attributable to an event other than the appellant's negligence. 57 There is another question, as to when the respondent would be likely to gain his LAME qualifications and be paid on the basis of being qualified. In my opinion, the evidence did not support a finding that that would have occurred in 2004. Indeed, the evidence was nebulous in the extreme on this point, and to the extent that anything firm could be said about it, the likelihood of the respondent being paid as a licensed aircraft maintenance engineer, even had he gained his qualifications in 2004, was that it was more likely to be at a later date rather than earlier. 58 On the positive side, from the respondent's point of view, there also needs to be put into the equation the fact that the respondent was a long-time employee of the appellant and there was no evidence that his work performance was otherwise than satisfactory. 59 In those circumstances, making an assessment as best I can, I would assess that the respondent would be paid as a licensed aircraft maintenance engineer within four years from the date of trial, that is, in 2010. Accordingly, I would find that the respondent was entitled to have his economic loss assessed on the basis that as from 2010, there was a 50 per cent probability that he would be earning at the rate of a licensed aircraft maintenance engineer. 60 The next question is of the award that was made in respect of the loss of income as a diving instructor. In my opinion, no error has been shown in her Honour's assessment of this claimed loss. The assessment of the diving award may have been generous, when compared to the respondent's previous earnings from that activity. Nonetheless, her Honour was entitled to accept the evidence of the respondent as to what he could earn in that capacity. Further, her Honour markedly reduced the hours that he claimed he would work at this activity in a way which reflected a realistic assessment of the evidence, and in particular, of the respondent's domestic circumstances. 61 That leaves two questions: the first relates to the award of non-economic loss; the second relates to the question of costs. 62 I have set out in some detail above the manner in which this matter came before the Court, because it seemed to me at the commencement of the appeal that the issues involved related to economic loss. The rules of Court and practice notes are promulgated for good reason and should be complied with. However, as the appellant raised non-economic loss in its submissions before the Court and counsel for the respondent did not object, I consider, for the reasons already given, that this Court is in a position to re-assess non-economic loss. 63 I consider that there should be a reduction in the award of non-economic loss to take account of the effects of that part of the psychiatric injury not attributable to the appellant's negligence. I consider that a ten per cent reduction should be made in this regard, so that the respondent's non-economic loss should be assessed as 25 per cent of a most extreme case. 64 As to costs, I am not satisfied that the issue relating to the respondent's psychiatric condition was conducted before the trial judge in the same way as it was conducted before this Court. That is a relevant factor to be taken into account, in determining whether the appellant should have the whole of its costs in accordance with r 42.1 of the Uniform Civil Procedure Rules 2005, which states that costs follow the event, unless the Court makes some other order. If that was the only issue on the trial, I would have been inclined to make some other order. However, the appellant has succeeded on the first issue, insofar that I have concluded that her Honour's evaluation required to be undertaken pursuant to the principles stated in Malec v Hutton was outside an appropriate evaluation, having regard to the facts that were established in the case. 65 In the end result, although the argument on the psychiatric issue appears to have been put differently to this Court, the appellant has been successful in having the award of damages reduced. This is not only because of the psychiatric injury, but also because of her Honour's error in the evaluation of the loss of a chance that the respondent would be paid at the rate applicable to a person with LAME qualifications, by having regard to his work history and the policy of the appellant as to payment at that rate. I have decided, on balance, therefore, that the appellant should have its costs of the appeal. 66 Finally, I should advert to the challenge to the awards for superannuation. As the quantum of these awards depends upon the awards for past and future economic loss, it follows that these awards will need to be varied accordingly. 67 I propose that the appeal be allowed with costs, and that the parties bring in, on or before 30 January 2008, short minutes of order to accord with my reasons. The respondent should have a certificate under the Suitors' Fund Act 1951. 68 IPP JA: Save in regard to what Beazley JA says in [49] I agree with Beazley JA and McColl JA. 69 McCOLL JA: Qantas Airways Ltd appeals from the decision of her Honour Judge Quirk awarding Mark Lisica damages amounting to $1,343,531 plus costs in respect of an injury he suffered when working for Qantas. 70 The respondent brought proceedings for damages against his employer. His claim fell to be assessed under Pt 5 of the Workers Compensation Act 1987 as in force at 13 October 2000. Liability was admitted. The case proceeded as an assessment of damages. 71 The Amended Notice of Appeal challenged the awards in respect of non-economic loss, past and future economic loss and past and future superannuation loss. Insofar as economic loss was concerned substantially the same complaints were made:

