_Reardon-Smith v Torres-Farr & Anor_

Supreme Court of Queensland|2006-09-11|Before: Byrne J

[1] On 10 March 2004, the plaintiff, then aged 25, suffered personal injuries in a motor vehicle collision: a whiplash type injury to the neck, another musculo-ligamentous injury to the lower back, and contusions to the right hip and knee. The only issue for decision is the amount of compensation to be awarded for economic loss.

[3] Elite surfers typically enter the WCT through acquiring a sufficiently high ranking from participation in the World Qualifying Series ("WQS"). About 40 WQS events are held around the world annually. Competitors are ranked by the points accumulated on their best seven competition results in a year. A competition is allocated one of six grades. The most challenging is a 6 star event, which offers higher prize money than lower graded events. And the higher the grade, the more the points a competitor earns from success. For example, the points gained from a first place range from 250 for a 1 star victory to 1,500 for a 4 star, 2,000 for a 5 star, and 2,500 for a 6 star. Winning points is critical to ranking and, therefore, to graduating to the WCT, where the world's best compete for the most valuable prizes and sponsorships.

[4] The plaintiff maintains that, when injured, his ambition was to compete that year on the WQS circuit, eventually qualifying for the WCT. He contends that a rule change in 2005 has permanently deprived him of the opportunity of joining the 192 highest ranked surfers in the WQS competition - the group from which the WCT squad is drawn. The case appears to be founded on these propositions:

• In 2004, had the injury not supervened, the plaintiff would have competed in several WQS events, in Australia and abroad.

• Those events would have included 5 and 6 star events, mainly overseas. In 2004, any surfer was eligible to compete in them.

• His success would have seen him rank in the top 192, leading to his ultimate goal of joining the WCT 48.

• That level of achievement would largely have been attributable to success in 5 and 6 star events, where a higher placing earns more points than equivalent positioning in 1, 2, 3, or 4 star events.

• In 2005, a new rule restricted participation in 5 and 6 star events to surfers ranked in the WQS top 192.

• Not having ranked in that 192, the plaintiff is no longer eligible to compete in 5 and 6 star events.

• No matter what his success in 1-4 star competitions in future, he will not break into the 192.

[5] The defendants' case is that the plaintiff has lost nothing of value by an inability to participate in 5 and 6 star events in 2004. He would not, it is said, have competed in them or else, if he had, he would not have achieved a WQS top 192 ranking in that year.

[6] The plaintiff testified that, at the time of his accident, his ambition for 2004 was to compete in the WQS, as well as the local conventional circuit, the Queensland Championship Circuit ("QCC"), and selected Airshow Series events, intending to "build up a seed for the following years to eventually qualify for the WCT". He would, he claimed, have competed in WQS events in the USA, England, France and Spain later in the year. 2004 was to have been a "big year" for him "on the WQS". He intended, he said, to have competed that year in "numerous" WQS events around the world: a minimum of seven "to get a seed for the next year".

[7] A "good seed" allows a competitor to start in the second or later rounds, depending on the level of seeding achieved. Seeding is related to ranking, and ranking depends on the number of points earned through success in WQS events. The later the round at which a competitor enters, the fewer the number of other surfers against whom he must compete, which is an advantage. The significance of the seeding to progression through the WQS to the WCT is explained by the plaintiff:

"You start off at the bottom and start from round one, compete in it through the whole year and get a seed for the following year so you don't have to start in round one again, you start in the further rounds, depending on how well you did, and so on and so forth throughout the years until you can reach the top 16 and qualify for the WCT."

[8] Each year the top performing 28 of the WCT are retained. Others are drawn from the top 16 of the WQS 192.

[9] Although the plaintiff's stated aim for 2004 was no more ambitious than to get a good WQS seed in preparation for 2005, the case propounded involves the notion that the realization of his plans for 2004 would have brought such success, particularly in mostly overseas 5 and 6 star events, that he would have surfed his way straight into the 192 in 2004.

[10] What, then, did the rest of 2004 hold in store for him when, 10 weeks into the year, the plaintiff was injured? Might he have competed, and performed well, in enough WQS events around the world as to have secured a place among the 192 in that year? And if so, might he have anticipated, with soundly based optimism, joining the WCT some day?

[11] The plaintiff started surfing professionally when aged 19 or 20. From the outset of his career, he participated in "conventional" surfing competitions. He discovered that he had an aptitude for the speciality known as aerial surfing, which involves manoeuvres in the air.

