TIPPER v WILLIAMS

CAUSATION COSTS - Indemnity costs awarded - reasons of trial judge not put before the Court - costs order was within discretion of trial judge. Held: Not possible to find that his Honour erred in the award of costs.

Priestley JA I agree with the reasoning and conclusions of Clarke JA in regardto the following points: (1), the reduction of interest on past general damages by the amount of $9,375 (at 3 of his reasons); (2), that counsel for the appellant at the trial did not fail adequately to take the point that in estimating future loss from impairment of the plaintiffs earning capacity, account must be taken of his continuing workers compensation entitlement (at 12); (3), that the fact that the trial judge did not take account of that continuing entitlement was an appealable oversight (at 3-4); (4), that this court should permit further evidence on that point in this appeal (at 18); (5), that the trial judge's conclusion that the 1979 incident was the cause of most of the plaintiffs problems (at 21); and (6), that the trial judge's costs orders should not be disturbed (at 22). On the remaining point in the case, I do not agree with Clarke JA.

In my opinion there was no error in the rate of interest allowed by the trial judge for the period between May 1987 and the date of judgment. Clarke JA refers to two arguments advanced for the appellant in support of the attack on this rate. He rejects the first, for reasons with which I agree (at 19) but accepts the second (also at 19). On the second, I take a different view. I do not see why the plaintiff should be treated as having invested the judgment moneys in such a way

as to earn taxable interest; he might have bought a home to live in; he might have bought shares with fully franked dividends; he might have bought vacant land with a view to holding it as a gift for his children in twenty years time; the possibilities are endless, and not all have the same tax consequences. Further, I take the award of interest as a form of compensation for the plaintiffs not having received his damages when he should have done in the ordinary course of events; the interest rate calculation is a convenient way of estimating this compensation, but does not require that the plaintiff be held to the hypothesis upon which its reasonableness is based.

On the view I have formed it is appropriate, in view of the various arguments put to the court, that any further evidence to be received by this court should be confined to the only issue upon which any necessity for further evidence has been shown that is, on point (3) listed above.

On the basis that O.(6), O.(7) and O.(8) proposed by Clarke JA are limited to the adducing of further evidence on point (3), I agree with the orders he proposes.

Clarke JA The first respondent (whom I shall call the plaintiff) was employed by the second respondent (which I shall call the employer) between 1978 and 1987. During that period he suffered two injuries in circumstances which he asserted established negligence on the part of the employer. The first was on 31 October 1979 when he fell while descending a ladder and injured his back. The second was on 15 March 1984 when he received another injury to his back. In October 1984 he contacted the appellant (whom I shall call the solicitor) and gave him instructions to act in proceedings against the employer in respect of both incidents. The solicitor made a number of enquiries on behalf of the plaintiff but did not commence action in respect of the first incident within six years of its happening. He did, however, write to the plaintiff on 10 July 1986 pointing out that the claim in respect of the first action was statute barred and recommending that the plaintiff take the letter to another firm of solicitors for advice.

In due course new solicitors were consulted and they instituted proceedings on the plaintiff's behalf. In the statement of claim which was filed damages were claimed against the employer in respect of both accidents and damages were claimed against the solicitor in respect only of his failure to institute proceedings in respect of the first incident.

The case was duly heard in Coffs Harbour by Wood J and on 30 November 1989 he published his reserved judgment. In that judgment he found in the plaintiff's favour against the employer on the claim brought in respect of the second accident and awarded the plaintiff $17,364. He also found in the plaintiff's favour in the claim against the solicitor and directed the entry of judgment in the sum of $367,651. During the hearing liability was admitted in respect of both claims and the court was concerned only to assess the damages resulting from the negligence of the respective defendants.

Although there were a number of complex questions which arose on the question of damages the critical question was that of causation. The solicitor contended that the bulk of the plaintiff's problems resulted from the 1984 incident while the employer blamed the earlier accident for the plaintiffs continuing disabilities. His Honour found that issue in the employer's favour. Indeed his Honour found that the March 1984 incident merely exacerbated the plaintiff's existing problems and that the exacerbation only lasted until June 1985. The solicitor has appealed from the judgment upon the grounds that the damages awarded are excessive. There are a number of grounds in the notice of appeal but during the hearing there were only four grounds advanced.

It is convenient to deal initially with the second ground in which the solicitor contended that his Honour erred in awarding interest on the past general damages at 7 per cent. The plaintiff accepted that there needed to be a reduction of the damages on this ground and the amount of that reduction was agreed at $9,375.

