Steve Masselos & Co v Young

6The plaintiff challenged the calculation of pre-judgment interest, relying on the decisions in Firth v Sutton [2010] NSWCA 90 and Firth v Sutton (No 2) [2010] NSWCA 109 which were not available to the trial Judge. The other grounds of appeal were abandoned. The amount at stake on the remaining ground is $7,539.25, well below the threshold for an appeal as of right. The appeal succeeds to this extent, but the plaintiff's success is swamped by the defendant's. 7The defendants' application for leave to appeal challenged the notional trial and judgment dates adopted by the Judge, his awards for non-economic and economic loss, and the calculation of interest. Their submission was that interest should be calculated in accordance with all aspects of the reasoning in Firth v Sutton and Firth v Sutton (No 2). 8At a late stage in the trial the parties, at the suggestion of the Judge, agreed on notional trial and judgment dates of October 2005 and 1 February 2006 and informed the Judge. Without notice to the parties he adopted notional trial and judgment dates of February and 1 May 2006. 9It was common ground that the parties had agreed on the earlier dates and informed the Judge. In many cases the difference would not matter but the plaintiff's condition deteriorated after October 2005, and evidence of this would have been available in a trial in February 2006. In this case the agreed nominal trial and judgment dates preceded the loss of the plaintiff's cause of action in May 2006 but neither party suggested that this made any difference. 10The award for non-economic loss took into account the plaintiff's psychiatric condition which did not manifest itself until September or October 2008 long after either notional trial date. The defendants contended that his psychiatric condition should have been ignored. 11The direct and consequential awards for economic loss were challenged as unsupported by the evidence, and contrary to the evidence at the agreed notional trial date. Relevance of notional trial date 12The plaintiff was entitled to damages for the loss of his cause of action against the Commonwealth, and the Judge had to assess on that basis, that is, for the lost chance of recovering from the Commonwealth. As the plurality said in Johnson v Perez [1988] HCA 64; 166 CLR 351, 367: "... the respondent would, but for the negligence of his solicitor, have recovered damages for personal injuries ... 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." 13That case, and Nikolaou v Papasavas Phillips & Co [1989] HCA 11; 166 CLR 394, established that the damages, to be assessed at the date the cause of action was lost, were the amount the client would have recovered at a notional trial. Non-economic loss 14The Judge assessed the plaintiff's non-economic loss at 40% of a most extreme case [161(a)] saying that this was justified "on the physical and psychiatric evidence". He rejected the defendant's submission of 30% as inadequate to compensate for the plaintiff's physical "as well as his psychological problems". 15The only psychiatric report in evidence is that of Dr Pilski of 30 September 2009 (blue 2/1116). He became the plaintiff's treating psychiatrist in February that year (2/1116), but took a history of symptoms dating from September 2008 (2/1019L) which became significant in October (2/1123U). They manifested themselves long after the agreed notional trial date. 16The High Court authorities referred to required the Judge to assess the plaintiff's damages on the basis of the evidence that would have been available at the notional trial date. This does not exclude evidence of subsequent events which clarify uncertainties known or reasonably foreseeable at the notional trial date. 17In Johnson (above) the plurality said at pp 368-9: "... the fact that the respondent's damages are to be assessed as at the time each action was dismissed for want of prosecution does not mean that evidence is excluded of events occurring since the dismissal. Such evidence may be relevant in a number of ways. In the first place, it may assist the Court in placing itself in the position of the trial judge at the notional trial when a judgment was to be made of the likely losses that would be suffered by the respondent in the future and for which the employer was to be held responsible ... Secondly, in a case where ... there is a paucity of evidence ... touching the condition of a plaintiff at the time of a notional trial, the evidence relating to subsequent events (including, for example, later medical reports on a plaintiff) may assist a Court in piecing together the case that could, but for the negligence of the solicitor, have been made out in the trial of the earlier action ...". 18These principles were endorsed by the plurality in Nikolaou (above) at pp 403-4: "... it is necessary to speak of the date when the cause of action against the solicitors arose ... because the damage flowing from the negligence of the solicitors crystallised at that date. What has to be assessed as at that date is the value of the claim which was lost by the negligence of the solicitors. In so far as that assessment has to pay regard to the injuries received ... and [their] effect ... there is no reason why evidence relating to those matters, subject to their having been foreseeable as likely losses at the date when the cause of action against the solicitors arose, should be excluded by the trial Judge. To borrow the words of Lord Macnaghten in Bwllfa and Merthyr Dare Steam Collieries (1891) v Pontypridd Waterworks Co 'Why should he listen to conjecture on a matter which has become an accomplished fact? Why should he guess when he can calculate? With the light before him, why should he shut his eyes and grope in the dark'." 