[12] In 2001, 2002 and 2003, the plaintiff was among the three top aerial surfers in Australia. In 2002, he was ranked first in the country in that speciality. In 2001-2003, he also competed in conventional surfing competitions.

[13] The plaintiff is an accomplished conventional surfer too. In 2003, he was ranked first on the QCC. 2004 held similar promise. Early that year, he competed in four events. He won them all.

[14] He had not enjoyed comparable success in WQS competition. Before his accident, the plaintiff had competed in three WQS events. All were in 2003. Two were in France: a 5 star; and a 6. He reached only the second round of those eight or 10 round competitions, earning a few points towards a WQS ranking. The third was a 3 star event at the Gold Coast, where he reached the round before the quarter finals. At the end of 2003, his admittedly "very poor" WQS ranking was, he says, "up towards" 1000.

[15] About a year before his accident,[2] after lack of success in WQS events, the plaintiff told a television journalist why he had decided not to participate in the WQS again:

"I couldn't actually get to the world circuit in the normal comp[etition] so I've concentrated on the ones in Australia ... that's the path I chose, I chose aerials so I'm just going to try to go as far as I can with that"; and

"I tried the QS ... for a while and it sort of wasn't my thing, now I sort of lean towards aerial surfing and ... the Cult [a reference to his sponsor] have got me on board and that's what they want me to do."

[16] In explaining why he had decided against WQS competition in future, he was making these points: WQS was not his "thing" - no doubt a reference to his failures in WQS events; he intended to concentrate on aerial surfing in Australia, capitalising on his rare aptitude for that speciality; his major sponsor, Cult Industries, wanted him to compete domestically in aerial events; and he did not have the financial resources to go overseas and "get to the world [WQS] circuit ...".

[17] These were all rational reasons for choosing not to participate in WQS events again. First, he had not performed well in them in 2003. Secondly, in aerial surfing he was in the top three in Australia. It was in aerial surfing that he had won the bulk of his prize money. There was, as he said, "a lot of money" to be earned in aerial events; and they were readily accessible: "a lot ... were in Australia". Thirdly, sponsorship was his main source of income. His most important sponsor was Cult Industries: Cult wanted the exposure of its clothes and watches that attended the publicity that came with the plaintiff's domestic success, especially in aerial surfing. Fourthly, money mattered; and in 2003 the plaintiff did not have enough to sustain sufficient overseas travel to allow him to compete in the number of events he needed to achieve even moderate success in the WQS.

[18] In the 2003 financial year, the plaintiff's pre-tax operating profit was $9,054. Sponsorship was about $45,000, and prize money about $18,000. Expenses included travel and accommodation outgoings of almost $24,000, and management fees of over $11,000. In the 2004 financial year, prize money amounted to about $11,500, sponsorship increased to $52,000, management fees were almost $10,500, and travel and accommodation expenses fell to $13,000. Accordingly, in the financial year in which he was injured, the plaintiff earned $27,364 net profit as a professional surfer. His tax returns disclose no other income.

[19] In 2004, before 10 March, there were four WQS events in Hawaii and Brazil: a 1 star, and three 4 star events. The plaintiff did not enter any. He remained in Australia, competing in QCC and other events. Shortly before the accident, he competed at the Gold Coast to qualify for a WCT event. He procured this marvellous opportunity for wildcard entry to the WCT by winning the 2003 QCC competition. This was his chance to go directly to the WCT, bypassing the many financial and performance-related challenges of struggling through the WQS, competing against hundreds of other WCT aspirants. But he did not reach the final. So, to reach the WCT, he had to do well in WQS events.

[20] The least expensive way of succeeding was through WQS events in Australia. There were three such events in 2004: a 5 star event at Maroubra starting on 15 March, a 4 star event at Newcastle starting on 22 March, and a 6 star event at Margaret River starting on 29 March. The plaintiff did not enrol in any of them.

[21] The plaintiff would have liked to have competed in WQS events in 2004. His participation in the WCT qualifying event at the Gold Coast shortly before his accident shows that he wanted to get to the WCT if he could. But desire and intention do not always coincide. And in 2004 the plaintiff still had the same substantial reasons to adhere to a course that would not have taken him overseas to compete in 5 and 6 star WQS events.

