2 On 17 May 2013 the Court delivered its reasons for judgment[1] allowing the appeal brought by Helen Rosa ('Rosa') against a firm of solicitors, Galbally & O'Bryan ('Galbally's') for negligently advising her to abandon a claim for damages against her employer, Drake Personnel Limited ('Drake'), for loss of earnings and settling her claim against Drake for damages for pain and suffering for less than its true value. Galbally's admitted negligence. The contest at trial lay in identifying the value of the loss Rosa had suffered as a result of the admitted negligence.

3 The trial judge held that Rosa would not have pressed her claim for loss of earnings even if she had received appropriate advice from a reasonable and prudent solicitor.[2] He held, however, that the negligence of Galbally's had caused Rosa the loss of a chance to pursue her common law claim for damages for pain and suffering against Drake.[3] He entered judgment in her favour in the sum of $56,750.[4]

4 On the appeal, the Court concluded that the trial judge was wrong to find that Rosa would not have pursued her claim for loss of earnings even had she received appropriate advice from a reasonable and prudent solicitor. In other words, the Court concluded that the negligence of Galbally's caused Rosa loss by advising her to abandon her loss of earnings claim. The Court also concluded that the trial judge was wrong in his assessment of the value of the loss to Rosa of the chance to pursue

her common law claim for damages for pain and suffering.

5 In the Notice of Appeal, Rosa sought orders that, if the appeal was allowed, the assessment of damages made by the trial judge in the sum of $56,750 should be set aside and this Court should determine the sum in which Rosa's damages should be assessed. This was reaffirmed at the hearing of the appeal and reliance placed on the fact that the appeal was by way of a re-hearing.[5] There is no doubt that the Court has the power to do so.[6]

6 This judgment is addressed to the question of the appropriate award of damages to be made by the Court.

7 On 23 May 2013 the Court conducted a short Mention of the matter directed to the question of disposition, having invited submissions from the parties. Galbally's did not seek a remitter of the matter to the trial division for the purpose of the assessment of damages but made written and oral submissions on the damages this Court should award. Rosa also made written and oral submissions on the award of damages she urged was appropriate.[7]

8 The issue of the appropriate award of damages is to be determined against the findings in the principal judgment. These include:[8]

(1) the judge was wrong to discount by 17.5 per cent the damages to be awarded against Galbally's having regard to Rosa's prospects of establishing negligence against Drake Personnel Ltd and/or Southern Health, or alternatively the risk of a finding of some contributory negligence;[9]

(2) the judge was wrong to consider that, in a hypothetical trial, a court was most likely to conclude that by the age of 62 Rosa would have been unable to sustain her nursing activity and it was likely that her ability to continue in welfare work would also have been dwindling;[10]

(3) the evidence supported a finding that Rosa would have worked until at least the age of 69, and that this retirement age should form the basis of any re-assessment of an award of damages;[11]

(4) the allowance the trial judge made for Rosa's continuing employment of 20 hours per week as a welfare worker and 10 hours per week as a nurse, with an additional allowance for increased work in the welfare sector, was open on the evidence and ought not be disturbed on the appeal (and Rosa's submission that she would have been able to work 40 hours a week was rejected). The Court found that, as the years went by, the proportion of time spent on welfare work might have increased relative to nursing;[12]

(5) Rosa should be awarded damages on the basis that she would have worked until the age of 69 with an average working week consisting of 20 hours as a welfare worker and 10 hours per week as nurse.[13]

9 Rosa submitted that the calculation as to loss of earnings should be divided into two categories, those up to the age of 65 and those from age 65 to 69. Rosa was born on 24 September 1948 and is now aged 64. She will be 65 in September this year.

10 In the first category, reliance was placed upon the evidence of Mr Allan, a forensic accountant, who had given evidence at the trial in respect of the scenario of 20 hours welfare work and 10 hours of nursing work, as follows:

(b) from 30/06/11 to age 65 discounted by 6 per cent $121,264.00

11 In respect of the second category, from the age of 65 to the age of 69, reliance was also placed upon the evidence of Mr Allan, using the scenario of 20 hours welfare work and 10 hours nursing work and the relevant multiplier of 186.2. The multiplier was based on the agreed discount of 6 per cent[15] applied to the number of weeks up until to the age of 69, that is, a discounted weekly multiplier. The calculation was based on the 2011 gross income sum of $56,660.00 per annum (net income of $45,696.00 per annum), that is, $878.77 per week, in the light of evidence adduced at trial about increases in awards and incremental increases in welfare earnings identified by Ms Hall of Goulburn Valley.