In the first ground the solicitor contended that his Honour erred in failing to make a deduction from the amount allowed in respect of impairment of future earning capacity because the plaintiff had a continuing entitlement under workers' compensation legislation in respect of the injury suffered in 1979 which was not affected by the judgment against the solicitor. If, the solicitor's counsel argued, the plaintiff had obtained a judgment against the employer in respect of the 1979 incident his workers' compensation entitlements in respect of that incident would have come to an end, whereas this result did not flow from the recovery of judgment against the solicitor in the action by the plaintiff against the solicitor, which action is accurately described as an action for the loss of a chance to recover damages against the employer for those injuries. The recovery of this judgment had no effect on his entitlement to future compensation in respect of that injury. Consequently, it was necessary to make an allowance for his continuing entitlement to compensation as otherwise the plaintiff would be over compensated for his injury.

It was pointed out by counsel that his Honour recognised this principle insofar as he made a deduction in respect of the assessment of wage loss and impairment of future earning capacity to the date of the trial but it was argued that he had erred in failing similarly to take account of the continuing entitlement in respect of the award for impairment of future earning capacity. It was also submitted that his Honour erred in awarding the plaintiff $5,250 in respect of past and future out of pocket expenses.

There is, it seems to me, substance in the solicitor's submissions which are supported by the decision of this Court in Scott and Ors v Echegaray (1991 Australian Torts Reporter 81-120 particularly at 69,137) and Adams v Ascot Iron Foundry Pty Ltd (1968) 72 SR 120 at 128-9).

However, the plaintiff has contended that this point was not taken at first instance and his counsel said that if it had been taken it is almost certain that he would have wished to call evidence on the value of the continuing entitlement to workers compensation, for instance, to establish the sum likely to be awarded in an application by the plaintiff for the redemption of his rights under the Workers Compensation Act (1926). This contention was disputed by the solicitor and, as there was no indication in the appeal papers that the point had been taken, evidence was called to establish what occurred at the trial.

The solicitor relied on the affidavit of Janette Lynne Boyd, a solicitor who had instructed counsel during the hearing, and she said that during final submissions counsel for the solicitor said words to the effect:

"Any allowance for past wage loss or impairment of future earning capacity should take account of workers' compensation entitlements".

She said that the trial judge replied "Yes I accept and understand all that?" Ms Boyd was cross examined on this evidence but adhered to her evidence.

No affidavit was filed in reply but Mr John Coombs QC, senior counsel for the plaintiff, both at the trial and on the appeal, returned his brief in the appeal and gave oral evidence. He agreed that counsel for the solicitor had referred to the need to make allowance for workers' compensation payments which had been made prior to the trial but was quite definite that nothing had been said about the future.

In his evidence Mr Coombs described what had occurred after the evidence had been given. Addresses which took place after the close of the evidence started at 9.15 am in the morning because his Honour had a long list which was moving slowly. When invited to address counsel for the solicitor handed up written submissions and spoke to them in what Mr Coombs described as 'a rather shorthand brief way'. According to Mr Coombs his Honour asked some questions and said in respect of some matters "Yes, well we know that". Mr Coombs was adamant that counsel had not referred to the need to take account of the workers compensation entitlement in relation to the impairment of future earning capacity. He was then asked the following question:

"Q. Can you recall now what Mr Loomes said to his Honour in connection with workers' compensation entitlement? A. The first discussion about workers' compensation was a discussion about interest on past loss. Mr Loomes said that there would have to be deducted from the past loss a figure for the purpose of calculating the interest, the amount of compensation received, and his Honour said he understood that or 'We all know that', or words to that effect. The second question about workers' compensation or compensation to the date of notional trial and his Honour said 'That obviously has been taken off before they got to the notional trial date'. The third comment was between the date of the notional trial and the actual trial. Mr Loomes submitted the plaintiff ought not recover twice by having compensation he received from the date of notional trial to the date of the actual trial and my recollection is his Honour said 'Does anyone contend that should not come off?', and my recollection is both I and Mr Robinson said we don't think he should get it twice and his Honour said "You don't need to say more about that'. There were no case books, no copies of cases or case books brought. The only reference to any case was in the written submissions."

Mr Coombs went on to reiterate that there was no submission that the future loss of earning capacity should be reduced by continuing entitlement to workers compensation payments and no submission that a verdict against the solicitor did not bring to an end the plaintiff's entitlement to workers' compensation in the future. He added "Indeed it is my belief that all of us operated on the basis that the trial would bring these rights to an end". It may well be that Mr Coombs operated on that belief but I find it difficult to understand upon what basis that belief could have been entertained bearing in mind the terms of the relevant legislation and the passage in the judgment to which his Honour was referred in the written submissions.

