Quantum
218 As Menzies J said in Jones v Schiffmann (1971) 124 CLR 303 at 308, the assessment of damages sometimes, of necessity, involves guess work rather than estimation. This is such a case. It involves consideration of what might have happened after March 2013 in hypothetical circumstances and with imperfect information. Ms Rakic sought to alleviate the difficulty of the task by suggesting that damages could be assessed by weighting possibilities.
219 In Malec v J C Hutton Proprietary Limited (1990) 169 CLR 638 at 643, Deane, Gaudron, and McHugh JJ, said as follows (footnotes omitted):
Hence, in respect of events which have or have not occurred, damages are assessed on an all or nothing approach. But in the case of an event which it is alleged would or would not have occurred, or might or might not yet occur, the approach of the court is different. 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. 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.
220 Malec was followed in Sellars v Adelaide Petroleum NL (1994) 179 CLR 332. Therein, Mason CJ, Dawson, Toohey and Gaudron JJ said as follows at 355 (emphasis added):
Notwithstanding the observations of this Court in Norwest, we consider that acceptance of the principle enunciated in Malec requires that damages for deprivation of a commercial opportunity, whether the deprivation occurred by reason of breach of contract, tort or contravention of s. 52(1), should be ascertained by reference to the court's assessment of the prospects of success of that opportunity had it been pursued. The principle recognized in Malec was based on a consideration of the peculiar difficulties associated with the proof and evaluation of future possibilities and past hypothetical fact situations, as contrasted with proof of historical facts. Once that is accepted, there is no secure foundation for confining the principle to cases of any particular kind.
221 The Malec dictum can lead, and has led, to mathematical approaches to calculating the value of hypotheticals: see, e.g., La Trobe Capital & Mortgage Corporation Ltd v Hay Property Consultants Pty Ltd (2011) 190 FCR 299 at [97]-[102] per Finkelstein J, with whose formulae Jacobson and Besanko JJ agreed. Recently, La Trobe was referenced with apparent approval by a Full Court of this Court in the context of a compensation order for damage or loss suffered by natural persons as a result of contravention by a union of the Workplace Relations Act 1996 (Cth) and the Fair Work Act 2009 (Cth): Maritime Union of Australia v Fair Work Ombudsman [2015] FCAFC 120 at [127] (Allsop CJ, Mansfield and Siopis JJ).
222 But La Trobe involved only a calculation of the value of one lost opportunity ("LO"), which Finkelstein J said was the product of the probability of its realisation ("P") and its value ("V"), V in turn being the product of M and (1 - C), M being the maximum value of the opportunity and C accounting for any contingencies. Ms Rakic's matter involves more hypotheticals: it was put in particulars, for example, that there was a 30 per cent chance of her receiving remuneration of $150,000 per annum from 1 January 2016, a 35 per cent chance of remuneration of $165,000 per annum from 1 November 2015, and a 35 per cent chance of remuneration of $180,000 per annum from 1 November 2015. If (as I hold below) Ms Rakic would have left employment with Pattersons due to dissatisfaction, the possibilities multiply as to Ms Rakic leaving at particular times and to employment of particular values. This results in a proliferation of hypotheticals that hinders rather than hones the assessment.
223 A "weighted average" approach was adopted in Blake v Norris (Hulme J, NSWSC, 5 December 1995, unreported). The plaintiff was a tort victim with a promising film career. Damages were assessed on the basis that there were varying percentages of chance that he would be a Hollywood superstar, or have considerable success, or have moderate success, or have only an Australian career. The approach involved appendices of mathematical calculations. It was argued on appeal that the approach was wrong in principle. Clarke JA said as follows (Norris v Blake (No 2) (1997) 41 NSWLR 49 at 72):
In my opinion such an approach may be appropriate in a case where the possibilities are limited, such as occurs where the question is whether the plaintiff would suffer a later complication from his or her injury, but it suffers from a lack of available information where the possibilities are indeterminate and there is no rational basis for restricting the alternative possibilities to the small number necessary for carrying out a weighted average exercise
224 On the basis that the case before the Court was more akin to the latter kind of case, his Honour said this, at 73:
The proper approach is to assess what it was most likely he would earn during the rest of his working life and adjust this for contingencies including the possibility that he might have done far better.
225 In Commonwealth of Australia v Ryan [2002] NSWCA 372 at [72], after referring to the approach to hypotheticals required by Malec, Hodgson JA said as follows:
Where there is a wide spectrum of possibilities … the best approach is often that supported in [Norris] at 73; namely, to take the figure applicable to the most likely alternative (if there are many alternatives, even this may have a probability considerably lower than 0.5), and then adjust it upwards or downwards according to one's assessment of the chances and figures associated with more favourable and less favourable alternatives.
