Solicitor for the appellant : Abbott, Tout, Russell, Kennedy

Counsel for the respondent : Mr. A. Shand, QC with Mr. S.R.C. Wilcox

2. Judgment in favour of the respondent for $129,904.95 be set aside and in lieu thereof judgment be entered for the respondent for $104,224.95.

3. Appellant to pay one half of the respondent's costs of the appeal to be taxed.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

This is an appeal against a judgment for $129,904.95 awarded to the respondent for damages for bodily injury suffered in a motor vehicle accident which occurred on 1 May 1980 near Lake George, New South Wales. The respondent was a passenger in a small truck which left the carriageway and overturned. The appellant, who was the driver, and a third occupant of the vehicle were brothers of the respondent.

2. It is convenient to first deal with grounds 7 and 8 of the notice of appeal which concern the refusal of the learned trial judge to give leave to the appellant to withdraw an admission of liability. When the trial commenced on 14 December 1987, his Honour was informed that the appellant had admitted liability, and that the trial would proceed as an assessment of damages against the appellant. The trial proceeded in this way. On 15 December the trial was then adjourned, and resumed on 23 May 1988. As the result of certain answers about the happening of the accident which the respondent gave during his cross-examination on 26 May 1988, counsel for the appellant applied to withdraw the admission of liability. This occurred on the sixth day of the trial. The application was refused. Later in the trial, the respondent called the appellant, to give evidence directed to the respondent's damages. During the appellant's cross- examination his counsel sought to renew the application for leave to withdraw the admission of liability, and his Honour confirmed his earlier refusal. The appellant now contends that both rulings were in error.

3. The proceedings were commenced on 27 July 1981. Two defendants were named. The appellant was the first defendant. The second defendant was a company alleged to be the owner of the vehicle. At the trial the respondent elected not to proceed further against the second defendant as some doubt had arisen about the ownership. Paragraphs 4 and 5 of the statement of claim read:

"4. At a point near Lake George in the said State of

New South Wales the said vehicle driven by the said

defendant skidded and overturned thereby causing

injuries to the plaintiff.

5. The said accident occurred as a result of the

negligence of the secondnamed defendant through its

agent, servant and employee the firstnamed

defendant and the firstnamed defendant.

PARTICULARS OF NEGLIGENCE:

(a) Failing to keep a proper look out.

(b) Driving too fast in the circumstances.

(c) Failing to manage and control his said vehicle so

as to avoid the collision with the vehicle in which

the plaintiff was in. (sic)

(d) Failing to take all the necessary precautions while

driving on a wet and slippery surface."

4. An appearance was filed on behalf of both defendants. A defence was filed on 15 July 1982 which pleads in paras. 2 and 3:

"2. The defendants deny the facts alleged in paragraphs

3, 4 and 5 of the Statement of Claim.

3. The defendants denies (sic) that either of them was

guilty of the alleged or of any negligence."

5. Argument before the trial judge disclosed that on 24 November 1982 the appellant, through his solicitors, admitted liability by letter. This occurred after the respondent's solicitors had delivered interrogatories for the examination of the appellant. In consequence of the admission the interrogatories were never answered. The pleadings were not amended to reflect the admission, nor did the respondent seek to enter an interlocutory judgment based on the admission. Rather, the parties followed the common course of informing the court of the admission at the commencement of the trial. In the time between the letter admitting liability and the trial of this action, separate proceedings against the appellant by Guiseppe Celestino, the other passenger in the vehicle, for damages for bodily injury suffered by him in the accident had been brought to trial and concluded. In those proceedings the appellant had admitted liability.

6. The respondent's answers which prompted the application to withdraw the admission, were to the effect that the accident happened when a woman who was driving another car overtook in circumstances where she was required to cut sharply back in front of the appellant's vehicle causing the appellant to swing left to avoid colliding with the overtaking car. In turn this caused the appellant's vehicle to leave the carriageway. On this version of the accident, counsel for the appellant indicated that the appellant wished to argue that the accident occurred without his negligence.

7. In the course of argument his Honour was informed that the appellant's real role in the proceedings was nominal; that an insurer which stood behind him had the carriage of the action; that the accident reports submitted to the insurer had suggested that there was a spill of diesel oil on the road causing the driver to lose control; and that in Guiseppe Celestino's action the allegation was made that the appellant braked on a wet and slippery surface and lost control.