12 Rosa's calculations for the award of damages for loss of earnings, general damages for pain and suffering, and interest was as follows:[17]

(5) Superannuation from age 65 to age 69 $ 18,258.77

Reduced for vicissitudes 20 per cent $575,542.19[18]

$90,000.00 plus $273,811.19 ($363,811.19) with interest

at 10.5 per cent from 21/06/10 (approx. 35 months) $111,417.16

13 Thus, Rosa argued that the award which the Court should make in substitution for that made by the judge below is $363,811.19 with interest of $111,417.16.

14 Galbally's challenged the date used by Rosa for the assessment of damages. It submitted, and I consider correctly, that the appropriate date for the purpose of calculating the loss of earnings is the date of the notional trial which was agreed to be June 2010[19] when Rosa would have been aged about 62 (61 years and nine months).

15 The judge below determined that an appropriate figure for loss of earnings to the date of trial was $330,000[20] being the mid-point between the figure of $335,005 arrived at by Mr Allan and the figure set out in Galbally's submissions in its Annexure A at trial ($325,000).[21] The figure of $335,005 was arrived at in two steps, the first was to take the net loss of earnings calculated by Mr Allan, on the assumption of 20 hours welfare work and 10 hours contract nursing for the period to 30 June 2011 ($380,701), and the second was to deduct the net earnings Mr Allan calculated for the 2010/11 financial year ($45,696) to arrive at the figure of $335,005.

16 Galbally's submitted that in accordance with the rejection of ground 8 of the appeal, and the Court's acceptance of the judge's finding that Rosa would have worked 20 hours per week as a welfare worker and 10 hours per week as a nurse, the Court ought to affirm the judge's finding to the notional trial date with respect to an appropriate allowance for loss of earnings and loss of superannuation; that is, $330,000 for loss of earnings and past loss of superannuation at $30,000.

17 Galbally's accepted that the vicissitudes with respect to the future loss of earnings would be 20 per cent relating to:

(1) The risk that Rosa would not have work available through the years from the date of the injury and into the future;

(2) The potential for her neck condition and arm along with other medical conditions reducing or eliminating her capacity to work;

18 At the Mention, Galbally's reiterated its submissions as to the appropriate assumptions to be applied in calculating damages, namely, that the Court should apply a discount for risk in relation to the notional trial both with respect to damages for loss of future earnings and general damages. I deal with these submissions below. However, it submitted that if the Court proceeded on the basis that the calculation of future earnings should be that Rosa worked to the age of 69 in a combination of 20 hours per week of welfare work and 10 hours per week of contract nursing work,[22] without a discount, the appropriate calculation would be as follows:

299.9 (being the 6 per cent multiplier for Rosa at the age of 62 as at the notional trial date of trial) x $819.50 (being the net weekly wage of Rosa from that combination of work for the 2009/2010 financial year as calculated by Mr Allan, $42,614 divided by 52) = $245,768.

19 The calculation of the future loss of superannuation would be:

299.9 x $91 (being Rosa's gross weekly wage from the relevant combination of work for the 2009/2010 financial year as calculated by Mr Allan, that is, $52,579 divided by 52 = $1,011 per week multiplied by .09) = $27,290.

20 There was no dispute with respect to the calculations of the damages for pain and suffering[23] and no dispute with the rate of interest (10.5 per cent). This analysis supported a calculation of damages for loss of earnings as follows:

Reduced for vicissitudes 20 per cent ($126,514) $506,054

21 Thus, Galbally's submitted that, putting to one side the question of a discount with respect to future loss of earnings and with respect to damages for future pain and suffering, the award the Court should make in substitution for that made by the judge is $284,167.00 with interest at 10.5 per cent from June 2010.

Should there be a discount for risk in relation to the notional trial?

22 In support of the proposition that the Court should adopt a discount for risk in relation to the notional trial, Galbally's submitted that Rosa faced a risk, albeit a limited one, in respect of liability, and a risk in relation to the issue of contributory negligence in not checking the documents which would have adequately warned her of the patient's propensity to kick, and a risk in relation to the question of what injuries and conditions resulted from the kick from the dementia-affected patient. It was argued that it was necessary to recognise the vagaries of a jury and the risk that the findings made by the judge, in making an assessment of what would have happened in a notional trial, might not have been reflected in the assessment of the circumstances by a jury. Furthermore, it was submitted, another judge might have arrived at different findings.

23 Galbally's also pointed to the fact that a proceeding against the employer might have been compromised and urged that experience showed that a compromise requires a discount for risk on a plaintiff's best case.

