Roufas v Action Insulations Engineers and ors

Husher v Husher (1999) 197 CLR 138 at 147; Conley v Minehan (1999) NSWCA 432; Rauk v Transtate Pty Ltd (2000) NSWSC 1020; CASES CITED: Wilson v Eraring Energy (2000) NSWDDT 17; Martyn v Amaca Pty Ltd (2002) NSWDDT 228; Corowy v ACI Operations Pty Ltd (2000) 24 NSWCCR 1

FOR PLAINTIFF: D E LETCHER QC FOR FIRST DEFENDANT: C M EGAN FOR SECOND DEFENDANT: J W DODD LEGAL REPRESENTATIVES: FOR THIRD DEFENDANT: W S STRATHDEE FOR FORTH & FIFTH DEFENDANT: A C SCOTTING

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1. This is an action for damages brought by the plaintiff, Anthony Roufas, against the defendants. In respect of the first and second defendants, he brings his action against them as employers. The plaintiff alleges that in his employment he was negligently exposed to and inhaled asbestos dust and fibre. He brings his action against the third, fourth and fifth defendants as suppliers of the asbestos material, to the dust from which the plaintiff was relevantly exposed.
2. On the first day of hearing the plaintiff settled his action against the first defendant who was consequently given leave to withdraw. The matter proceeded and on the third day, the plaintiff settled his action against the second defendant who was then also given leave to withdraw. The matter then continued against the other defendants as suppliers.
3. No contradictory evidence on the question of liability was led or tendered by the remaining defendants who, at the close of the evidence, indicated that the remaining issues to be determined related to the question of damages and their quantum. I therefore turn to general damages. GENERAL DAMAGES
4. The plaintiff was born in Greece on 28 March 1945. He is married with four children, three of whom remain living at home, the youngest of whom is still partially financially dependant while studying full time at university.
5. The plaintiff grew up on the island of Kos. His education finished when he was 13 years of age whereupon he worked on the family farm and in the family business, until he left his home country to come to Australia.
6. He engaged in labouring work initially with the Water Board until late 1964 when he began his employment with the first defendant as a lagger, which continued until late 1968. He was then employed with the second defendant until 1974. He had other various employments until 1988 when he formed his own private company.
7. He first noticed shortness of breath in about 1986 but paid little attention to that symptom at the time. In 1990 he had influenza and needed to attend upon is general practitioner, who referred him to Professor Schonnel, a specialist in the area of thoracic medicine. He was at that time advised to stay away from dust and fumes and was told that he was fortunate that he was not a smoker. X-rays were taken of his lungs and general chest area and he was told to his understanding that he had asbestos in his lungs. He then underwent x-rays yearly and noticed that with deep breathing there was pain. Over the ensuing period of time he increasingly became short of breath.
8. In August of 2002 he was seen by Dr Marantos, a thoracic physician. He was told he had widespread pleural plaque formation, consequent upon past asbestos exposure. The plaintiff experienced as a consequence a real concern for his future health, as a number of his previous workmates and colleagues had died of mesothelioma.
9. A CT scan of his chest in May 2002 showed thickening, and extensive diaphragmatic pleural calcification, with folded atelectasis in the right upper lobe, giving the appearance of a pleural mass. Lung function testing revealed moderate airflow limitation, with total lung capacity reduced to 72 per cent of predicted. His condition, Dr Marantos explained, was causing significant pulmonary restriction of moderate to severe degree.
10. Dr Marantos expressed surprise that he was not significantly more breathless, given the appearances on the CT scan. Comparative scans confirmed the existence of significant abnormalities, however there was no evidence of any sinister transformation of the existing abnormalities in his lung. There is the risk of malignant transformation in one of the pleural plaques, and although the risk is relatively low, it is significantly greater than had he not had his abnormalities.
11. All in all, he was said to have a significant respiratory disability based on lung function which would affect his ability to perform even moderate physical work. There was no suggestion there would be any shortening of his life span.
12. Dr McKenzie, whose reports were tendered by the defendant, indicated that his asbestos disease had produced a disability or impairment of 30 to 35 per cent of the whole person. He details the plaintiff's current medical history in terms of his ability on walking and his deterioration over the last four years. He was noticed to have, when being examined, some symptomatology when walking around the doctor's clinical rooms and while getting dressed. However he recovered quickly on sitting down. The total lung capacity when seen by Dr McKenzie was reduced to 60 per cent of predicted. There was the possibility of further progression which will be slower, with increasing disability over the next ten to twelve years with little or no affect upon his life expectancy. He says that he is capable of supervising activities and running a business.