8. The trial judge considered that the application to withdraw the admission of liability was in a sense an application to lead fresh evidence so that the trial might proceed on the basis that liability was in issue. His Honour applied by analogy the principles which govern the admission of fresh evidence on an appeal in support of an application for a new trial. His Honour cited a lengthy passage from the judgment of Glass J.A. in Nicholls v. Carpenter (1974) 1 NSWLR 369 at p 373. In part that passage reads:

"The conditions which must be fulfilled before a title

to a new trial on this ground can be made out have been

defined by the High Court: Greater Wollongong City

Council v. Cowan [1955] HCA 16; (1955) 93 CLR 435 and cases there

cited. One requirement is that the fresh evidence was

unavailable to the appellant at the first trial,

notwithstanding the exercise by it of reasonable

diligence: McDonald v. McDonald [1965] HCA 45; (1965) 113 CLR 529 at

p 542. No difference in meaning is suggested by the

alternative formulations that the fresh evidence could

not have been discovered by the exercise of reasonable

diligence: McDonald v. McDonald at p 532; Orr v.

Holmes [1948] HCA 16; (1948) 76 CLR 632 at pp 635-644; or could not

with reasonable care have been discovered previously:

Green v. The King [1939] HCA 4; (1939) 61 CLR 167 at p 174. Where

the moving party is an insurer who incurs liability

under any verdict recovered against the nominal

defendant, the criterion is identical. All the

circumstances, however, require consideration, including

the information supplied and withheld by the insured and

the independent measures taken by the insurer to

ascertain the facts: McCann v. Parsons (1954) 93 CLR

418 at p 431. The steps taken by the insurer

preparatory to trial are to be separately examined in

each case and the notorious circumstance that it is only

one trial among many furnishes no reason either for

raising or lowering the standard by which its conduct is

to be measured...If the information accepted has been

fraudulently supplied to it by or on behalf of the

plaintiff, that is a matter for consideration, but it

does not conclude the issue in favour of the insurer."

9. The trial judge observed that counsel for the appellant had not produced any material to indicate what steps the insurer in the present case had taken to verify the circumstances of the accident. His Honour noted that no request for particulars of the allegations of negligence, which lacked clarity, had been made, nor was there any evidence that the appellant had sought to interrogate the respondent. His Honour had also been the trial judge in the claim by Guiseppe Celestino (a fact which his Honour pointed out to the parties at the commencement of the trial). In respect of the present case his Honour in his reasons for judgment said:

"But the insurer had been, as the conduct of the trial

of the earlier action indicated, suspicious of the

circumstances of the accident and it seems to me that it

was put on sufficient notice to enquire more deeply into

the circumstances before this matter came on for trial.

There was not, in my opinion, that due diligence which

would have entitled it to leave to withdraw the

admission of liability. I am not satisfied, in all the

circumstances, that the claim in the Statement of Claim

constitutes fraud."

His Honour went on to point out that on the information before him, the respondent's version of the accident had been consistent throughout. In a medical report from Dr Edwin Cassar dated 5 November 1982 (less than three weeks before liability was admitted) supplied to the solicitor who signed the letter containing the admission the doctor had recorded:

"Mr. Celestino advised that the truck in which he was

travelling was passed on a wet road by another motor

vehicle which then cut in front of the truck, causing it

to hit an embankment in an effort to avoid the vehicle,

the truck then rolling and overturning."

This history was in substance that which the respondent's counsel had given in opening the case on the first day of the trial, and which the respondent gave in his cross-examination.

10. There is an important point of distinction between an application made on appeal after judgment to introduce fresh evidence, and an application made during a trial for leave to withdraw an admission. It is in the public interest that disputation between litigants be brought to finality by the judgment of the court, subject only to the normal appeal process which ordinarily does not entail the reception of further evidence. The public interest considerations are reflected in the rules which limit the admission of fresh evidence on an appeal. Where an application is made to withdraw an admission before judgment the relevant considerations are different. The trial process which is intended to lead to the finality of judgment is still in progress. Regard must be had to another public interest consideration which is reflected in the principle governing the amendment of pleadings. That principle was stated by Bowen L.J. in Cropper v. Smith (1884) 26 Ch D 700 at pp 710-711:

"...the object of Courts is to decide the rights of the

parties, and not to punish them for mistakes they make

in the conduct of their cases...I know of no kind of

error or mistake which, if not fraudulent or intended to

overreach, the Court ought not to correct, if it can be

done without injustice to the other party...as soon as

it appears that the way in which a party has framed his

case will not lead to a decision of the real matter in

controversy, it is as much a matter of right on his part

to have it corrected, if it can be done without injustice,

as anything else in the case is a matter of right."