24 Galbally's submitted that the Court should allow a discount for risk in the notional trial at 10 per cent to represent risks of litigation relating to issues of liability, contributory negligence and risks, beyond the ordinary vicissitudes, relating to the potential failure at a notional trial before a jury to prove the claimed losses. It relied on calculations it performed which showed that, after the 20 per cent deduction for vicissitudes; 10 per cent deduction for risk at the notional trial in respect of the pain and suffering claim; 10 per cent deduction for risk at the notional trial in respect of loss of earnings; and subtraction of the weekly payments for compensation, the assessment of damages would be:

25 Rosa submitted that it was necessary at all times to recall that what is to be assessed is the value of the asset comprising the value of the claim she could have brought against her employer, but for Galbally's admitted negligence. This is why evidence was received by the judge, as was recognised in Johnson v Perez, 'for the purpose of assessing the damages that the plaintiff was likely to be awarded had the action gone to trial'.[26] The assessment must be made relative to the prospects of success on trial, not relative to what Rosa may have compromised her claim for in negotiations. I agree. The prediction of what might have been an acceptable offer of compromise is not the task this Court, or the judge below, was embarked upon.

26 Moreover, it is also important to keep in mind that where, by reason of a solicitor's negligence, a plaintiff has been unable to bring a claim for personal injuries to trial, and recover damages in respect thereof, the object of valuing the loss of the chance to bring the claim is to provide appropriate compensation to the plaintiff by putting him or her in a position as though the negligent conduct of the solicitor had not occurred. So much was stated in Johnson v Perez:[27]

The starting point is that 'a plaintiff who has been injured by the negligence of the defendant should be awarded such a sum of money as will, as nearly as possible, put him in the same position as if he had not sustained the injuries.' ... In each of the present cases, the respondent would, but for the negligence of his solicitor, have recovered damages for personal injuries against his employer. It is that loss for which he is to be compensated; he is not to be compensated as if his claim against his solicitor was a claim for damages for personal injuries.

27 The asset is of uncertain value and calls for an assessment by reference to a rejection or acceptance of each risk factor in the notional trial. The assessment can proceed when 'the contingencies have been foreclosed ... by the decision of the primary judge in the trial of the claim against the solicitor'.[28]

28 This was a very unusual case. As was observed in the principal judgment, Rosa was hit with considerable force by a dementia-affected patient whom she was told was 'a bit punchy'.[29] Rosa directly sought assistance on how to handle the patient and was told 'to duck'.[30] This occurred in circumstances in which her employer well knew, and had documented, that the patient was aggressive and 'kicks and hits at staff'.[31] The judge concluded that Rosa was given 'an incomplete warning'[32] about the patient's aggressive tendency and 'cynical advice on strategy (in response to a direct question)'.[33] Rosa had not nursed the patient before. She was clearly dependent on what she learned from the handover procedure. The judge found that reliance on the incident reports and nursing plans as the means of making causal nurses aware of hazards was 'impractical and inadequate'.[34] He also considered that the allegation of contributory negligence in not calling for a second nurse or not being more careful 'bordered on the untenable'.[35] There was a 'substantial likelihood'[36] that Rosa would have established her claim against her employer had the matter proceeded to trial and there was no identifiable deficiency in her case upon which a reduction of those prospects of success could be based or that rendered her claim doubtful.[37] There were no risk factors identified by the judge which were not disposed of by the judge in Rosa's favour. In the language of Johnson v Perez, the contingencies were all foreclosed, to Rosa's advantage, by the decision of the primary judge in the trial of the claim against the solicitor. The 'way was open'[38] for the assessment of damages in accordance with those findings.

29 In my opinion, in the special circumstances of this case, it would be wrong to cast about speculatively, without reason, for a general reduction to apply to Rosa's chance of success, independently of the rejection of the risk factors in the case, on the ground, for example, that some juries may not have been sympathetic to Rosa or another judge might have looked at the circumstances differently.

30 The value of the loss of a chance, while it calls for a 'broad brush'[39] approach to the elements making up the valuation, does not require an inevitable application of an arbitrary discount once the elements of the valuation have been identified. To require such a discount in every case could be to misstate the value of the chance lost. Indeed, such a requirement might have the effect of precluding the value of a claim, once lost, ever being equal to the claim. The compensation afforded may not serve to achieve the purpose of putting a plaintiff into the same position as if he or she had not sustained the injuries. While many cases, perhaps most cases, will call for a discount to reflect specific identified deficiencies evident in the notional trial, in my opinion, in the particular circumstances of this case no such deficiencies were identified and therefore no such general reduction should be made.