(a) that the primary judge erred in finding that the cause of the respondent's loss was a work injury and not the combination of a work injury and a marriage breakdown, the effects of which were divisible and apportionable;

(b) that the primary judge erred in determining the respective heads of damages by a determination on the probabilities, adjusted for specific vicissitudes of 10%, rather than by the evaluation of the loss of a chance for a past hypothetical;

(c) that the primary judge erred in assessing the respondent's loss of earning capacity on the basis that he would have qualified, been employed as, and paid by the appellant as, a licensed aircraft maintenance engineer, rather than an aircraft maintenance engineer, from early January 2004; and

(d) that the primary judge erred in awarding the respondent damages in respect of a claim for lost opportunity to undertake commercial diving/investigations, on the basis of probabilities, rather than by the evaluation of the loss of a chance for a past hypothetical. 72 However, more significantly as shall become apparent, the appellant complained that the primary judge erred in assessing all heads of damages in attributing all of the respondent's losses to his workplace injury and in failing to find that the breakdown of his marriage, coincident with that injury, was a cause of his losses. The appellant argued this approach should have led to the apportionment of his losses. This ground of appeal was modified in the course of argument to a contention that the evaluation of the respondent's losses ought to have taken into account the possibility that the respondent would have suffered the pain and suffering and losses of which he complained at trial, even if not injured through Qantas' negligence. 73 The appellant also complained that the primary judge failed to give any, or any adequate reasons, for finding that the cause of the respondent's loss was the work injury and for failing to find that the breakdown of his marriage coincidental with the work injury was a contributing cause to all his losses and, in particular, to the diminution of his past and future economic loss. 74 The appellant seeks an order setting aside the judgment below and, in lieu thereof, that damages be reassessed by this Court or that there be a new trial limited to the question of damages. Background 75 The respondent was injured when he slipped on a metal Clayco platform surface and fell three metres onto concrete on 13 October 2000 onto his left hip and back. He also injured his neck and shoulders. Dr Solomon, an orthopaedic specialist, treated him and diagnosed him as having suffered a soft tissue injury to his lower lumbar spine and left hip and a possible labral tear of his left hip. Dr Solomon also diagnosed a chronic pain syndrome. The primary judge noted that while there was some dispute as to whether or not the pathology in the respondent's left hip was a labral tear, a view apparently accepted by most of the expert surgeons or orthopaedic specialists, the respondent had as a consequence of the injury to his hip or back, significant atrophy of his left leg. 76 The appellant conceded at trial that the respondent was incapacitated for work as an aircraft maintenance engineer and that he was entitled to damages for economic loss reflecting that incapacity. However it put in issue the extent to which the respondent's incapacity was affected by the accident. It was common ground at trial that following the accident the respondent developed a psychiatric condition, being a major depressive disorder. The appellant argued that his incapacity was affected by his psychiatric condition, a condition which was not solely attributable to his injuries, but also to the fact that his marriage had broken down almost at the same time as his accident. 77 The appellant also put in issue whether the respondent ought be awarded damages for economic loss arising from his alleged inability to progress to a higher position in Qantas and, too, from his inability to work as an inquiry agent and a commercial diver. 78 The primary judge was of the view that there was little difference in the medical opinions as to the respondent's physical or psychiatric injury. She noted that the appellant's expert, Dr Walden, attributed fifty per cent of the respondent's continuing psychiatric problems to the breakdown of his marriage. In a section of her judgment in which she dealt with her impression of the respondent, she noted there was no dispute on the medical evidence that he had been "significantly depressed and anxious since his accident, which psychological symptoms have been exacerbated by the loss of his job with Qantas … [and] also by the breakdown of his marriage". She observed that his treating psychiatrist, Dr Galambos, had opined about the interplay between the two events as follows: "Certainly, his psychological injuries have proven to be very disabling. Whilst his chronic pain disorder and major depressive disorder are likely to have developed in the context of both the workplace injury and the marital disruption, the former clearly had made a significant contribution to these conditions. He is certainly unlikely to have developed the pain disorder if not for the workplace injury . Whilst his personality structure makes him vulnerable to developing a major depressive disorder, he would have had his work to fall back on if his marriage had broken up. If he had retained the capacity to work, this may have compensated for the resulting distress . It was unclear to me whether there had been any association between the workplace injury and the subsequent marital breakdown." 79 Her Honour then said: "The plaintiff's psychological condition and the effect upon him is set out in the reports and I need not refer to it in detail, except to say that the effect of this accident upon the plaintiff has been quite devastating. He was an extremely fit man, and his self worth and self-image was very much tied up with his ability to perform his work duties, to perform in the army and in his diving work, both of which activities required a significant level of fitness. He was also a keen abseiler and rock climber and in the past trained and continues to instruct his children in those activities. It is not surprising that, because of his inability to continue working as an aircraft engineer, and in his other fields of endeavour and his ongoing pain, which I accept has been extremely distressing for him [he] developed psychiatric symptoms, for which the prognosis appears to be gloomy." 80 The only other passage in her judgment in which the primary judge referred to the respondent's psychiatric condition was in determining the amount to be awarded for non-economic loss. It is apparent from her brief remarks in this part of her judgment where she said the respondent had "…suffered considerable ongoing pain, which is, no doubt exacerbated or aggravated by his psychiatric condition" that her Honour attributed the respondent's psychiatric condition entirely to the workplace injury.