[22] Evidence of the sports lawyer and entrepreneur, Mr Callinan, establishes that the WQS is "very expensive to get to". To "tour effectively", as Mr Callinan puts it, a professional surfer needs an annual travel budget of at least $30,000. The money is not easily found. Attracting Australian sponsorship for WQS participants has its difficulties. Mr Callinan explains that Australian sponsors are reticent about supporting surfers on the WQS circuit. Those who succeed in WQS events more often than not do so overseas, where most WQS events take place. Such success may well not generate publicity in Australia. So, many sponsors do not expect to derive much product coverage from a placing in some 4 star event in Ecuador, as Mr Callinan illustrated his point.

[23] Mr Callinan knows many talented surfers who prefer to remain in Australia, participating in local competitions, without putting time and money into pursuing WQS ranking in the hope of reaching the WCT eventually. His testimony reveals that, unless a surfer seems destined for elite status on the WCT, it will often make more economic sense to stay in Australia, winning local events and sponsorship, just as the plaintiff had told the television interviewer he intended to do.

[24] In 2004, the plaintiff was no better situated financially than in 2003 to afford the considerable expense that would necessarily have been incurred in competing overseas in the number of events that a surfer of his level of prowess would probably have needed for a reasonable chance of ranking in the select 192. In testifying, the plaintiff accepted as much.

[25] In early 2004, he appreciated that he would not have been able to compete in enough overseas WQS events to reach the 192 in that year without attracting "bigger and better sponsorships so I could compete on the world circuit". He says that he competed in his Australian events in the 10 weeks or so before his accident to "build up" his profile so as to garner the more rewarding sponsorships that were essential to venturing overseas to WQS events.

[26] By 2003, neither the plaintiff's number one QCC ranking nor his ongoing successes as an aerial surfer had generated the sponsorship required to sustain overseas travel for the times needed for effective WQS participation. Despite his number one ranking early on in the 2004 QCC circuit, there is no evidence of a change in the plaintiff's sponsorship or prize money fortunes in 2004: nothing to indicate that his pre-accident successes in 2004 had interested an existing sponsor in increasing the level of support or that he looked like attracting a new sponsor. Nor is there a word of evidence proposing anyone who might have been approached later in the year for new or enhanced financial support.

[27] In these circumstances, why would the plaintiff radically have altered the course announced in 2003 and attempted the WQS again later in 2004?

[28] Knowledge of the impending rule change to confine participation in 5 and 6 star WQS events to the top 192 from 2005 could not account for such a turnaround. If the plaintiff simply could not afford to go overseas for the time needed, it would not matter that the rule change was an incentive to make 2004 his WQS year. The response Mr Grant-Taylor SC gives is this: although the plaintiff had not previously generated sufficient money or built a high enough profile to meet the expenses of competing at national and international WQS competitions, his success domestically in the eight months or so over the 2003/2004 financial year immediately before the accident had changed that. This, however, for reasons mentioned, is not an accurate characterisation of the position.

[29] Mr Grant-Taylor suggests that there were other reasons for the plaintiff to have concentrated on the WQS in 2004.

[30] It is said that the judging criteria were set to change - to have aerial moves figure in the scoring in the competitive surfing events. The change would, it is true, have helped him. But it is an immaterial consideration. The plaintiff does not say that, at any stage in 2004, he knew of the proposal to alter the judging criteria, let alone that it influenced him to decide on 2004 as his "big year" on the WQS.

[31] Next, Mr Grant-Taylor argues, the plaintiff had to earn a living. The Airshow Series, which had been an important source of income, was no longer held after 2004. The plaintiff had no other skills, experience or qualifications to generate a livelihood and, in reality, had no choice: "he had to make the switch to the WQS". But the plaintiff does not suggest that, before the end of 2004, he knew or suspected that the Airshow Series was not to be held in future. His evidence makes no link between the loss of that circuit and attempting the WQS again.

[32] Of more moment is the third proposition said to justify a conclusion that the plaintiff's evidence of his intentions on 10 March 2004 is reliable. It concerns his conduct post-accident. Since returning to competitive surfing, the plaintiff has been trying to make the grade in the WQS. And, so the argument goes, there is no reason to think that his plans would not have been similar had the accident not occurred.

[33] What he has done recently has potential to indicate the course he might have taken two years ago when surfing with equivalent proficiency, although assessing the significance of post-accident activities for pre-accident prospects is made problematic by two things that happened after the accident: loss of the Airshow Series, and the change in judging criteria to accord more weight to aerial surfing. Both developments would tend to encourage the plaintiff towards greater emphasis on conventional surfing competitions. What he has done in response to the two changes is, therefore, no sure guide to what he would have done in 2004. With that reservation, his post-accident achievements can be approached.