13. Dr Gianoutsos has seen the plaintiff on a number of occasions, the last of his reports being April 2005. The plaintiff gave a history of some deterioration in his effort capacity over the ensuing few months. His lung function tests however appear to be stable at the previously mentioned level by Dr McKenzie.
14. In March 2005 there is some history in a report which indicated that whatever attention he was giving to the business at that time was in a consulting capacity with no manual work. The doctor was of the opinion that he had a significant disability. The defendants also submitted a short report of the same doctor which indicated a history in April 2004 of the plaintiff's own assessment of how he had been since November 2003. I am not convinced that this adds anything which would alter what I have already indicated regarding the capacity of the plaintiff.
15. I accept the plaintiff, when he indicates in his evidence the extent of his disability, and I conclude that the level of his fitness corresponds to a person engaged in sedentary consulting work and perhaps management oversight in a restricted environment.
16. As regards the level of general damages, the approach of the parties has been helpful. The plaintiff through his counsel has submitted a schedule which has aided submissions. Accepting as I do the results of exposure to asbestos, the defendants thought a proper figure in the circumstances was about $70,000.00. Learned counsel for the plaintiff put a slightly higher range on the figures than that.
17. The plaintiff has had breathlessness for a number of years, increasing during that time. He has had his activities restricted and he lives under the shadow of mesothelioma or other relevant cancer in the future. It seems to me that an appropriate figure for provisional general damages in this case in respect of the conditions he now suffers consequent upon his exposure is $75,000.00.
18. The condition under which further damages may be awarded pursuant to s 11A will be dealt with by way of order later in the judgment.
19. Interest at 2 per cent of half the general damages amounts to the sum of $14,250.00. ECONOMIC LOSS
20. By far the most significant issue and the subject of much contention between the parties has had to do with economic loss. The plaintiff makes a claim in this matter for loss of earning capacity.
21. In 1988 the plaintiff began his own company known as T & S Air Systems, having in the immediate preceding years been in partnership doing sheet metal fabrication. His present company is located in premises in Marrickville and is engaged in sheet metal manufacturing and supplying ducting for other companies. The plaintiff expected to keep working until he was 65 years old. I think particularly because he was running his own business, he did not think he would need therefore to stop until at least that time. Moreover, there was a daughter still living at home studying and he expected to be able to keep supporting her for some period of time.
22. The plaintiff's role in the company was widespread and involved all aspects of the business. It included labouring activities such as making ducting for air conditioning and the installation of ducting and various other work on particular sites. His work also involved a degree of expertise, which included the quoting and measuring for new jobs. Supervision of employees, customer relations, some design work, and overall management of the company was also part of his work. He was the one who engaged in the entrepreneurial and marketing of the company to obtain new work. He was required to be on the job all of the time and available to his customers on site.
23. Overall his work in the company was physically demanding and it required long hours. Moreover his experience in the manufacture of ducting also contributed to the profitability of the company. He was undoubtedly the dominant person and driving force of the company. He had control of the company and the company's income which significantly but not totally came from his efforts and the exploitation of his earning capacity.
24. It was the plaintiff who had the ability to determine the company's fate in terms of either its continuance or discontinuance of his own choice. He did have under his control and at his disposal, to a large degree the whole fruit of his labour and skill and it was expressed and obtained through the company's operations. His was the capacity to terminate the company's operations or to bring to an end or vary the arrangements made in respect to the company's distribution of profits. All of which resulted in an effective control which was of significance in measuring his earning capacity and his financial loss.
25. The plaintiff gave evidence that the company employed three to five persons and additionally casuals and subcontractors. The reports of the accountants in relation to the profit and loss statements significantly revealed that the company paid between $167,251.00 in 1998 and $279,346.00 in 2001 in wages. Additionally, there were significant sums paid to contractors. These sums exclude the amounts paid to the plaintiff and the plaintiff's wife.
26. The company's assets comprised mainly of a folding machine, guillotine and two utilities. Other sundry tools that would have been utilised in installation and other works both at the factory and on site were not mentioned in evidence as being part of the company's assets. The plaintiff's wife worked in the business doing the books and accounting. The work of others, and the return on at least some capital invested also contributed to the company's profitability.