Statement of the case 81 The respondent had worked at Qantas since 1988. At the time he was injured he was employed as an aircraft maintenance engineer ("AME"). As described by the primary judge, it was agreed at trial that the principal issues turned on the assessment of economic loss and, in particular:

1. whether or not the respondent would, but for his injury, have obtained further qualifications as a "licensed aircraft maintenance engineer" ("LAME"), and therefore been paid at a higher rate than as an aircraft maintenance engineer; and

2. what, if any, earnings the respondent would have made as a commercial diver/insurance investigator and was he precluded from undertaking this work because of his injuries.

There was another issue at trial about whether the respondent had lost an opportunity to continue in the Army Reserve. The primary judge awarded him $5000 as a buffer to compensate for that lost opportunity. The respondent does not challenge this award. 82 Mr Lidden of Senior Counsel, who appeared at the trial, and who appeared on appeal with Mr M Daley, did not dispute that the appellant had argued at trial, and was accordingly entitled to argue on appeal, that the respondent's psychiatric condition was one to which he would have come in any event, having regard to his pre-accident personality and his marriage breakdown. 83 The respondent returned to selected duties at the appellant's premises in December 2000, but his employment was terminated in June 2002 because he was unable to perform his pre-injury work. In the meantime, he had been performing light duties for Qantas and, although he had applied for permanent sedentary jobs and had been interviewed for some such positions, had not been offered any work. The respondent had come under the care of a rehabilitation provider. However, the primary judge concluded that person had not done much to help him obtain alternative work. 84 The respondent sought to retrain himself in computer studies and completed a basic course but not a second. He was unsuccessful in obtaining computer work. He had obtained work as a market researcher in April 2005, a position in which he worked until November 2005. From November 2005 until the time of trial he had worked for the Australian Bureau of Statistics as a casual interviewer. 85 The respondent gave evidence that he had intended to pursue the requirements which would qualify him as a licensed aircraft maintenance engineer. He said that at the time of the accident he had about five months leave owing to him which the appellant was pressuring him to take. Some years earlier he had sat for two of the eleven examinations which he was required to pass in order to qualify as a LAME. He did not pass the exams, but said that was because conditions at home at the time were not conducive to study. He said he had had ongoing discussions with his leading hand, a Mr Walsh, about his plans to complete the requirements to achieve LAME qualifications. He had taken some preliminary steps towards undertaking the course including obtaining from the Civil Aviation Authority a "schedule of experience books" and an exam schedule. He said that the further qualifications could be obtained in the order of one year, although some had obtained them in a shorter time. There were two possible means by which he could obtain his qualifications. The first was being sponsored by the appellant. The alternative was to pay for the course himself. The respondent gave evidence, which the primary judge clearly accepted, that he would have achieved his further qualifications by 2003 or 2004. 86 The respondent called Mr Fergus Haines, who had been a LAME for Qantas for about 17 years. His evidence was that there were approximately 260 maintenance engineers working at the International Airport for Qantas, of whom about 190 to 200 had LAME qualifications. He said that with the correct amount of experience and training almost any aircraft maintenance engineer could become a LAME. In his experience it was "just a question of time" for aircraft maintenance engineers to become licensed. His evidence, as accepted by the primary judge, was that although some individual engineers had experienced difficulties at times, "it was almost inevitable that licensed aircraft maintenance engineers, once qualified, were paid as such by Qantas". 87 The appellant called Mr Hespe who was the Manager in Aircraft Customer Services at Qantas' Sydney international operations, a position he had held for twelve months as at the date of trial. He gave evidence that during his time as manager Qantas had not employed newly qualified licensed aircraft maintenance engineers. He conceded, however, that he had recognised any "commitment" given by former managers to "trained or licensed aircraft maintenance engineers to pay them at the appropriate rate." He also conceded that a cost saving regime apparently then in force at Qantas did not mean there would not be the need for more LAMEs to be employed in the future. He agreed that there was obviously a "process of attrition" by virtue of retirements or other reasons. 88 The primary judge said: "I accept the evidence of the plaintiff as to his future intentions. This, combined with the evidence of the two Qantas witnesses, and an absence of any criticism of the plaintiff's work performance or skills, leads me to find that he would most probably have become qualified as a licensed aircraft maintenance engineer within a couple of years of his accident, had he not been injured. There is a small chance that something may have prevented him from either qualifying, or being paid as a licensed aircraft maintenance engineer, and I assess that possibility as only 10%."