This statement of principle was approved by the High Court in Clough and Rogers v. Frog (1974) 48 ALJR 481.

11. If the admission of liability had been made in the pleadings, this principle would have direct application. Here the admission was made outside the pleadings, but in our opinion the principle is equally applicable. The admission by letter was formally made for the purpose of narrowing the issues at trial, and had effect as if the pleadings had been amended to incorporate the admission.

12. The statement of principle assumes that an error or mistake by or on behalf of the party seeking the amendment has been demonstrated. Where the proposed change involves the withdrawal of an admission, a further matter arises for consideration. In Langdale and Anor v. Danby (1982) 1 WLR 1123 Lord Bridge of Harwich, speaking for the House of Lords, said at 1134 that in the absence of clear evidence to the contrary, a court is entitled to assume that counsel who makes an admission in the course of the conduct of a trial, has satisfied himself that the admission was, on his client's version of the facts, a proper admission to make. In our opinion a court, and other parties to litigation, are similarly entitled to make that assumption about admissions made by solicitors on their client's behalf in the course of litigation whether in pleadings or in correspondence. For this reason, where leave to withdraw an admission is sought, a court will require an explanation for the making of the admission. The explanation must be a sensible one based on evidence of a solid and substantial character: Langdale v. Danby at 1134; Hollis v. Burton (1892) 3 Ch 226; and Cumper v. Pothecary (1941) 2 KB 58 at 70.

13. In the present case the only explanation proffered on behalf of the appellant when his Honour was first asked to rule on the application was that the report of accident given originally to the insurer apparently contained a story which differed in material respects from that given by the respondent. But as his Honour pointed out, there was reason for the insurer to be on notice about this even before liability was admitted. Neither explanation nor evidence was offered to the court as to what enquiries had been made before liability was admitted, or as to what enquiries were made by the insurer after its suspicions were raised, as they apparently were, in relation to the claim by Guiseppe Celestino. In our view, although the analogy with the admission of fresh evidence was imperfect, the trial judge was correct to reject the application on the ground that no sufficient explanation had been given about the circumstances which led to the making of the admission, and the very late decision to seek to withdraw it.

14. There is however a further ground on which we think his Honour's decision should be supported. Even where sufficient explanation for the erroneous or mistaken making of an admission is provided, the admission may only be withdrawn where no injustice will be occasioned thereby to the other party. If the only hardship to the other party is delay or cost in the proceedings, that hardship will ordinarily be met by an order for costs. But if the other party has in good faith relied on the admission to his detriment so as to give rise to an estoppel the court will not permit the admission to be withdrawn: H. Clark (Doncaster) Limited v. Wilkinson (1965) 1 Ch 694, Langdale and Anor v. Danby at 1135-1136, Clough and Rogers v. Frog. In the present case the trial judge held, correctly in our view, that the material before him provided no basis for alleging fraud going to the respondent's version of the accident. In argument before this court counsel for the appellant disclaimed any allegation of fraud. In the absence of fraud, it must follow that in consequence of the admission of liability, the respondent's solicitors waived the requirement for the appellant to answer the interrogatories concerning the circumstances of the accident. Presumably the solicitors also put aside any further steps to marshal together evidence to prove the respondent's case on liability. In our opinion, in the absence of any evidence suggesting to the contrary from the appellant, the court is entitled to assume that the respondent would suffer prejudice in the proof of his case if after a period of almost five and a half years the admission of liability were withdrawn. The interval between the happening of the accident and the withdrawal of the admission (if leave had been granted on 26 May 1988) would have exceeded eight years. In this time it could be expected that the memories of witnesses and the parties would have faded, and lines of enquiry would have become cold. Although prejudice in particular respects may not be apparent on the information before the court, the delay would have been so long that in the circumstances of this case the probability of prejudice, although unidentified, should be assumed: see Allen v. Sir Alfred McAlpine and Sons Ltd (1968) 1 All ER 543 at 556 per Diplock L.J.