19The plaintiff responded by referring to the report of Dr Bertolino of the Pain Management Unit at St George Hospital (blue 1/535) dated 23 August 2004. This related to a "multidisciplinary biopsychosocial assessment" of the plaintiff conducted by the doctor, a physiotherapist, and a clinical psychologist. The section prepared by the psychologist (1/546) included: "After assessment, I believe that Mr Young displays evidence of mood disturbance and decreased general functioning. I believe that Mr Young would benefit from attending the Activate Pain Management Program." 20There was no expert evidence that "mood disturbance" without more is evidence of a psychiatric illness, and the psychologist did not suggest that the plaintiff had or was likely to develop a psychiatric problem, or that he should be referred to a psychiatrist. 21The other evidence relied on was a diary note by the solicitor and some of her evidence in cross-examination. The file note dated 15 April 2004 (blue 2/794) recorded a statement by Dr Endrey-Walder, an orthopaedic specialist, that he "believes gross functional overlay in [the plaintiff's] condition". There was no reference to this in his report to the solicitors of the same date (blue 1/501). The only reference to the plaintiff's mental condition in that report was (1/506): "There does appear to be a considerable degree of ongoing apprehension and anxiety regarding the bodily injuries, and one would expect that this remains a hindrance in this gentleman's rehabilitation. I believe that consideration of referral to a Pain Management Clinic for a multidisciplinary rehabilitation would now be overdue." 22There was no expert evidence that a functional overlay without more is a psychiatric illness. It was not suggested to the solicitor that Dr Endrey-Walder's comment required her to obtain a psychiatric report. The solicitor agreed (black 183) that a psychiatric opinion would be something "you'd need to consider" when considering a common law claim, and (black 184) "had the case proceeded ... as a common law matter against the Commonwealth" she would have obtained one. 23There was no evidence that anything would have been achieved by referring the plaintiff to a psychiatrist before the claim against the Commonwealth became statute barred in May 2006 because there was no evidence of psychiatric symptoms before September 2008. 24Thus there was no evidence that the plaintiff's psychiatric condition existed or was reasonably foreseeable in May 2006 let alone at the agreed notional trial date in October 2005. It follows that of the Judge was not entitled to take the plaintiff's psychiatric condition into account in assessing his non-economic loss. 25This part of the assessment must therefore be set aside and the relevant loss reassessed. The defendants submitted that the assessment should be reduced to 35% of a most extreme case or $145,600. This is conservative, and the Court can be comfortably satisfied that it will not occasion any injustice to the plaintiff. Past economic loss 26The Judge assessed the plaintiff's past economic loss at $750 per week. The defendant accepted a loss of $750 per week until November 2004. On 27 October that year Dr Eisman, the plaintiff's specialist physician, in a report copied to the plaintiff (blue 1/542) advised that he was unfit for any type of employment for at least three months. Undeterred on 1 November (blue 2/671) the plaintiff obtained employment at Westfield Miranda as a security guard. On 16 November Dr Eisman considered that this was within the plaintiff's capacity (1/549). 27On 27 January 2005 Dr Eisman assessed (1/550) the plaintiff's capacity for work at Westfield as 30 hours a week. He maintained this assessment until after the agreed notional trial date in October 2005. 28The Judge rejected the defendant's submission that the loss, presumably after 1 November 2004, should be assessed at $400 a week. He said [161(b)] that this was flawed because it relied upon a rate of remuneration "that was clearly an under payment, evidenced by the industrial proceedings taken against the employer". 29This was based on exhibit G "Schedule of under payments" (blue 2/1135), tendered, after the plaintiff left the witness box without being asked any questions about it. Counsel for the plaintiff said (black 141) that he was "told" that it was prepared by the Union that commenced proceedings on his behalf in the Chief Industrial Magistrate's Court. He said (black 142) that it was the prosecution's averment as to the under payments. Counsel for the defendant objected to the tender (black 143) saying it was a mere submission, and if it had been tendered through the plaintiff he probably would have asked questions about it. The Judge admitted the document "subject to objection" (black 143). 