226 In Moss v Lowe Hunt & Partners Pty Ltd [2010] FCA 1181, a case to which Ms Rakic referred, Katzmann J adopted a Norris approach (at [146]) to one of the matters in issue in the damages assessment.
227 I think the same approach is appropriate here. The "weighted average" approach, while having the appearance of mathematical precision, can lead instead to imprecision and inaccuracy for the reasons given by Clarke JA in Norris at 69-71. The better approach is to make a finding as to the most-likely outcome in the counterfactual hypothetical, and then to adjust it to account for other possibilities.
228 The matters that require findings are these. First, but for Johns Lyng's conduct, when and for what remuneration would Ms Rakic have left employment with Pattersons? Second, what is likely to be Ms Rakic's remuneration after the date of hearing?
229 Dealing with the second matter first, Ms Rakic's evidence was that she was pursuing inquiries in relation to three jobs. The first two were with the same employer and entailed remuneration packages of around $195,000 (job 1) and of around $180,000 (job 2). Ms Rakic thought there was a "strong possibility" of working for that employer. She said that there was a "very good chance" she would be offered the third position, which had a remuneration package of around $200,000 (job 3). The questions were put to her in terms of whether she was likely to secure one or other of those jobs before around November 2015. Ms Rakic said that if none of jobs 1-3 were offered to her, she would lower her sights to remuneration packages of around $150,000. She thought there was around a 90 per cent chance that, if she did so, she would have a job before 1 January 2016.
230 The first matter turns in part on Ms Rakic's dissatisfaction at Pattersons. In that connection, I find as follows. Ms Rakic was dissatisfied at Pattersons, but not so dissatisfied that she would have left for a job that was substantially less remunerative. Ms Rakic struck me as quite robust. I do not think that her dissatisfaction was something she was unable to tolerate, or even unwilling to tolerate as long as her remuneration was acceptable. The evidence is that, not only was the remuneration acceptable, there were very few other jobs available to someone of Ms Rakic's skill and experience of comparable remuneration. On the other hand, I find that if a job did become available that was within Ms Rakic's range of acceptable remuneration, she would have left Pattersons rather than stay. That is consistent with Ms Rakic having in fact left to accept the Johns Lyng job, which I infer she saw as being adequately remunerative, at least (and with some risk) over the term of the predictive representations that were made to her - that is, until around March 2014.
231 When I pressed Ms Rakic's counsel as to what findings were appropriate were I to find (as I have) that Ms Rakic was dissatisfied at Pattersons, he proceeded on the reasonable assumption that Ms Rakic would have been prepared to accept less by way of remuneration as time went on. Ms Rakic's submission was primarily that she would have remained at Pattersons for a number of years. Further, as she was in a "position of power and strength," she would have "hung out longer than an ordinary employee would have who was seeking to jump ship. … She was in no rush." Ultimately, and very much in the alternative, Ms Rakic submitted that she would have stayed with Pattersons for around a year after she grew dissatisfied looking for a remuneration package of around $210-220,000. Thereafter, she would look for a package of around $200,000 for around six months, and then $180,000 for a further six months. In fairness to counsel for Ms Rakic, his submissions as to the time periods following which Ms Rakic would have left Pattersons, and the salaries for which she would have left, were intended to deal with the hypothetical that I found that Ms Rakic was sufficiently dissatisfied at Pattersons as to significantly compromise her salary, not with a finding that she was just dissatisfied in some measure.
232 In that connection, a few matters are of moment. Ms Rakic was her mother's primary carer and met her lifestyle expenses. Her husband earned far less than she. Ms Rakic's job at Pattersons was very remunerative. On her uncontroverted evidence, she had secured one of around a dozen commensurately-remunerative jobs, for a person of her experience and background, in the Victorian insurance building industry. What is more (and I say this without intending any disrespect), it was a highly-remunerative job for a person of Ms Rakic's education and employment background. In 1988, with no post-VCE qualifications, she commenced at QBE as a filing clerk. Twenty-odd years later, she was its National Claims Manager. She left for a job at Pattersons which was, as I have said, highly remunerative and which entailed substantial responsibility. That was, and Ms Rakic would have known that it was, an impressive story of success, but it was also a rare one.
233 In those circumstances, it is my opinion that Ms Rakic would not have lightly left Pattersons for a less-remunerative job. As I posited to Ms Rakic's counsel and as he agreed, Ms Rakic was on a good wicket.