15. When the appellant was called to give evidence for the respondent, he was asked in his examination questions about the happening of the accident intended to elicit information as to the forces to which the body of the respondent may have been subjected. In answering these questions the appellant gave substantially the same version of the accident as the respondent had given. When cross-examining the appellant, his counsel sought to question him on a statement he made to a policeman after the accident which was said to be inconsistent with his evidence, and about the written report of the accident which had been submitted to the appellant's insurer. The report was signed by the appellant. In argument it was said that the report failed to disclose that an overtaking vehicle had caused the appellant to take evasive action. A lengthy exchange between counsel and the trial judge followed during which counsel for the appellant indicated his intention to renew the application to withdraw the admission of liability. To this end he sought to ask the appellant if the appellant had told his legal advisers (that is the solicitors on the record who, it was clear, were instructed by the appellant's insurers) about an overtaking vehicle which had caused him to take evasive action. Counsel indicated that if the appellant's answer indicated that he had not done so, then counsel would argue that the appellant had not been advised in relation to the admission of liability on the full facts, and that he had been advised mistakenly on an incomplete account of the accident. His Honour appropriately described aspects of this submission as unreal, and refused to allow the proposed question to be asked. His Honour confirmed his earlier ruling that the admission of liability could not be withdrawn.

16. The question sought to be asked might have laid the first step towards showing the possibility of error or mistake in the admission of liability, but the information before the court would still have failed to give anything like a sufficient explanation for the making of the admission. The anticipated answer would have raised other questions, for example whether, before the admission of liability was made, detailed instructions were taken from the appellant by the legal advisers. As we are of the opinion that the ruling to refuse the withdrawal of the admission of liability should be upheld on the ground that the withdrawal at so late a stage in the litigation would cause injustice to the respondent it is unnecessary to further consider the second ruling made by his Honour. In the circumstances the confirmation of the refusal of the earlier application was correct.

17. The other grounds of appeal contend that the assessment of damages was excessive.

18. The plaintiff was born on 18 September 1948. He left school when aged 16 and migrated to Australia in 1967 when he began labouring work as a drainer. In December 1972 he returned to Italy where he married. On his return to Australia he and his brothers Vincent, Guiseppe and Rocco commenced a business as drainers in Canberra. In 1975 the structure of the business was changed. Vincent retired. Thereafter the business was conducted by Adore Celestino Investments Pty Limited, a trustee company of which Guiseppe, Rocco and the respondent were the three principal directors and employees. The company was trustee of a family trust of which the three directors and their families were the beneficiaries. The company worked mainly as a contractor for A.V. Jennings Limited. The respondent worked as a backhoe driver preparing trenches, but also assisted in the laying of pipework.

19. The respondent gave evidence that in the accident he hit the top of his head and a small bruise eventually appeared there. His neck and chest were painful. He was wearing a seatbelt at the time of the accident. He had "very deep" pain in the back of the neck, to the head, and to the chest. He did not initially suffer from headache. He consulted a doctor two days after the accident. He said that at about 10 to 15 days after the accident he went back to work, although still suffering neck and chest pain. After he returned to work, he began to suffer severe headaches, and these continued. He found the manipulation of the levers of the backhoe increased his neck and chest pain. This prevented him working full time even though he was anxious to meet the needs of his family. Before the accident he had been working six days a week, for long hours. He continued to work, although with difficulty for the balance of 1980. He said that early in 1981 he began to suffer low back pain.

20. At trial the respondent alleged that as a result of the accident he had thereafter suffered neck and back pain, severe disabling headaches, and chest pains. His capacity for work was limited. The neck and back pain caused discomfort, and when he was suffering severe headaches as well he was unable to work at all. He said he could work much of the week at the ordinary tasks of a backhoe operator. He could walk freely over rough sites, and engage from time to time in heavy digging work clearing trenches. He could lay pipes. He estimated that the amount of time which he could devote to his work, without feeling the need to go home because of pain, was of the order of 20 to 30 hours a week when he was not totally disabled.