The primary judge calculated damages from 1 January 2004. The appellant submits that the finding that the respondent would most probably have become qualified as a licensed aircraft maintenance engineer within a couple of years of his accident, envisaged that he would have obtained that qualification between 13 October 2000 and 1 January 2004. 89 The appellant submits that the passage I have set out in the previous paragraph is the central error in the primary judge's reasons. It argued that the primary judge both failed to take into account the extent to which the respondent's future prospects were limited by a psychiatric condition which would have eventuated whether or not he had been injured at work and, too, that the primary judge failed to evaluate the respondent's future prospects in the manner required by Malec v J C Hutton Pty Ltd [1990] HCA 20; (1990) 169 CLR 638 as explained in Seltsam Pty Limited v Ghaleb [2005] NSWCA 208; (2005) 3 DDCR 1. 90 The primary judge then considered the question whether the respondent would have continued working as a commercial diver/investigator. Prior to his accident in March or April of 2000, the respondent had obtained a Commercial Diver's Certificate B, Part 3, at a cost of $10,500. He gave evidence that he had undertaken commercial diving work before obtaining this qualification, but that new restrictions meant he needed to be certified. Shortly before the accident the respondent had also acquired a private inquiry agent's licence. He gave evidence that he saw an opportunity to combine work as an inquiry agent and commercial diving. He said that he had previously done some diving work in respect of which he had not declared his earnings, but that in the couple of months after he obtained his commercial licence he had declared earnings of approximately $2000 for commercial diving work. He said that, but for his accident, he had intended to spend an average of about sixteen hours a week undertaking commercial diving. He said the rate of pay for such work was generally about $25 an hour plus overtime as well as a depth allowance if the work was over 25m deep. However his expenses were significant and were conceded at trial by his counsel, Mr Lidden, to be 50% of earnings. 91 In considering this question, the primary judge took into account the fact that the respondent's marriage broke down within days of his accident and, at the time of trial, he had access to his two children, aged eight and twelve, every second weekend and for one week of each holiday. The primary judge accepted that the respondent's desire to look after his children during access periods would have limited the amount of time the respondent could devote to diving or any activities apart from his work. In addition, her Honour referred to overtime available at Qantas for both aircraft maintenance engineers and LAMEs which was "expected to be worked" and averaged about ten hours a week. Her Honour then said: "Taking these matters into account I think that until the youngest child reaches his mid-teens, or about the age of 16, the plaintiff's opportunity to work as a diver or a diver/investigator would be, because of his family obligations, limited or restricted to something less than 16 hours a week. However, given that my impression of the plaintiff, consistent with the impressions gained by the doctors, is that prior to his accident he was a very ambitious and driven man and, I accept, someone who wished to further himself and to increase his income, I think it likely, especially given that he had, only months before, paid over $10,000 to obtain his licence, [he] would have continued to perform work as a diver, but for his accident, even with his commitments to his children." 92 The primary judge accepted the respondent's evidence that commercial diving work involved strenuous use of the legs and that, having regard to his injuries, he was unfit for that work. She accepted that $100 per week net for past and future economic loss in respect of this activity was a reasonable estimate. In so concluding she took into account that while for the next few years the respondent would have undertaken less diving work, he could have engaged in more work once his children were older. She only allowed for the respondent carrying out diving work for a further twenty years, to age 55, rather than 65 as was suggested by the respondent's counsel. 93 The primary judge then returned to the respondent's future with Qantas. She said: "As I have said, I assess a ninety per cent chance that the plaintiff would have qualified as a licensed aircraft maintenance engineer, probably around the beginning of 2004. There are agreed figures for comparable earnings of aircraft maintenance engineers and licensed aircraft maintenance engineers, which are set out in a number of schedules. Using the agreed figures, I find that, had the plaintiff continued as an aircraft maintenance engineer, rather than as a licensed aircraft maintenance engineer, his rate of pay would have been, at the present time $1,000 per week net, and that a licensed aircraft maintenance engineer would at present earn $1,400 net per week, i.e. an additional $400 per week over and above what an aircraft maintenance engineer would earn. Allowing only ninety per cent of that difference gives a present rate of $1,360 on which to base calculations for future economic loss. Mr Leahy submits that the plaintiff has retained about fifty per cent of his pre-injury capacity to earn. Mr Lidden submits that he has a capacity to earn in the order of $450 net per week. There is no dispute that he is earning about $200 net per week in his current casual employment at the Australian Bureau of Statistics. Therefore, although I accept that he has done everything he could, up to the present stage, given his limitations because of his physical and psychological injuries, it is conceded that his capacity to earn in the future is greater than what he is currently earning." 94 Her Honour accepted that the respondent's economic capacity was greater than that revealed by his income at the date of trial, and that he was capable of earning $450 a week. Submissions on Appeal