27. In 2001 the plaintiff, due to his deteriorating condition regarding his breathlessness and for reasons that can only be described as apprehension as to what he may develop in the future, and also for what he felt was his increasing inability to meet the demands his position made upon him, decided to close down the company's operations. It seems to me that he also decided to retire while he still had at least some measure of physical capacity. His wife at the same time decided to retire from the business to spend more time with her husband, the plaintiff.
28. It is also to be noted that the plaintiff had the personal financial means to take this course as a consequence of the successful operation of his company over a number of years. It was at this time that the plaintiff's son insisted that the company not be closed down but that he take over the business. The plaintiff was encouraged by Dr Gianoutsos to follow that course and to carry on and assist his son in the transition, which took approximately to the end of the financial year of June 2002.
29. Such a decision in relation to his son in these circumstances in my view would not have been difficult because the plaintiff expressed the view that there would have been a time in the future when his son would have taken over the company in any event. It became obvious during the ensuing takeover period that the plaintiff, (if the son was really to takeover), should cease engaging in the business as it was to his son's disadvantage in his relationships with the plaintiff's former customers.
30. While the plaintiff maintains some capacity and expertise to engage in some managerial work, it's nature limits his ability to exercise it due to what is required in an industry of this kind. This would also provide greater difficulty in finding appropriate work in the marketplace.
31. The defendants contend that the plaintiff is required to mitigate his loss and as such, his earning capacity should be measured upon the basis that someone be employed to do what he would now not be able to do in the business which in their contention relates more to someone engaged in perhaps the physical side of the work and some quoting. The defendants contended that there was ample scope in the business to employ further labour to replace any shortfall resulting from the plaintiff's condition. The plaintiff, they say, had the knowledge and ability to train a suitable person to conduct the aspects of his involvement in the business he was no longer able to undertake. The defendants submitted that the principles that ought to be applied, had been outlined in the case of Borowy v ACI Operations Pty Ltd & Others (No.2) (2002) 24 NSWCCR 1 and that the earning capacity of the plaintiff be determined by the cost of employment already referred to above.
32. The plaintiff conceded that he retained some capacity to earn and that his entitlement to damages ought to be reduced commensurate with the amount that his earning capacity would realise. He does contend however, given the circumstances, that this sum is relatively modest. He is unable, he contends, to engage in any meaningful position in work for which he has long training and experience. It was submitted on his behalf that the case of Borowy ought to be distinguished in relation to it's method of calculating damages, as that case involved a plaintiff with low taxable earnings and periods of unemployment and where there were circumstances where a hypothetical wage had to be determined.
33. It was contended on behalf of the plaintiff that the appropriate basis on which to award damages is in accordance with the principles in the case of Husher v Husher (1999) 197 CLR 138 which were applied by Curtis J, in Martyn v Amaca Pty Ltd [2002] NSWDDT 228. In that case Curtis J referring to Husher assessed damages on the basis of what Mr Martyn would have had under his control as income but for the incapacity generated by the defendant's tort. It is however to be understood that in Martyn, as indeed in Husher, the operations of both businesses could not continue without what the plaintiffs contributed to the business in each case.
34. A similar approach to Borowy was taken by Duck J in Wilson v Eraring Energy [2000] NSWDDT 17. The two different bases contended for in this case were also put before Duck J and Curtis J in the matters referred to above.
35. The principles to be applied in relation to this matter have been well canvassed by me in Borowy. In deciding what is the value to be ascribed to the loss of future earning capacity of an injured plaintiff, close attention to the facts of each case is necessary. The task is not an endeavour to classify cases as concerning sole traders, partnerships, wage earners or private companies and then attempting to adduce some role of general application to all cases falling within the classification so derived: Husher v Husher (supra).
36. The enquiry is about what could the plaintiff have done in the workforce but for the accident and what sum of money the plaintiff would have had at his disposal. Only when those enquiries are pursued can a judgment be made about what capital sum to allow as damages for the impairment of the plaintiff's earning capacity. Regard must also be had to all the contingencies of life that might reasonably be expected to affect the course of events in the future: Husher v Husher (supra).
37. In Husher two critical elements were involved; the first, that the whole of the income of the partnership came from the efforts of the appellant and the exploitation of his earning capacity; secondly as it was a partnership at will the plaintiff had a choice to make some other arrangement concerning the fruits of his labour. What the plaintiff had under his control and at his disposal but for the accident were the whole fruits of his skill and labour and it was the whole of those fruits that he had lost.