21. In particulars filed shortly before the trial the respondent alleged the following periods of total incapacity for work caused by the accident:

1 May 1980 to 2 February 1981

9 July 1982 to 15 January 1984

7 April 1987 and continuing.

22. The respondent denied that he had suffered serious headaches or chest pains before the accident. However his Honour accepted clear evidence from the medical records of the Scullin Health Centre where the respondent had been a patient, that he had previously suffered migrainous or "vascular" headaches of a serious nature and abdominal pains. In particular he had consulted doctors at the clinic on several occasions between March and December 1975. By December 1975 he was complaining that his headaches were so bad that he could not finish a day's work. At that time he was referred to Dr Cassar, a consultant physician, and a brain scan was performed. Dr Cassar recorded that the respondent gave a two year history of left sided throbbing headache which lasted up to 12 hours. He was also complaining of abdominal pain. The doctor made a provisional diagnosis of analgesic induced hepatic disease or nephropathy, migraine equivalent headaches, and neurosis. He prescribed a course of drugs which settled the headaches within a few days. He also advised the respondent to cease heavy analgesic consumption. The respondent again presented to the clinic with headaches of a migrainous nature in September 1977. At a further consultation in August 1979 the respondent complained of an upper respiratory tract infection and sinusitis which could possibly have been producing headaches, but this is not clear from the medical notes and we are not persuaded that the trial judge was in error in disregarding that consultation as relevant.

23. Extensive films (which took approximately two days of court time to show), were put to the respondent in his cross- examination. These were taken in September and October 1982, January and February 1984, in December 1985, in April and May 1986, in November and December 1987 and in March 1988. His Honour found that the film disclosed no sign that the respondent was suffering from any disability at all at those times, but that it was not inconsistent with the respondent's evidence, and that of his wife and brother Rocco, that he could work very hard during much of the day, and on occasions for whole days and thereafter find himself unable, because of headaches, to work any further. The films showed that the respondent was engaging in hard work as a backhoe operator with his brothers on 11 and 12 October 1982, days when he alleged he was totally incapacitated. Evidence from the medical records and from the films discredited the respondent in substantial respects. His Honour held that he could not accept the respondent's evidence as "completely accurate". The findings and conclusions which his Honour reached indicate that he rejected large parts of the respondent's evidence, but he did not reject it entirely. There was independent evidence, from several medical practitioners in particular, which supported parts of the respondent's evidence. His Honour was faced in these circumstances with a difficult task of estimating what loss the plaintiff had suffered. He could do this only in a broad way.

24. His Honour found that no causal relationship had been established between the accident and the low back symptoms about which the respondent first complained in early 1981. His Honour went on to observe about the back:

"It seems to me also that the pain was a relatively

moderate pain in any event and I do not think it plays

any particular part in any disability from which the

plaintiff suffers."

His Honour found that there was no disc lesion at the level of the cervical spine. However there was evidence from Dr Cassar, which he accepted, that he had on many occasions observed spasm in the neck muscle which was an objective sign. Dr Cassar considered the respondent should be able to work quite vigorously for a good deal of the day as a backhoe operator and engage in work generally as though he was not incapacitated at all but that when neck pain and headache combined as they did he would have expected the respondent to be incapacitated as he said. That the respondent probably suffered continuing neck pain was also conceded by two consulting neurologists called on behalf of the appellant, Dr Andrews and Dr Spira. Concerning the headaches his Honour said:

"I think the proper conclusion to draw from all the

medical evidence is that the plaintiff was susceptible

to migraine headaches and had been so since at least

1975. I am satisfied, however, that treatment had been

effective in controlling the migraine for some years

until the accident. I do not think the plaintiff would

have failed to complain about continuing headaches of

migraine type had he had them in the years immediately

preceding 1 May 1980. If anything, he impressed me as

being something of a hypochondriac. The real question

is whether the migraine from which he had suffered would

have returned in any event causing him that degree of

incapacity or some part of it from which he presently

suffers as a result of the vascular headaches. I am

satisfied that he did have time off from work due to

those headaches and I think they were, for all practical

purposes, due to the accident."

Later, after reviewing evidence about the fortunes of the business conducted by Adore Celestino Investments Pty Ltd, and the salary which the respondent had received from that company, his Honour said:

"I think his time spent at work was rather greater than

his evidence would have had me believe. But when all

this is said it is still the case that the plaintiff

suffers from a disabling combination of neck pain and

vascular headaches. It may be that his migrainous

condition would have reasserted itself, accident or no,

but the evidence satisfies me that, had it done so, the

probabilities are that it would have been controlled by

medication and not seriously incapacitated the plaintiff."