95 Mr J Maconachie of Queen's Counsel, who appeared on appeal with Mr N Chen, but not at trial, submitted that the judgment below was flawed in two critical respects. 96 As first advanced, Mr Maconachie argued that the evidence compelled the primary judge to determine that the respondent's marriage breakdown had a causative effect on his psychiatric condition, which was divisible and therefore required a judgment to be made compensating the respondent only for that element of the psychiatric condition which was caused by the work injury: State of New South Wales v Burton [2006] NSWCA 12 (at [75]) per Basten JA. 97 In the course of argument, as I have said, I understand Mr Maconachie to have re-formulated this argument, without objection from Mr Lidden, to advance the proposition that her Honour failed to evaluate the respondent's future prospects in the manner required by Malec as explained in Seltsam Pty Limited v Ghaleb. 98 Mr Maconachie also complained about the primary judge's conclusion that the respondent developed psychiatric symptoms "because of his inability to continue working as an aircraft engineer, and in his other fields of endeavour and his ongoing pain". He argued that if the primary judge's reasons, properly understood, attributed the respondent's psychiatric condition entirely to his workplace accident her Honour failed properly to engage with a number of issues raised by Dr Galambos, the most important being the latter's opinion that while the respondent's psychological injuries were disabling, they were likely to have developed in the context of both the workplace injury and the marital disruption. 99 Mr Maconachie also argued that even if the primary judge had not held the appellant solely liable for the psychiatric condition, she had still failed to deal with the issues raised by Dr Galambos. He contended that the primary judge overlooked the report of the appellant's psychiatrist, Dr Walden who, having diagnosed the respondent's condition as an adjustment disorder, ascribed it "approximately 50% … to sequelae of his injury on 13 October 2000 and 50% to the breakdown of his marriage which was not related to his injury." Mr Maconachie submitted that this evidence discharged the appellant's Watts v Rake [1960] HCA 58; (1960) 108 CLR 158 and Purkess v Crittenden [1965] HCA 34; (1965) 114 CLR 164 disentangling onus, requiring her Honour, in assessing damages, to take into account the extent to which the respondent's condition was not caused by the workplace injury.