30During the plaintiff's evidence in chief his counsel tendered the initiating process in the Industrial Magistrate's Court (blue 1/243) which was admitted without objection as Exhibit F (black 51). 31Exhibits F and G were not evidence of anything except the Union's claim on behalf of the plaintiff and that was not relevant. Exhibit G should have been rejected. Having been admitted subject to objection it was of no weight and must be disregarded. 32The plaintiff's invoices to his employer before the accident, for his hours worked and the payments claimed, were in evidence but no attempt was made at the trial to analyse them or summarise their effect. No attempt was made to establish what was ordinary time and what was overtime. The award and the relevant rates of pay were not proved. 33The Judge did not attempt to analyse these invoices and the plaintiff's counsel did not do so in his written submissions in the appeal. This Court is not obliged to undertake such a task without appropriate assistance. The Judge erred in giving weight to Exhibit G and this Court must intervene. 34The Judge continued [161 (b)]: "The medical evidence certified the plaintiff as being unfit for work as at the date of the notional trial." 35The medical evidence referred to was the report of Dr Eisman of 1 December 2005 (blue 1/569): "He is working 30 hours a week in his security job. He does find that he now has to be more mobile and he is finding it more difficult and so I would agree that it is reasonable for him to reduce the hours now to 16 hours a week for the next couple of months and I would like to review him after that." 36In fact the plaintiff ceased work at Westfield Miranda after 29 November 2005 when it obtained security services from another source (blue 2/688). 37The plaintiff worked part-time from 1 November 2004 with a capacity, regularly reassessed by Dr Eisman of 30 hours a week. Dr Bodel reported on 18 October 2005 that the plaintiff was working between 13 and 19-1/2 hours a week (blue 1/560). The Judge erred in assessing past economic loss from 1 November 2004 to the notional trial date on the basis of a loss of $750 a week. 38The parties had accepted as the starting point for the assessment of economic loss average weekly earnings for an adult male in May 2005 of $890 per week. 39The assessment of the plaintiff's past economic loss for this period may be fairly based on an average of 16 hours work per week. Converting average weekly earnings for a 40 hour week to an hourly rate and multiplying that by 16 produces a figure of $356 earned a week and, hence, a weekly loss of $534 for this period. 40The defendants accepted a weekly loss of $750 from the accident to 1 November 2004, a period close enough to 74 weeks. This produces a figure of $55,500. The plaintiff's weekly loss of $534 from 1 November 2004 to 1 February 2006 produces a figure of $35,244. This gives a total for past economic loss at the notional judgment date of $90,744. Future loss of earning capacity 41The Judge's assessment of the plaintiff's future loss of earning capacity was $750 per week until age 65 because he found [161(v)]: "The plaintiff is clearly unfit for work as the medical evidence confirms." 42This finding was based on the adoption of notional trial and judgment dates of February and 1 May 2006. The plaintiff could not get work after his job at Westfield Miranda disappeared on 29 November 2005 (blue 2/643W). Dr Kwong said in his report of 23 March 2006 (blue 1/576S) that the plaintiff "is currently working 16 hours per week". This is unsupported and contrary to the plaintiff's statement (blue 2/644V), which should be accepted since he was not cross-examined on Dr Kwong's statement. Dr Kwong also said that the plaintiff was fit for 16 hours' work a week, which is consistent with Dr Eisman's opinion on 1 December 2005. 43Dr Eisman in his report of 31 May 2006 (blue 1/584) said that the viral illness the plaintiff was suffering made him unfit for work for the next six weeks. He said the plaintiff was still unfit for work on 19 July (blue 1/597) and 20 September (blue 1/598). 44This evidence relates to the plaintiff's condition after the agreed notional trial date of October 2005 and notional judgment date of 1 February 2006. In October 2005 the plaintiff was working an average of 16 hours a week, with a capacity assessed by Dr Eisman and Dr Bodel of 30 hours a week. The evidence at the notional trial did not support a loss of future earning capacity of $750 a week. 45When the plaintiff saw Dr Eisman on 1 December 2005 it appears he was not aware that his job at Westfield Miranda had disappeared (1/569). The doctor reduced his hours to 16 a week which appears to have been his weekly average up to that time [36] above. He thought that this reduction would be temporary. 46Judgment had notionally been reserved at the end of October without evidence of Dr Eisman's revised opinion. This would have only got into evidence if the plaintiff's advisers made an application to reopen the notional trial. 47The doctor's report was copied to the plaintiff and his general practitioner, but not to his solicitors. The plaintiff realised he had lost his job "not long after 1 December" (blue 2/643W). Nothing could happen until he received the report and nothing would then happen until he passed it on to his legal advisers. The doctor did not indicate any concern about the plaintiff's recovery from this set back and the plaintiff did not know he would not find part-time work again. 