25. During the period of alleged total incapacity between 9 July 1982 and 15 January 1984, the respondent visited his parents in Italy. He left Australia at the end of March 1983, he says intending to stay in Italy for about three months. However in June 1983 he developed a form of hepatitis which led to him being hospitalised in Italy on various occasions from 2 June 1983 to 26 October 1983. His Honour held that this illness was due to the drugs which he ingested in an endeavour to treat the headaches and pain from which he was then suffering.

26. Although the respondent claimed that he had worked only to a very limited degree after 1 April 1987, his Honour did not accept his evidence that his not working was due to his incapacity as a result of the accident but he held it was appropriate to make an award in respect of the period from 1 April 1987 and continuing on the basis of a loss of earning capacity of 20%. On about 31 March 1987 Adore Celestino Pty Ltd had lost the A.V. Jennings Ltd contract, and, through lack of work, both Rocco Celestino and the respondent ceased to be employed by the company at that time.

27. Against these findings his Honour assessed the damages as follows:

(a) loss of 3 months earning capacity in the

period ended 1 February 1981 - $3,500

(b) "lost income" for the period 2 June 1983 to

26 October 1983 (the period of illness in

Italy) - $6,300

(c) in his Honour's words, "a sum representing

general damages for loss of earning capacity

for which I am satisfied the plaintiff

suffered but which I am unable to quantify

except in a most general way" during the

period from 1 May 1980 to 31 March 1987 - $7,000

(d) loss of earning capacity from 1 April 1987

to the date of judgment, 5 January 1990,

based on 20% of the net earnings which the

plaintiff would have received as a backhoe

operator if fully fit and working 38 hours

per week (now $363 per week net) - $10,130

(e) future economic loss representing 20% of

$363 per week to age 65 discounted by

3% - $60,750

(f) general damages for pain and suffering - $35,000

(g) special damages - $7,224.95

$129,904.95

In assessing the damages for future economic loss his Honour did not discount the result of his mathematical calculation for contingencies. He considered that the adverse vicissitudes which ought to be taken into account were balanced by the capacity which, but for the accident, the respondent would have had to earn overtime.

28. The appellant's first challenge to this assessment concerned the findings relating to the post accident headaches. It was submitted that the trial judge should have held that the respondent's headaches had been migrainous in nature throughout and a continuation of pre-existing problems; and that the headaches were causally unrelated to the accident. In seeking to make good this submission, counsel for the appellant took the court in detail through the medical evidence. It was submitted that his Honour failed to appreciate the significance of aspects of this evidence. We are not persuaded that this is so. We think it is clear from the judgment that his Honour did find that after the accident the respondent suffered headaches which were of the same kind as those headaches suffered beforehand. We do not accept the submission that his Honour was misled by an attempt by the respondent to describe his headaches after the accident as being different from those which he had previously suffered. From about 1984 the evidence suggests that the respondent may have been endeavouring to make this distinction but the doctors did not consider that the symptoms which he related - occipital headaches rather than frontal headaches with migrainous features - were necessarily descriptive of a type of headache which was unrelated to the previous condition. The trial judge referred specifically when making his findings to symptoms of migraine headaches reported by the respondent to the Scullin Health Centre on 15 September 1980, and 3 March 1981, and to Dr Corry, a specialist in rehabilitation medicine, in August and October 1980 and January 1981. His Honour did not distinguish between the headaches complained of then and headaches about which the respondent made later complaint. His Honour's finding was that after the accident the respondent suffered vascular headaches, an expression used in the evidence to describe migraines. This finding provides the setting which made it relevant for him to say "the real question is whether the migraine from which he had suffered would have returned in any event causing him that degree of incapacity or some part of it from which he presently suffers as a result of the vascular headaches".

29. We do not find any reason to think his Honour misapprehended the evidence, or fell into error in failing to appreciate a significance in passages in the evidence of the specialists to the effect that the headaches were not secondary to injury in the cervical spine. A common theme in the medical evidence is that a cervical spinal injury, and a blow to the head, could precipitate a recurrence of the plaintiff's migraines, and as we understand the reasons for judgment, this is what the trial judge found had happened.