100 Mr Maconachie submitted that the primary judge's failure to deal properly with the psychiatric evidence vitiated all the damages she awarded, particularly the economic loss components. 101 Next, Mr Maconachie also argued that the primary judge erred in approaching a past hypothetical event (the chance of the respondent becoming a LAME and/or securing work as a commercial diver/investigator) on the balance of probabilities as a matter of fact, then adjusting the outcome by a possibility of it not occurring. He argued the primary judge ought to have evaluated the chance of the respondent securing such earnings or such employment: Malec; Fightvision Pty Ltd v Onisforou [1999] NSWCA 323; (1999) 47 NSWLR 473. He also submitted that the respondent had failed to prove that his disability was, or may be, productive of financial loss insofar as he claimed in respect of his commercial diving/investigation work: Medlin v State Government Insurance Commission [1995] HCA 5; (1995) 182 CLR 1 (at 5).

102 Mr Lidden criticised Dr Walden's apportionment of half of the respondent's psychiatric condition to his marital breakdown and half to the workplace injury. As I understand his submissions, he argued that the cause of the respondent's psychiatric condition was indivisible. He pointed out that even Dr Walden accepted that the workplace injury had contributed to the respondent suffering a significant psychiatric state. He contended that Dr Walden had not concluded the respondent's psychiatric state would only be half as bad if the marriage breakdown had not occurred, that this would be a necessary finding to discharge the Watts v Rake onus and its absence was fatal to the appellant's contentions.

103 Next Mr Lidden argued that the primary judge preferred the findings of the respondent's treating psychiatrist, Dr Galambos.

104 Finally Mr Lidden submitted that a court cannot arbitrarily divide up a condition caused by a tortious wrong if there is no reason to do so and no evidence upon which to do so.

105 Both Mr Maconachie and Mr Lidden made detailed submissions about the other aspects of the appeal. It is unnecessary to deal with them, however, having regard to the conclusion I have reached that the primary judge erred in dealing with the psychiatric issue in a manner warranting a new trial.

The respondent's psychiatric condition 106 Neither party's psychiatrist was called. Neither party criticised the qualifications of the other party's expert nor suggested either expert had relied upon unproven facts. It was left to the primary judge to assess their respective opinions from their reports. To the extent there were any differences in their respective opinions, they were "capable of being resolved rationally by examination and analysis": Wiki v Atlantis Relocations (NSW) Pty Limited [2004] NSWCA 174; (2004) 60 NSWLR 127 (at [68] per Ipp JA (Bryson JA and Stein AJA agreeing).

107 It is useful to repeat the passage from Dr Galambos' report the primary judge extracted in her reasons: "Certainly, his psychological injuries have proven to be very disabling. Whilst his chronic pain disorder and major depressive disorder are likely to have developed in the context of both the workplace injury and the marital disruption, the former clearly had made a significant contribution to these conditions. He is certainly unlikely to have developed the pain disorder if not for the workplace injury . Whilst his personality structure makes him vulnerable to developing a major depressive disorder, he would have had his work to fall back on if his marriage had broken up. If he had retained the capacity to work, this may have compensated for the resulting distress . It was unclear to me whether there had been any association between the workplace injury and the subsequent marital breakdown." 108 Dr Galambos also said: " 4. Capacity of your client to return to his pre-accident employment Mr Lisica's capacity to return to his previous occupational function is extremely unlikely, in view of the severity of his psychopathology and his severe disability over an extended period of time … My impression was that psychological factors were a major contributor to Mr Lisica's disability. Having said that, chronic pain disorders may result from physical and psychological factors. I am aware that pathology has been found from the MRI reports of Mr Lisica's lower lumbar spine and left hip. It is not my area of expertise to comment on the degree of contribution of his physical injuries to his chronic pain. Certainly, my impression is that psychological factors are playing a significant part in the propagation of his pain disorder, in view of the nature, course and extent of his pain symptoms and behaviours. In addition, the presence of major depressive disorder is likely to be significantly magnifying any pain present and retarding recovery through inhibiting his psychological and occupational function. The chronicity and treatment resistance of Mr Lisica's mood and pain symptoms, his poor progress to date, his limited range of coping strategies, his personality style, and his poor compliance with treatment, all bode poorly with regard to prognosis." (emphasis added) 109 The appellant's expert psychiatrist, Dr Walden, said: " I consider that his current psychiatric condition is in part related to the incident of 13 October 2000 when he fell and experienced pain which restricted his activities . His sense of self has been heavily reliant on his physical prowess and capacity to work. It has also been significantly contributed to by the breakdown of his marriage a few weeks after the accident . On the basis of the history he gives, I do not consider that his marital break up was associated with his injury but was related to other factors involving his wife's infidelity and predated his injury. It is likely that Mr Lisica's feelings of anger and depression have been exacerbated by his lack of success in finding alternate employment within Qantas despite applying for a number of jobs which he considered were within his physical capabilities. On clinical grounds, I would attribute his current Adjustment Disorder to approximately 50% being related to sequelae of his injury on 13 October 2000 and 50% to the breakdown of his marriage which was not related to his injury." (emphasis added) 110 There are two points to be made about these opinions. The first is that both psychiatrists were of the opinion that two factors had contributed to his depressive disorder: his accident and his marital breakdown. Secondly, his psychiatric condition was a major factor in his incapacity to work.