38. Professor Luntz in his text, Assessment of Damages; 3rd Edition at 247 states the following: W here in a particular business the physical or intellectual exertion of the plaintiff predominates, the loss of profits which result from the disablement should be attributed entirely to the injury even though the capital invested would have contributed to the realisation of those profits. This is because at least in the short term and subject to the duty to mitigate, by employing the substitute, a capital has in effect been sterilised. It is rendered useless unless the plaintiff can resume working or be deployed elsewhere. Leaving aside for the moment the fact that in that case the loss had been suffered through the medium of a company, Leah v Sheared shows that the loss for which damages are payable is the total diminution suffered by the plaintiff in return from the business.
39. In the judgment of Husher, which referred also to Graham v Baker (1961) 106 CLR 340 the joint judgment of Gleeson CJ, Gummow, Kirby and Hayne JJ stated the following . T he financial loss occasioned by impairment of earning capacity is the loss of what had there been no accident, the injured plaintiff would, as opposed to could, have expected to have had under his or her control and at his or her disposal by exercising that capacity. We refer to control and disposal because what the plaintiff has lost are the financial rewards from work that are rewards the plaintiff would have been able to direct to whatever purpose or destination he or she chose.
40. The court emphasised that the facts of each case required, as I have already noted, close attention. In Conley v Minehan [1999] NSWCA 432 Mason P. indicated however that this passage showed that the principles annunciated in Husher were capable of application to business structures other than partnerships and in doing so he referred specifically to what Callinan J had said, in Husher. It is therefore obvious that the basis contended for by the plaintiff is open to any plaintiff who has a corporate structure. It is my view, however that other principles in relation to the application of this method of calculating damages also apply.
41. A useful analysis has been undertaken by O'Keefe J in Rauk v Transtate Pty Ltd; Restile Pty Ltd v Transtate Pty Ltd [2000] NSWSC 1020. In that case His Honour applied the principles in Husher. He also observed that the approach adopted by the High Court in Husher was not restricted to partnerships, trading trusts and the like. He indicated in this regard, that Callinan J expressly adverted to and equated the position of a partner in a partnership and an employee of a company which a plaintiff controls or in which he had a substantial proprietary interest, as being no impediment. O'Keefe J also referred to Conley and concluded that the principles of Husher to a situation in which income splitting was effected through a company were applicable.
42. I think the most significant factor, however, in determining in this case which approach is to be utilised is that in Husher, Martyn and in Rauk the whole of the income was produced as a result of the efforts of the plaintiff. In each of those cases, when the plaintiff could not continue, the operations of either the partnership or the corporation could also not continue. The contribution of the labour of others in company profitability in this case is in my view, also a determing factor in the method of assessing economic loss.
43. The company's operations have continued under the management of the plaintiff's son. Given the plaintiff's duty to mitigate, it in my view renders it necessary in measuring his loss of earning capacity to proceed by reference to the cost of a replacement.
44. Given the diversity of the plaintiff's role in the business, such a replacement would need to have varied abilities and qualifications. That such an option was open to the plaintiff was in my view also illustrated by the plaintiff's son who has continued to make the business a success albeit with the additional ability of engaging in refrigeration work. The plaintiff's evidence is that there still is a significant amount of work in the business now run by the son in ducting for air-conditioning.
45. I consider that the consequence of the plaintiff's incapacity would render his role in the company to be no more than an adviser and consultant with some customer relations, provided that it was limited to environments that were not dusty and were not physically demanding and therefore within his physical capacity. For this reason it is my view that the cost of any replacement would be higher than that expressed by the fourth defendant's accountant's report in Exhibit 4DX3.
46. The plaintiff's accountants report by Furzer Crestani bases the plaintiff's loss on company profits averaged out over a period of years. The report makes no mention of any salary figures in relation to the cost of the plaintiff's replacement.
47. Appendix G to the defendant's accountant's report by Horwath, indicates in relation to a plant factory manager a salary, and a benefits summary which specifies an average package of $85,620. It is, however, in its description a more managerial type position and does not include any labouring component. In my view the amount in this case should include an additional sum for a required labouring component, and should therefore be an overall sum of $95,000.
48. In regard to the past, the calculation is to be made in respect of three years, being the financial years 2002/3, 2003/4, 2004/5. The gross cost of the replacement in my calculation is $1,846 per week, from which must be deducted the appropriate income tax.