30. Although the medical specialists acknowledged in their evidence that there is a distinction between occipital headaches and frontal headaches with migrainous features, they do not seem to have considered this distinction to be important when formulating their opinions about the respondent. It is clear that on many examinations the respondent complained of both types of headache, and complaints of occipital headache were often considered by the doctors to be a manifestation of his predisposition to suffer migraines. At other times symptoms of occipital headache were considered to be associated with, or part of, the pain syndrome from the neck injury. Insofar as his Honour has not referred expressly to occipital headaches as a different complaint from migraines or vascular headaches we think he has intended general references in the reasons for judgment to "neck pain" to include the occipital headaches associated with complaints about the neck. In any event we agree with the submission of counsel for the respondent that in the result it makes no material difference to the outcome of the case to draw the distinction urged by counsel for the appellant as frontal headaches and occipital headaches tended to occur together, and headaches of either description in association with neck pain caused incapacity for work.

31. Next it was contended that the allowance made for lost earning capacity during periods of total incapacity up to 2 February 1981, and whilst the respondent was in Italy, should be set aside as the evidence did not establish that the respondent had suffered a wage loss even though there may have been some loss of earning capacity in a medical sense. It was said that financial statements for Adore Celestino Investments Pty Limited for the period up to 31 March 1987 showed that the respondent and his family had received substantial income, and that the loss of earning capacity was not productive of economic loss.

32. The annual turnover and profit of the company was considerable in this period, and in some years remarkably high. But the evidence discloses that there were times when the company was short of work, and when the respondent and one or other of his brothers could not be employed because of insufficient work.

33. The first period in question is that which ended on 2 February 1981. The financial statements and the respondent's tax return indicate that during this period he was not employed by the company. Neither was his brother Guiseppe. It is alleged that this was due to their injuries, but the coincidence in the periods of unemployment casts a doubt on this. Whatever the reason for their not being employed by the company it cannot be said that during this time the respondent was remunerated notwithstanding his injury. We think the award of three months loss of earning capacity during this period was a reasonable broad brush estimate with which this Court should not interfere.

34. The award from 2 June 1983 to 26 October 1983 is attacked on a number of grounds. The finding that the illness in Italy was due to drug ingestion is challenged. This finding is based squarely on the evidence of Dr Cassar, which was accepted, and reflects his considered opinion and the diagnoses made in two hospitals in Italy after extensive tests. Even if the hepatitis condition was precipitated by a viral infection (the other possibility) Dr Cassar's opinion is that the condition would not have caused a problem had it not been for the considerable analgesic drug ingestion of the respondent. So even on the alternative hypothesis the finding of causation was properly made.

35. Then it is said that during this period there was a shortage of work such that the respondent had been laid off since 9 July 1982 and both Rocco and Guiseppe Celestino had been laid off in about March 1983. In any event the respondent had intended not to work whilst in Italy. To 30 June 1983 these are forceful arguments. However beyond that date the arguments do not carry weight. But for the illness the respondent would have returned to Australia at that time. From 1 July 1983 the financial statements of Adore Celestino Pty Limited establish that the company resumed full activity.

36. There is however another reason to question the award in respect of the period from 1 July 1983 onwards. Throughout that financial year the financial statements show that the respondent was paid his full salary by the company. He received the same salary as his brothers - they received $30,000 each. No explanation for the payment of this salary by the employing company whilst the respondent was incapacitated was given. In the absence of any indication of the reason for the payment we do not think it is possible to characterise the payment as a subvention of the kind which should be left out of account in accordance with the principle in National Insurance Co. of New Zealand Ltd v. Espagne [1961] HCA 15; (1961) 105 CLR 569. There is no suggestion that the payment affected the respondent's entitlement to future salary or other benefits from the company after his return to work. The payment appears to have been simply one of salary. As such, the payment should be brought to account in the assessment of damages: Graham v. Baker [1961] HCA 48; (1961) 106 CLR 340 at 345-347 and Espagne's case at 586 per Windeyer J. If the respondent were employed by a company in which he had no financial interest we think the unexplained payment of his full salary would lead to the result that he had failed to establish that his loss of earning capacity was productive of financial loss, and no award would be made. However the respondent was directly concerned in the financial success of his employer. In a practical sense the business was a family partnership. Had he not been ill he could have returned to Australia as planned at the end of June. His presence might have been productive of extra income for the company. As a matter of probability his illness removed this chance. The loss of the chance should be compensated in damages. However as there is no evidence that the respondent's presence in Australia would certainly have increased the turnover or profit of the company, the valuation of the lost chance should be conservative. As for the period from 2 June 1983 to 30 June 1983, had the respondent not been injured he may not have visited Italy. Although work was not available with the company when he left Australia he might have found work elsewhere in Canberra. This lost chance must also be compensated. We consider the award for the period 2 June 1983 to 26 October 1983 on the basis made by the trial judge cannot be supported. However there should be an award for lost chances which we would fix at $4,000.