111 As I understand Dr Galambos' report, he placed more weight on the workplace injury than the marital breakdown as having contributed to the respondent's psychiatric condition. He nevertheless regarded the marital breakdown as a material cause of the respondent's mental state. Dr Walden, on the other hand, attributed fifty per cent of the respondent's psychiatric condition to the injury, and fifty per cent to the marital breakdown. The trial judge does not appear to have regarded the differences between Dr Galambos and Dr Walden as significant. As I have said (at [10]) she observed that there was "little difference in the medical opinions as to the plaintiff's … psychiatric injury".

112 The appellant's case at trial, and on appeal, was that the primary judge ought to have taken into account in assessing damages, the extent to which the respondent's earning capacity was affected by his psychiatric state. It argued that Dr Walden's evidence disentangled the operative causes of the respondent's psychiatric condition, in a manner which limited the effect of the accident as an operative cause of his incapacity rendering it only liable to the extent that incapacity could be attributed to the accident. 113 In Seltsam Pty Limited v Ghaleb (at [93] ff) Ipp JA (with whom Mason P agreed) discussed the implications of there being more than two conditions contributing to a plaintiff's incapacity, one caused by the accident sued on (asbestos exposure), the other unrelated (obesity). In that case, as here, the plaintiff argued (see [94]) that the defendant had failed to discharge its Watts v Rake and Purkess v Crittendon disentangling onus to establish "with reasonable particularity" the extent to which obesity had contributed to the plaintiff's disability, and, accordingly the obesity should be ignored. The trial judge had accepted that submission. Ipp JA held that the trial judge had erred. 114 In his Honour's view (at [103]), a court asked to consider the Watts v Rake and Purkess v Crittendon disentangling exercise, had also to take into account the following propositions established by Malec: "(a) In the assessment of damages, the law takes account of hypothetical situations of the past, future effects of physical injury or degeneration, and the chance of future or hypothetical events occurring. (b) The court must form an estimate of the likelihood that the alleged hypothetical past situation would have occurred. (c) The court must form an estimate of the likelihood of the possibility of alleged future events occurring. (d) These matters require an evaluation of possibilities and are to be distinguished from events that are alleged to have actually occurred in the past, which must be proved on a balance of probabilities." 115 The consequence was, that while the evidentiary onus as explained in Watts v Rake and Purkess v Crittenden remained for the defendant to discharge: "[105] …[T]o the extent that the issues involve hypothetical situations of the past, future effects of physical injury or degeneration, and the chance of future or hypothetical events occurring, the exercise of 'disentanglement'" discussed in those cases is more easily achieved. That is because the court is required to evaluate possibilities in these situations - not proof on a balance of probabilities." 116 His Honour illustrated that proposition (at [105]) with a case where, even if the defendant's negligent act had not occurred, "a pre-existing condition might have given rise to the possibility that the plaintiff's enjoyment of life and ability to work would have been reduced and to a susceptibility to further injury; in addition, other causes entirely unrelated to the defendant's negligent act might have contributed to the plaintiff's ultimate condition". 117 Ipp JA considered (at [107]) that in such a case, a proper assessment of damages required "making … a judgment as to the economic and other consequences which might have been caused by a worsening of a pre-existing condition, had the plaintiff not been injured by the defendant's negligence". 118 Ipp JA also held that it was not necessary for a defendant, seeking to prove that a plaintiff's pre-existing condition contributed to an injury, to establish that that condition had made a material contribution to the injury. It was sufficient that the defendant adduce "evidence sufficiently precise and definite to displace the inference that the disabling pain from which the plaintiff suffered after the accident was caused by the hurt she then received". The evidence had to be such that "a reasonable person could draw from it the inference that the possible consequences contended for by the defendant existed": Seltsam (at [100], [109] and [112]). 119 In Seltsam, Ipp JA observed (at [110]) that where there was "an obvious and real chance" that a non-accident condition (obesity) would have reduced the appellant's enjoyment of life or ability to work in any event… [t]hat chance had to be assessed and allowed for in the calculation of future economic and non-economic loss". Without such an allowance, his Honour observed, "… the appellant would be held responsible for loss that was not causally related to the ARPD brought about by it (cf Wynn v NSW Insurance Ministerial Corporation (1995) 184 CLR 485 at 498-499". He held (at [111]) that the trial judge's failure to assess the chance in question was a significant error of law. 120 Although Seltsam concerned a pre-existing condition, the principles Ipp JA articulated apply also to a defendant, seeking to prove, as here, that a supervening condition contributed to the plaintiff's disability: see Jobling v Associated Dairies Ltd [1982] AC 794; app K-Mart Australia Ltd v McCann [2004] NSWCA 283. 121 Mr Maconachie argued that the present was a stronger case than Seltsam, in the appellant had established that a non-accident related cause had contributed to the respondent's condition, and the primary judge had erred in failing to take it into account. 122 The primary judge found that there was a "90% probability" that the plaintiff would have become a licensed aircraft maintenance engineer and determined what she described as "future wage loss" on the basis of this finding. The finding of such a "90% probability", however, paid no regard to the real probability on the medical evidence that was common ground that even had the accident not occurred the respondent might have suffered from a mental illness or condition that might have prevented from qualifying as such an engineer or working such as such. The 10% reduction for which her Honour allowed was for contingencies that did not include the respondent developing a mental illness, in any event. Further, it is apparent that her Honour did not take the real probability of the respondent suffered from a mental illness or condition in any event into account in determining non-economic loss. These omissions, on her Honour's part are material errors in her reasons and the awards she made both for non-economic and economic loss. 123 In my view, the evidence the appellant led from Dr Walden met the standard identified in Seltsam. Indeed, as Mr Maconachie submitted, in this case the "possible consequence" had materialised: the respondent's psychiatric condition on either expert's opinion was the product of two causes, his workplace injury and his marriage breakdown. It was incumbent on the primary judge, therefore, in considering the respondent's future economic and non-economic loss to consider the "obvious and real chance" that a non-accident condition (his marriage breakdown) would have led to his depressive disorder and reduced his enjoyment of life and ability to work in any event.

