(Section 126 is in the same terms as the Civil Liability Act 2002, s 13).
82 It is reasonable to comment that the drafting of s 126 is not particularly clear and its proper construction and thus application has caused the courts considerable anxiety. There have been calls for legislative clarification: see MacArthur Districts Motor Cycle Sportsman Inc v Ardizzone [2004] NSWCA 145; (2004) Aust Torts Reports 81-744. In this case, the Court requested the parties to provide a joint note as to the history of s 126. In providing those submissions, the parties indicated a common approach to the proper construction of the section.
83 Pursuant to that request, the parties submitted that the correct approach to s 126 was: first, to arrive at an assumption as to the plaintiff's most likely earnings had the plaintiff remained uninjured: s 126(1); and secondly, to take into account other possibilities in adjusting the resulting calculation of damages for future economic loss for contingencies, including that the plaintiff's earnings may have been higher or lower had the plaintiff remained uninjured: s 126(2). Section 126(3) then required the Court to make explicit the assumptions upon which the award was based. In this regard, the assumptions in s 126(1) and s 126(2) had to be specified.
84 The parties further submitted that in the usual case, the Court could award damages for future economic loss by determining the difference between the plaintiff's "most likely" future earnings uninjured and "most likely" earnings injured. In determining the first of these integers, they accepted that the Court may take into account a range a possible future circumstances had the plaintiff remained uninjured. In that regard, they accepted that the correct approach to the assessment of future economic loss under s 126 was the approach approved by the Court in Norris v Blake (by his Tutor Porter) (No 2) (1997) 41 NSWLR 49; (1997) 25 MVR 101. The parties also submitted that that assessment would then be made subject to a discount for vicissitudes and suggested that, in the normal course, the usual discount for vicissitudes would be 15 per cent.
85 Some comment is required in respect of Norris v Blake (No 2) and the adjustment made for contingencies. Before dealing with those two matters, reference should also be made to Graham v Baker and Malec.
86 Graham v Baker is authority for the basal proposition that an injured plaintiff recovers not merely because his or her earning capacity has been diminished, but because the diminution of his or her earning capacity is, or may be, productive of financial loss.
87 In Malec, Deane, Gaudron and McHugh JJ explained how the assessment of that loss is to be undertaken. Although the relevant passage is long, it is appropriate to set it out in full, given that the appellant relied upon it as being the framework for the proper construction of s 126. Their Honours stated, at [7], 643:
"If the law is to take account of future or hypothetical events in assessing damages, it can only do so in terms of the degree of probability of those events occurring. The probability may be very high - 99.9 per cent - or very low - 0.1 per cent. But unless the chance is so low as to be regarded as speculative - say less than 1 per cent - or so high as to be practically certain - say over 99 per cent - the court will take that chance into account in assessing the damages. Where proof is necessarily unattainable, it would be unfair to treat as certain a prediction which has a 51 per cent probability of occurring, but to ignore altogether a prediction which has a 49 per cent probability of occurring. Thus, the court assesses the degree of probability that an event would have occurred, or might occur, and adjusts its award of damages to reflect the degree of probability. The adjustment may increase or decrease the amount of damages otherwise to be awarded. See Mallett v. McMonagle (1970) AC 166, at p 174; Davies v. Taylor (1974) AC 207, at pp 212, 219; McIntosh v. Williams (1979) 2 NSWLR 543, at pp 550-551. The approach is the same whether it is alleged that the event would have occurred before or might occur after the assessment of damages takes place."
88 The appellant contended that s 126 replicated this approach. The respondent did not contend to the contrary. In circumstances where the parties have agreed as to the construction of s 126 in this case, I do not consider that it is useful to enter upon an exegesis on the point. That should await an occasion when the construction of the section is directly in issue. This case turns upon whether her Honour erred in treating as a certainty that Senior Constable Moor would have left the police service by the time of the trial and whether his decision to remain in a non-management position was a personal choice or whether his inability to it was causally related to his Post Traumatic Stress Disorder.
89 However, as both parties accepted that the approach in Norris v Blake (No 2) applies in these circumstances, a consideration of that case is appropriate.
90 Norris v Blake (No 2) was concerned with the future economic loss of a promising young actor who was seriously injured in a motor vehicle accident. The trial judge approached the assessment of future economic loss on the basis that given his potential, there were a number of possibilities relating to his future career. He thus made an assessment of the percentage likelihood of each of the possibilities that the respondent would be a superstar, have considerable success, have moderate success or have a solely Australian career. The trial judge then adopted a "weighted average method of assessment" of future economic loss. He did this by determining what the young actor would have earned had he reached and remained in each of the four categories. His Honour identified the plaintiff's possible future employment prospects and then applied the percentage which he had allocated to each of the categories. That method was described by an expert accountant as being "a decision analysis tool which provides a structured and logical treatment of a range of hypothetical or subjective estimates".