234 In my opinion the most-likely scenario, had Ms Rakic not taken up employment with Johns Lyng, is that she would have looked for a job that was of roughly equivalent remuneration to her Pattersons package for quite some time. I accept that Ms Rakic was dissatisfied at Pattersons, but not that she was so dissatisfied that she would have left for a job paying very significantly less than her current position. The position at Johns Lyng, if profit predictions had held up, would have been comparable in remunerative terms to her Pattersons position. While there was risk associated with the taking of a profit share, I accept that the risk was offset in Ms Rakic's mind by Johns Lyng's representation that profits would continue at FY12 levels for the next twelve months and her knowledge that, within the reasonably-foreseeable future, there was a fair chance that she would take up five per cent equity, so that her remuneration would in fact be greater than at Pattersons.
235 If a job of comparable remuneration to Pattersons was offered to Ms Rakic, I think she would have taken it. But it seems to me unlikely that such a job would have been offered, mainly because the evidence was that there were very few such positions. If such jobs were readily available, I think that Ms Rakic would likely have found one between having been made redundant by Johns Lyng and the date of the hearing, whereas in the event she had not. I think it is more likely that, after around 24 months of looking for a comparably-remunerative job, Ms Rakic would have started looking for a job that offered a package of around $220,000 in definite remuneration (i.e., no profit share). I think that such a job would have been significantly easier to secure. After all, Ms Rakic's evidence at hearing was that she had very strong prospects of securing a job worth around $200,000 within the next six weeks. It seems to me that within six months or so Ms Rakic could have secured a job worth around $220,000.
236 It follows that I consider the most-likely outcome is that Ms Rakic would have worked for Pattersons for around 2.5 years and then left for a job worth around $220,000. I think it is most likely that she would have continued to work in that job or in a comparatively-remunerative job to the present day.
237 I turn now to the other question, namely, what is the most-likely outcome in respect of Ms Rakic's post-hearing job prospects. Ms Rakic's evidence included that there was a "strong possibility" of receiving a job offer involving remuneration of $195,000 or another of $180,000, and a "very good chance" of being offered a third position involving remuneration of $200,000, in every case by 1 November 2015. Here I think that the most-likely outcome is that Ms Rakic would receive a job offer of around $190,000 by 1 November 2015 (post-hearing employment). I think it is more likely than not that Ms Rakic will continue looking for jobs that are closer in remuneration to what she received at Pattersons. Relevantly, it seems to me that it is likely that Ms Rakic would or could secure a job with a remuneration package of $220,000 or more within around another year after gaining post-hearing employment.
238 In order to determine damages, I should subtract from what I consider to be the most-likely scenario absent Johns Lyng's conduct (the counterfactual) the amount actually earned by Ms Rakic plus the amount likely to be earned post-hearing (the post-hearing hypothetical). Summarising what is said above, the counterfactual is that Ms Rakic would have remained in employment with Pattersons for 2.5 years, following which she would have left for a job worth around $220,000 and would have remained in a job of approximately that remuneration to the present day and continuing. The post-hearing hypothetical is that Ms Rakic is likely to have procured a job worth around $190,000 by 1 November 2015, and that she is likely to find a job worth around $220,000 by around 1 November 2016.
239 In terms of contingencies, there seem to me really to be two broad categories of contingency:
(1) I have found that the most-likely scenario is that Ms Rakic would have left Pattersons after around 30 months for a job paying around $220,000. It is possible that she would have found a job paying an amount comparable to Patterson's either within that 30-month period, or after. Or, it is possible that over time her dissatisfaction with Pattersons would have waned, including because of any diminishment in Mrs Patterson's involvement in the business. Alternatively, it is possible that Ms Rakic would have lost her job with Pattersons for other reasons (including, say, redundancy), in which case, she may have had to take a less-remunerative job in the immediate term, as she did having been made redundant by Johns Lyng. In the former case, her remuneration in the counterfactual would be higher than what I have found is the most-likely scenario; in the latter case, lower. I cannot say that any one is more likely than the other: I think that they balance out. I think no adjustment is necessary for these contingencies.
(2) I have found that the most-likely scenario is that Ms Rakic obtained a job worth around $190,000 by 1 November 2015, and will obtain one worth around $220,000 by around 1 November 2016. It is possible that she found a more-remunerative job by 1 November 2015, or that the second job will be secured earlier, will be more remunerative, or both. On the other hand, it is possible that Ms Rakic did not find a job worth $190,000 until after 1 November 2015, or that the job she did find was less-remunerative (or both). Or, it is possible that she is unable to find a job worth $220,000 by 1 November 2016, or at all. Again, no one of these contingencies seems to me to be more likely than the others: I think that they balance out. I think that no adjustment is necessary for them.
240 Ultimately, then, I think that no adjustment is necessary to the award of damages to deal with contingencies. I note, for completeness, that Johns Lyng did not submit that any adjustment was necessary.