31 As indicated above, I consider that Galbally's is correct in its submission that the past loss of earnings ought be calculated to the agreed notional date of trial, June 2010. However, I do not agree that the judge was correct to adopt a figure that was the mid-point between the evidence of Mr Allan of $335,005 and the figure relied on by Galbally's in their submissions before him, of $325,000. It has not been demonstrated that there was error in the calculation performed by Mr Allan and I adopt the sum he arrived at for past loss of earnings, as applied to the notional trial date.[40] The past loss of superannuation should also be that calculated by Mr Allan, as applied to the notional trial date.[41]

32 I also accept Galbally's submissions that, rather than dividing up loss of earnings to the period before 65 and the period after 65 to age 69, it is more sensible to calculate future loss of earnings from the notional date of the trial (June 2010) to the date on which Rosa will turn 69 (September 2017). Galbally's calculation for this period relied on the multiplier of 299.9 x $819.50 (the weekly wage for the 2009/2010 year as based on Mr Allan's calculations), to arrive at the sum of $245,768, which I accept. I also accept, on the same basis, Galbally's calculation for future loss of superannuation, $27,290.

33 I have further accepted the figure for the weekly compensation payments that will need to be deducted to be the higher figure submitted by Galbally's, namely, $348,156.00.

34 The final calculations which I consider to be appropriate are these:

35 I would set aside the award of damages made by the trial judge of $56,750 and the award of interest of $9,420 and substitute instead an award of damages in the sum of $285,335 and an award of interest of $87,384.

[1] Rosa v Galbally & O'Bryan [2013] VSCA 116 ('principal judgment').

[2] Rosa v Galbally & O'Bryan [2012] VSC 3 ('trial reasons'), [116].

[3] Alternatively, he found that Rosa suffered the loss of a chance to pursue her claim for pain and suffering damages against the operator of the hospital, Southern Health: See trial reasons, n 16.

[4] Trial reasons, [124]. Paragraph 1 of the orders made by the judge on 31 January 2012 was that there 'be judgment for the plaintiff against the defendant in the sum of $56,750.00 together with interest in the nature of damages in the sum of $9,420.00'.

[5] Fox v Percy [2003] HCA 22; (2003) 214 CLR 118.

[6] Section 14(1) of the Supreme Court Act 1986; Electrolux Pty Ltd v Siniakis [1998] 1 VR 29, 48; Murphy v Mark [1977] VicRp 38; [1977] VR 316.

[7] Following the Mention, Rosa filed amended submissions as to damages and Galbally's filed a further response.

[8] These findings were identified for the parties in a Statement by the Court distributed at the time the judgment was delivered.

[14] There appears to be a minor error in Rosa's calculation (the correct figure being $96,602) but it is of no consequence.

[15] See trial reasons, [88], [109].

[16] The figures differ slightly from, but are consistent with, those put at trial because the submission at trial was based on a scenario of 30 hours of welfare work and 10 hours of nursing. The 40-hour per week scenario was rejected in the principal judgment, [122]. See [8(4)] above.

[18] This figure may not be accurate and should be $577,542 (vicissitudes of 20% being $144,386). This appears to be a transcription error as the rest of the calculation follows if this figure is $577,542. It is of no consequence as I reject the general approach of dividing the calculations for loss of earnings as before and after the age of 65, without reference to the notional trial date of 30 June 2010.

[19] See trial reasons, [88]; principal judgment, [61].

[20] This excluded the additional component the judge allowed for the prospect of further work: trial reasons, [104].

[22] In its initial written submissions filed before the Mention, Galbally's submitted that Rosa's loss of earning capacity should be assessed solely as a loss of ability to work in welfare at the rate of 20 hours per week. Some of its initial calculations were based on this assumption. However, the submissions ran counter to the conclusions reached in the principal judgment that Rosa would have worked for 30 hours a week (see [114], [122], [126], and [143]). It was also accepted at the Mention that there was little difference in the earnings per hour of a welfare worker and a nurse and thus the issue of exactly what proportion, on average, of the 30 hours per working week would have been spent in welfare or nursing was not material. The possibility that work would not have been available was taken into account as part of the vicissitudes.

[23] Save for the issue of discount, which I consider below.

[24] This figure appears to be inaccurate, the total being $633,058. This is of no consequence.

[25] This figure should be $538,323 (putting to one side the earlier error in the calculation).

[26] [1988] HCA 64; (1988) 166 CLR 351, 369.

[27] Ibid 367 (emphasis added) (citations omitted).

[37] See the principal judgment, [86]-[107].

[38] Johnson v Perez [1988] HCA 64; (1988) 166 CLR 351, 366.

[40] In accordance with the calculations of Mr Allan applied to the notional trial date, as Galbally's submitted.

[41] In a similar way to the two-step process set out in [15] above. This involves taking the figure of the net loss of superannuation contributions to 30 June 2011 ($35,195) and deducting the net superannuation contribution for the 2010/2011 financial year ($4,230) to arrive at the figure of $30,965.