91 On appeal, Clarke JA (Handley and Sheller JJA agreeing) rejected that such an approach was appropriate, except in limited circumstances. Rather, his Honour said, at 73:
"The proper approach is to assess what it was most likely he would earn during the rest of his working life and adjust this for contingencies including the possibility that he might have done far better."
92 Applying that approach, Clarke JA (at 78) held that the actor would have earned $750,000 per annum until he reached the age of 60 years. His Honour then allowed an additional $2,500,000 by way of contingency to take account of the loss of the actor's chance to succeed in America and the real possibility that he would have earned income after the age of sixty years. His Honour considered that this approach was consistent with the observations as to vicissitudes in Bresatz v Przibilla [1962] HCA 54; (1962) 108 CLR 541.
93 The adjustment for vicissitudes is the second matter upon which brief comment should be made. In Bresatz v Przibilla Windeyer J said at [3], 554:
"… the generalisation, that there must be a 'scaling down' for contingencies, seems mistaken. All 'contingencies' are not adverse: all 'vicissitudes' are not harmful. A particular plaintiff must have had prospects or chances of advancement and increasingly remunerative employment. Why count the possible buffets and ignore the rewards of fortune? Each case depends upon its own facts. In some it may seem that the chance of good fortune might have balanced or even outweighed the risk of bad."
94 In Teubner v Humble [1963] HCA 11; (1963) 108 CLR 491 at [15], 508-509, Windeyer J (McTiernan J agreeing), again emphasised that vicissitudes could be positive or negative. This is now well accepted. In Luntz, Assessment of Damages for Personal Injury and Death, 4th ed, (2002) Butterworths, at 381, the author identified sickness, accident, unemployment and industrial disputes as the four major adverse contingencies which expose employees to loss of income. In the current Australian economic and industrial climate the last of these might arguably be seen to be of little weight. But economic times can change swiftly. The point of principle is that in the course of a person's lifetime, a variety of contingencies, negative and positive, will affect a person's earning capacity.
95 It has been long accepted that in a 'usual case' the court is justified in applying a conventional deduction for vicissitudes. In Wynn v NSW Insurance Ministerial Corporation [1995] HCA 53; (1995) 184 CLR 485, Dawson, Toohey, Gaudron and Gummow JJ said, at [19], 497-498:
"It is to be remembered that a discount for contingencies or 'vicissitudes' is to take account of matters which might otherwise adversely affect earning capacity and as Professor Luntz notes, death apart, 'sickness, accident, unemployment and industrial disputes are the four major contingencies which expose employees to the risk of loss of income'. Positive considerations which might have resulted in advancement and increased earnings are also to be taken into account for, as Windeyer J pointed out in Bresatz v Przibilla '(a)ll 'contingencies' are not adverse: all 'vicissitudes' are not harmful'. Finally, contingencies are to be considered in terms of their likely impact on the earning capacity of the person who has been injured, not by reference to the workforce generally. Even so, the practice in New South Wales is to proceed on the basis that a 15% discount is generally appropriate subject to adjustment up or down to take account of the plaintiff's particular circumstances." (Citations omitted)
96 In Government Insurance Office of New South Wales v Wojnar (Court of Appeal, 15 December 1988, unreported), at 13, the Court said:
"A conventional discount of 15% … is allowed in many cases, although this Court has been at pains to say that there is no warrant for inflexibility in fixing the appropriate deduction. The eventualities which people, individually, are likely to face in their lives necessarily vary enormously. They are particular to each injured claimant."
97 In Nestle Australia Ld v McDougall [1998] NSWCA 158 I noted (Mason P and Powell JA agreeing) that a survey of the authorities revealed that the Court had applied discounts of up to 40 per cent for vicissitudes, although in NSW Insurance Ministerial Corporation v Sprengnagel [1995] NSWCA 315 a 40 per cent discount had been described as "high". Nestle emphasised that whether or not the "usual discount" should be applied depended upon the facts of the particular case.
98 This approach to contingencies has so far survived the introduction of s 126 as is apparent from the joint submission of the parties.
99 As I have indicated, the parties have agreed as to how s 126 should operate, including the application of a usual discount for contingencies. As the case does not throw up any unusual features, it is appropriate to adopt the approach suggested by the parties.
100 The question in this case becomes, therefore, whether her Honour erred in finding as a certainty that Senior Constable Moor would have left the police service by the time of the trial and that his current level of work was a personal choice unassociated with the accident. These were factual questions. This is an appeal by way of a rehearing: the Supreme Court Act 1970, s 75A. Although the trial judge's findings require respect, this Court nonetheless has an obligation to review for itself the evidence and if it comes to a different decision from the trial judge, it has an obligation to give effect to its own decision. These principles were discussed in depth in Gett v Tabet [2009] NSWCA 76.