[34] The plaintiff testified that his current plans are, much as he maintains they were on 10 March 2004, to build up his "points on the WQS", "try as hard as possible to break in" to the 192, and then attempt to qualify for the WCT.

[35] After months of convalescence, the plaintiff returned to surfing towards the end of 2004. He did not want to "drop down the ratings too far". He was anxious to preserve his QCC seeding to avoid having to compete against more surfers in the 2005 local competitions. In 2004, after the accident, he also competed in one international event: in Ecuador, in the "World Amateur Titles", as he described the competition.

[36] In 2005, in Queensland, he competed in "just the smaller competitions", and was ranked third on the QCC.

[37] By the end of 2005, the plaintiff was surfing as proficiently as he had before the accident. Even so, his success in WQS events has remained limited. At the end of last year, he competed in two WQS 2 star events in the United States. In California, he reached the quarter finals, earning "a few hundred points" towards a WQS ranking. In North Carolina, he finished at the round before the quarter finals.

[38] This year, after four QCC events, he is in first place again. His current WQS ranking is, he testified, 300.

[39] This year, in the WQS he reached the last 32 in a 1 star event in New South Wales, winning about 150 points. He also entered two 4 star events from which he had to withdraw because of an ankle injury. Overseas, he has competed in a 3 star event in Japan, and a 4 star event in the Maldives. In both, he finished about 44th.

[40] The rest of this year, he intends to compete in only three WQS events, all of them in the Canary Islands: 2, 3 and 4 star competitions.

[41] He has not said why he intends to compete in so few WQS events overseas in 2006. Presumably, the explanation is a continuing lack of money to defray travel expenses.

[42] In the 2005 financial year, his prize money fell to about $8,500; sponsorship was about $45,000. After expenses of about $19,500, his pre-tax profit rose to almost $29,000. The slight profit increase over 2004 was influenced by a decline in outgoings: travel expenses (flights, ferries and car hire) were less than $6,000. So he still does not have the money needed to participate effectively in the WQS.

[43] When injured, the plaintiff harboured a dream of joining the top 192 on the WQS. But he realized that that object was out of reach until his financial fortunes improved markedly. By 10 March 2004, they had not. And there was no sign that they might do so later in the year. It is no surprise that he had not even bothered to enter a WQS event in 2004, in Australia or overseas.

[44] On the highly improbable hypothesis that the plaintiff would have participated in several 5 and 6 star events, mostly overseas, in the rest of 2004, what results might have been expected?

[45] The plaintiff's skills as a surfer are well respected by people with the knowledge to judge his proficiency and prospects.

[46] Mr Barton Lynch won the WCT title in 1988. He was a successful professional surfer for 15 years. He considers that, before the accident, the plaintiff was the best aerial surfer in Australia, with the potential to qualify for the WCT. He believes that the plaintiff would "clearly have been able to maintain a standard of performance" sufficient to rank him in the world's top 198 conventional surfers. Such is Mr Lynch's regard for the plaintiff's skills and attraction to sponsors that he considers that annual earnings of as much as $100,000 were not beyond the "realms of reality".

[47] Mr Callinan believes that the plaintiff's success domestically shows that he had the "raw talent to actually attack the WQS", if he could find the money to go overseas. Mr Callinan thinks highly of the plaintiff's skills, describing him as "an incredibly talented surfer", with the capacity to win a 5 or 6 star event in the WQS.

[48] Mr Sasha Stocker, Surfing Australia's National High Performance Head Coach, regards the plaintiff as a "very talented surfer", who showed some "really good skills, particularly in aerial surfing ...".

[49] Mr Joel Parkinson is ranked seventh on the WCT. He started on the WQS. He joined the WCT aged 20. In 2002 and 2004, he was WCT runner-up. He expects to earn more than $1,000,000 a year, before expenses. He competed against the plaintiff in early 2004, and lost to him. He considers the plaintiff to be a "real good surfer ... a really exciting surfer", whose skills are suited to the "poor surf" often found in WQS conditions. Asked to predict the plaintiff's prospects of success had he not been injured in 2004, Mr Parkinson considered that "definitely he was 192 bound ... he would have made ... the top 50 of the WQS quite easily ...".

[50] These are honestly held, expert opinions. Mr Lynch, Mr Callinan, Mr Stocker and Mr Parkinson, however, do not know of the plaintiff's results in WQS events. And those achievements, before and after the accident, do not match their expectations.