49. In respect of the remaining five years to 65 I consider that the plaintiff in accordance with his evidence would have continued operating his business. I accept the plaintiff's evidence that he would have continued until he was 65 had he been in good health. The resultant sum for the remaining five years at the abovementioned rate must be reduced for vicissitudes, given the fact that the plaintiff was reaching that time of life when it might be expected that the nature of his health or physical capacity may have to some degree deteriorated, it seems to me that the appropriate rate for vicissitudes should be 20 per cent. HEALTH INSURANCE COMMISSION
50. I now turn to the Health Insurance Commission. A notice has been received from the Commission about medical accounts which have accrued. To date they total the sum of $1,700. The mathematics did not cause the parties any difficulty. The question remains whether it may be possible to obtain some refund from the Dust Diseases Board, although the position in that regard appears somewhat unclear. In terms of the calculation of the damages the amount is to be included in the orders made on the understanding that the parties clarify the abovementioned situation. I will grant leave to vary the damages in this regard if the Board agrees to pay them. GRATUITOUS CARE
51. In relation to the question of damages for provision of care, the only evidence of its necessity in the future is that of the defendant's report of Dr McKenzie. If his pleural disease continues to worsen, it is possible he will need some respiratory support including supplemental oxygen. Increasing amounts of domestic help would eventually be required with activities of daily living as well as some nursing care over the last year of his life. The plaintiff has calculated such care at approximately $20,000.00.
52. The task, which is undertaken by the Tribunal when assessing damages for future or potential events, is done in terms of the degree or probability of those events occurring and the Tribunal adjusts its award of damages to reflect the degree of probability. That is not to say that the determination is made with mathematical precision. What is required is that the damages to be assessed be proportionate to the injury or loss. I am of the view that an award of damages in this regard of $9,500.00 would reflect the degree of probability.
53. There is a claim in respect for painting and decorating of the plaintiff's home, the sum of which, $3,300.00, has been agreed upon.
54. As regards an allowance for future indoor and outdoor maintenance, I think the appropriate sum of $3,000.00 should be allowed as properly reflecting the degree of probability.
55. In regard to gratuitous services, it is my view that the period to be allowed for the past is five years at the rate submitted by the plaintiff of one-and-a-half hours, each two-and-a-half weeks. In respect of the future to reflect the degree of probability, I think an allowance of a further seven years would reflect the appropriate degree of probability. The rate is $22.00 per hour. The sum is to be calculated at the same rates mentioned above with the application of the appropriate multiplier. The appropriate multiplier has to be applied to the economic loss as well in regard to the future.
56. The plaintiff therefore is to be awarded damages in the following terms: · General damages $75,000. ·Interest on general damages $14,250. ·Past economic loss $203,208. ·Interest thereon $27,433, ·Future economic loss $260,227. ·Past Griffiths v Kerkemeyer $3,432. ·Future Griffiths v Kerkemeyer $4,354. ·Past maintenance and outdoor costs $3,000. ·Future outdoor and maintenance costs $9,500. ·Health Insurance Commission $1,700. ·Painting $3,300.
57. Prior to entering verdict I grant leave to the defendants to issue any cross-claims on or before 31 October 2005. (A). I find by consent that ten per cent of the plaintiff's related and relevant exposure was in the employ of the second defendant.
58. I therefore make the following orders in accordance with the findings in paragraph 57A and in accordance with the agreed schedule between the plaintiff and the third, fourth and fifth defendants ·There will be verdict and judgment for the plaintiff as against the first defendant in the sum of $40,000 plus costs agreed at $10,000 on a final basis. ·Verdict and judgment for the plaintiff as against the second defendant in accordance with the sum of $40,000 plus costs agreed at $10,000 on a final basis. ·Verdict and judgment for the plaintiff as against the third defendant in the sum of $429,134.06 on a provisional basis. ·Verdict and judgment for the plaintiff as against the fourth defendant and fifth defendant in the sum of $75,729.54 on a provisional basis.
59. In respect of the third and the fourth and fifth defendants the order is made pursuant to s 11A and r 5 of the Dust Diseases Tribunal Act and rules.
60. The plaintiff is granted leave to seek further damages against the third, fourth and fifth defendants should the plaintiff develop any of the following conditions, (a) asbestosis, (b) asbestos related lung cancer (c) pleural or peritoneal mesothelioma, (d) asbestos induced carcinoma (e) asbestos induced carcinoma of any other organ.
61. I therefore confirm the verdicts and judgments for the plaintiff and add in respect of the third, fourth and fifth defendants the words plus costs as agreed or assessed.

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