37. Apart from the general challenge to findings about the respondent's headaches, the appellant did not otherwise challenge the "general damages" of $7,000 awarded for lost earning capacity up to 31 March 1987.

38. The appellant challenges the basis on which lost earning capacity from 1 April 1987 was made as being too generous. It is to be observed that in the period up to 1 April 1987, leaving aside the periods of total incapacity, the trial judge allowed, broadly, a little more than $1,000 per annum for lost earning capacity, whereas the calculations he made for the period beyond that date allow in excess of $3,700 per annum. At first sight this difference suggests a considerable over-compensation after 1 April 1987. However we think the different amounts can be explained, and, subject to what follows on the topic of contingencies, are justified. Before 1 April 1987 the respondent had, for practical purposes, been in the fortunate position of a self-employed person in a successful business. He could tailor his working hours and his tasks to meet the exigencies of his health. Absences from work were tolerated and understood. Lost time was for the most part not productive of economic loss.

39. On the collapse of the family business the situation changed. The respondent was placed in a position where he had to seek work with unrelated employers, and where he was required to compete on the labour market with wholly fit people. His disabilities then assumed greater importance and were likely to cause greater economic loss. We are not persuaded that the basic approach to the assessment for the loss of earning capacity after 1 July 1987 adopted by the trial judge should be disturbed.

40. We are however not able to agree with the capitalisation of the future loss to age 65 without discount for contingencies. The respondent was firm in his evidence that he intended to retire at 60, not 65. On his Honour's findings we think there are several adverse contingencies which are not offset by the possibility that the respondent might have earned overtime but for his injuries. His injuries do not wholly prevent him from working some overtime which, the evidence suggests, is usually worked on weekends. His Honour, having found as a matter of probability that the predisposition to migraines would, but for the accident, have been controllable with drugs, was required nonetheless to recognise the chance that the condition might not be controlled. This has now been made clear by the High Court in Malec v. J.C. Hutton Pty Ltd [1990] HCA 20; (1990) 64 ALJR 316. In our opinion the following chances require a significant discount for contingencies: that the migraine headaches might not be controlled; that the low back pain about which the respondent complained from early 1981 might become disabling; that the liver condition which caused symptoms in 1975 and 1983 might reoccur and cause disablement, perhaps for example because the respondent consumed excessive analgesics for back pain; and that downturns in the availability of employment would result in periods of unemployment. There is also the chance that in the future the respondent might go back into business so that he could once again tailor his work to suit his health.

41. A calculation on the basis made by the trial judge, but to age 60, produces a figure of approximately $52,700. After allowing for contingencies we would reduce the award for future loss of earning capacity from $60,750 to $40,000.

42. The award for the period from 1 April 1987 to the date of judgment must also be adjusted to reflect contingencies. We would reduce the sum of $10,130 to $7,500.

43. The appellant further contended that in assessing damages for loss of earning capacity the trial judge erred in not bringing to account certain payments of unemployment benefit received by the respondent in accordance with the Redding v. Lee [1983] HCA 16; (1982-1983) 151 CLR 117 principle. We consider this submission is without substance as at no stage has the respondent received benefits which overlap the awards of compensation so as to produce an element of over-compensation.

44. A challenge to the award for special damages should also be dismissed. It is unclear whether the figure adopted by the trial judge was proffered to him as an agreed figure or one which was to be subject to adjustment according to his findings. Insofar as the items of special damage included in the award may relate to the back condition, they are offset by the absence of any items for hospital or medical treatment in Italy.

45. Finally, the award for pain and suffering was said to be too high. On the trial judge's findings the respondent has a lifelong painful neck condition and will be subject to migraines, at the least made worse by the accident. His disabilities will be aggravated by heavy work. The award of $35,000 is perhaps at the upper end of the scale but we cannot say that it is manifestly excessive.

46. The result of these reasons is that we consider that the appeal against the assessment of damages should be allowed. The overall assessment of $129,904.95 should be reduced by $25,680 to $104,224.95.

47. The appellant has failed on the grounds of appeal relating to liability, and has failed on the submission concerning the cause of the respondent's headaches which occupied the majority of the time spent on the appeal. We consider the appellant should pay one half of the respondent's costs to be taxed.