[51] The plaintiff has competed in eight WQS events. His best performance was in reaching the quarter finals in a 2 star event. Commonly, 5 and 6 star events are more competitive than the lower graded events. Accordingly, the plaintiff seems unlikely regularly to have improved in 5 or 6 star events on the limited success enjoyed in 1-4 star competitions. But maybe his admirers are right, and it is just that he is yet to realize his potential. That possibility cannot be ignored. He has, after all, beaten WCT surfers. On the other hand, by 2004, the plaintiff had not attained the kind of WQS "good seed" that is important to the prospects of reaching the 192 some day.

[52] There is, in short, a slim possibility that the plaintiff would have reached the 192 in 2004 if money were no object and he had participated that year in many WQS events, including 5 and 6 star competitions.

[53] Few surfers want to stay on the WQS circuit for long. Overseas travel is costly; and the financial rewards are rarely substantial. As Mr Callinan explains, no surfer is interested in a career in 5 and 6 star events. He participates in the WQS "to get to the WCT ... That's all they do it for ... as a stepping stone ... No-one's interested in being a WQS athlete. That's peanuts. Who wants to do that the rest of your life? They want to get to the WCT and make millions".

[54] But the WCT remains forever elusive for most. Mr Lynch sees the leap from the WQS top 192 to the WCT as being extremely difficult. Mr Callinan's evidence is to the same effect. Most WCT surfers have had major successes in world junior titles. The plaintiff did not.

[55] Another question is whether the plaintiff retains a chance of reaching the WQS 192. For if his prospects are as good now as they were in 2004, the monetary compensation would be assessed largely by reference to any loss caused by the two year delay in getting there. The plaintiff's case is that that opportunity is irretrievably lost with the result that he has permanently lost income which he would otherwise have derived, including, perhaps, millions of dollars from becoming a surfing "superstar".

[56] In testifying, the plaintiff exaggerated the challenges in reaching the 192 under the new rule. He said that the top 192 restriction in 5 and 6 star competitions makes it "virtually impossible" for a new surfer to join that group. "It is pretty hard to drop out once you are in there," he claimed. He also said that it was "definitely very hard" to reach the 192. I prefer Mr Callinan's evidence on the topic: that each year, the top 30 in the WQS who are not already in the 192 will replace others who have not performed as well.

[57] Mr Callinan is persuaded that the restriction of 5 and 6 star events to the top 192 does make it more difficult for talented surfers to reach the 192. Generally speaking, this seems to be so. But the effect of the rule change on a particular surfer depends on the extent to which the denial of the opportunity might matter for him. That turns on what the surfer would have achieved in 5 and 6 star events. The contrast between the views of the four experts and the plaintiff's results in WQS competition makes assessing this disadvantage for him essentially speculative.

[58] The rewards for high achievement in the WCT are great. Prize money is valuable. Sponsorship is an even more important source of income for successful professional surfers on the WCT: the very best in the world might derive $1,000,000 or more annually from that source. Those holding the lower rankings in the top 50 of WQS ratings might earn about $60,000 per annum from sponsorships, according to Mr Lynch.

[59] It is no part of the plaintiff's case that his injuries have impacted adversely on his earning capacity except to the extent to which they are said to have denied him the top 192 ranking in 2004. There is, for example, no claim for lost prize money for the months during which the plaintiff could not surf, at all or as well as before the accident. What, then, is fair compensation?

[60] There was no substantial chance that the plaintiff would have competed in several 5 and 6 star WQS events overseas in 2004 had he not been injured. Had that remote prospect eventuated, his chances of reaching the WQS 192 that year were slim. And if, very much against the odds, he had joined the 192 in 2004, he would have been unlikely ever to have joined the WCT. But if the plaintiff had conquered the WQS, and if he had progressed to the WCT, he stood to make a lot of money.

[61] My impression[3] is that $35,000 adequately compensates for economic loss.[4]

[2] These things were said after competition in WQS events, and when the plaintiff was 24. He first competed in a WQS event in 2003. He turned 25 on 26 May 2003.

[3] Cf Wynn v NSW Insurance Ministerial Corporation [1995] HCA 53; (1995) 184 CLR 485, 499.

[4] The methodology employed (see s 55(2) of the Civil Liability Act 2003) is, put shortly, the application of the principles stated in Malec v J C Hutton Pty Ltd [1990] HCA 20; (1990) 169 CLR 638.

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