48The plaintiff was not entitled, as of right, to reopen the trial. The success of an application to reopen would depend on the importance of any new evidence and the discretion of the trial Judge. It is not self-evident that competent solicitors would have made such an application. Evidence in chief from the plaintiff about his reaction to receipt of this report might have been barred by s 5D(3) of the Civil Liability Act, but no attempt was made to adduce it. There was no expert evidence of how an experienced solicitor would have reacted early in December 2005 to receipt of this medical report. Without such evidence the Court cannot find that an application to reopen would have been made. 49The principles established in Johnson [1988] HCA 64, 166 CLR 351 and Nickolaou [1989] HCA 11, 166 CLR 394 based on an assessment at a notional trial date do not preclude reliance in an appropriate case on evidence coming to the attention of the parties' advisers after judgment has been reserved. A trial before a judge alone continues until judgment: McIntosh v Williams [1976] 2 NSWLR 237, 248 per Hutley JA, 258 per Samuels JA. 50The agreed notional trial date requires the Judge's assessment for loss of future earning capacity to be set aside. The Court should substitute an assessment based on the evidence available to the parties in October 2005, without evidence of unforeseen later events. 51The latest report then available was that of Dr Bodel of 18 October who thought that the plaintiff's clinical condition had stabilised and his long term prognosis was reasonable (blue 1/563). Dr Eisman had not given any warning that the plaintiff's condition might deteriorate. 52Prima facie therefore the plaintiff's loss of future economic capacity at the date of the notional trial would be based on a loss of $534 a week for 21 years until he turned 65 (black 9). 53That loss would produce an award of $311,193 based on a retained earning capacity of 16 hours a week. The plaintiff's capacity at the notional trial date had been assessed as 30 hours a week and the difference represents an appropriate buffer for the plaintiff's uncertain future in the general labour market. Consequential adjustments 54The reduced awards for past economic loss and loss of future earning capacity require adjustments to the past and future losses of superannuation based on the 11% of those awards. This produces awards for past and future loss of superannuation of $9,982 and $34,231. Application of Firth v Sutton . 55The principles established in these cases ([2010] NSWCA 90 and [2010] NSWCA 109) require past out-of-pocket expenses to be added back to the primary assessment although they were paid by the workers compensation insurer. Applying the s 151Z discount to the reduced primary assessment plus the out of pockets produces a figure of $299,812 which must be reduced by the 20% discount for the chance to give a subtotal of $239,850. The irrecoverable solicitor and client costs of $30,000 must then be deducted to produce $209,850. The revised table submitted by the solicitors for the defendants on 16th August 2011, adjusted in accordance with these reasons, is as follows: Heads of damage assessed at 1 February 2006: $ Non economic loss 145,600.00 Past economic loss (based on a rate of $750 on the basis of total incapacity until November 2004 and then on the basis of partial incapacity from November 2004 until February 2006 at a rate of $500 per week) 90,744.00 Fox v Wood 12,000.00 Future loss of earning capacity (at a rate of $534 per week, for 21 years to age 65 (multiplier 685.6), less 15% for vicissitudes) 311,193.00 Past loss of superannuation 9.982.00 Future loss of superannuation 34,231.00 Past domestic assistance 29,156.00 Future domestic assistance 194,200.00 Past and future out of pocket expenses 29,500.00 Subtotal 856,606.00 Discount under Section 151Z (65%) 556,794.00 Subtotal 299,812.00 Less discount for the lost chance (20%) 59,962.00 Subtotal 239,850.00 Less unrecoverable solicitor/client costs (agreed) 30,000.00 Subtotal 209,850.00 Interest (CLA rate) (1625 days) 52,785.00 Subtotal 262,635.00 Less: 70,000.00 (a) Workers compensation benefits received to notional trial date 11,370.00 (b) Interest on above benefits 2.500.00 (c) Permanent impairment payment 425.00 (d) Interest on permanent impairment payment 150,000.00 (e) Workers compensation entitlements beyond notional trial date 10.061.95 (f) Interest received on workers compensation entitlements between notional trial date and professional negligence judgment date Total 18,278.00

56Accordingly I would make the following orders: (1) Appeal allowed in part; (2) Grant leave to cross appeal, the notice of cross appeal to be filed within 10 days; (3) Cross appeal allowed; (4) Judgment of the District Court set aside; (5) In lieu thereof substitute judgment for the plaintiff for $18,278 with effect from 13 October 2010; (6) Liberty to the parties to apply to correct the mathematical calculations in these reasons and for the making of appropriate orders for the costs of the trial, appeal and cross appeal consequential upon these reasons. 57SACKVILLE AJA : I agree with Handley AJA.

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