124 Once that exercise was undertaken, it was necessary to reduce the respondent's damages by the amount necessary to reflect the increased likelihood that he would have suffered pain and suffering, as well as economic loss, due to his psychiatric disorder but absent the workplace injury: Malec, Chappel v Hart [1998] HCA 55; (1998) 195 CLR 232 (at [82] - [83]) per Gummow J, (at [93] (10)) per Kirby J. 125 In my view, the primary judge fell into error in failing to carry out the evaluative exercise to which I have referred and in failing to take into consideration the matters to which I refer in the previous paragraph in assessing the respondent's damages. 126 Evaluating the significance of these matters will turn upon an evaluation of the respondent's demeanour which would ordinarily mean a new trial was called for. However, I agree with Beazley JA (at [54]) that, in the circumstances, there is sufficient material before the Court to enable a reassessment to be undertaken without remitting the matter for a new trial. The appellant was content for this Court to reassess damages and the respondent did not press for a new trial if the appeal was allowed. 127 I would express one reservation about Beazley JA's implicit conclusion (at [49]) that the appellant is succeeding on an issue which may not have been run at trial. Mr Lidden appeared for the respondent at trial and on appeal. It was open to him to object that the appeal was being run on a different basis to the trial. As her Honour notes he did not demur to the course the appeal took. In my view the Court should conclude when Senior Counsel is silent in such circumstances, that the appeal does not depart from the course taken at trial. 128 I agree with Beazley JA's reassessment of damages and with the orders her Honour proposes. **********

19/12/2007 - Case number should be CA 40799 of 2006Order 2 should read ....under the Suitor's Fund Act if so qualified" - Paragraph(s) Front Cover of judgment

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