Further, it would seem to me that the written submissions made by counsel for the solicitor are inconsistent with the notion that he entertained that belief.

Both Miss Boyd and Mr Coombs gave their evidence in a credible fashion. There was nothing, for instance, about the manner in which either gave evidence which caused me to doubt that both were furnishing the Court with their best recollections of the events which occurred more than three years ago. In determining whether counsel for the solicitor at the trial made an oral submission that it was necessary to take account of the plaintiff's future entitlement to workers' compensation in assessing the impairment of his earning capacity in the future it is necessary, in my opinion, to have regard to a number of facts which were incontrovertibly established. Because both witnesses were honestly informing the Court of the facts as they recalled them it is only in that way that the Court is able to ascertain whose version of the facts is more likely to be correct.

There are, as it seems to me, two important facts which provide convincing support for the version given by Mr Coombs. The first is that in a lengthy and comprehensive judgment in which he undertook a detailed analysis of the plaintiff's case Wood J made no reference to the point which is now sought to be agitated. His Honour did make a deduction from the allowance for the impairment of earning capacity to the date of trial but at no stage did he deal with the effect of compensation entitlements in the future upon the award. The second telling factor is that no submissions were made to his Honour as to the proper manner in which the entitlement to future compensation should be assessed or dealt with. During the hearing five schedules were handed up to his Honour and these are contained in the appeal papers. Schedule 1 contained the Agreed Past Wage Loss; Schedule 2, the Out of Pocket Expenses; Schedule 3 contained a table of Comparable Wages; Schedule 4, the amount of Workers' Compensation paid during the relevant periods; Schedule 5, the amount of Tax Paid and Schedule 6, an Agreed Superannuation Loss Figure.

Those schedules enabled his Honour to calculate the damages which should be awarded in accordance with his findings. Although the plaintiff gave evidence as to the amount of net compensation he was receiving at the date of trial that was the full extent of the material before his Honour to assist in the calculation of any allowance in respect of future workers compensation entitlements. These facts I take to be common ground.

The position is reached, therefore, that there is no indication in the appeal book that the point which the solicitor now wishes to raise was raised below, the trial judge did not advert to the point and no attempt was made by either party to put forward submissions as to the manner in which future entitlements should be assessed and taken into account. Having regard to those matters I have concluded that the probabilities are strongly in favour of the version given by Mr Coombs. It is clear that counsel for the solicitor did say that the allowance for past wage loss should take account of workers' compensation entitlements or payments but I am not satisfied that he made the rather terse reference to entitlements in the future which Miss Boyd has said he did.

That conclusion does not necessarily mean that the point now under discussion was not raised during the trial. The major portion of the submissions of counsel for the solicitor were in writing as Mr Coombs has said. The court has been furnished with a copy of those written submissions. It is possible that counsel had problems arranging secretarial services in Coffs Harbour because the submissions are quite cryptic. It may be that they are more accurately described in some respects as Notes for Submissions. There is, however, a passage which deals with workers' compensation which reads: "As to workers' compensation the second defendant relies upon Lee v Mogg, Qld Sup Ct, unreported, Mr Justice Lee, 22 March 1989 (No 14/87 Toowoomba) at 31-34, for the principle workers compensation payments should be deducted from the plaintiffs entitlement against the second defendant. See also at 128-9 of Adams (supra)" (The full reference to Adams appears earlier in the submissions.) There then appears in capitals the following words: "Application of legal principles above to facts".

A full understanding of the submissions would be impossible without reference to the authorities which were expressly mentioned. Adams was a case in which a plaintiff sued his employer for negligently exposing him to silica dust. During the hearing the employer sought to lead evidence that the plaintiff had received compensation under the Workers' Compensation (Silicosis) Act but the trial judge rejected this evidence. There was, it should be pointed out, a critical

distinction between the Workers' Compensation Act 1926 and the Workers' Compensation (Silicosis) Act in that the latter did not incorporate s63 of the Workers' Compensation Act, nor did it have a provision in similar terms. The effect of s63 was, relevantly, to ensure proper allowance was made for Workers' Compensation payments to ensure that a plaintiff who was awarded damages against his or her employer at common law was not over compensated. The critical question which was debated in Adams was whether the character of compensation payments under the Workers' Compensation (Silicosis) Act was such that they should be taken into account in the assessment of damages or whether they should be held to have been given by way of bounty to the intent that they should be enjoyed in addition to damages. Sugerman JA, with whose conclusion Asprey JA agreed, held that the payments of compensation should be taken into account. At 129 his Honour said:

"Tt appears to me that, as Mr Glass has submitted, the correct method of preventing a double recovery here is by taking into account the payment received or to be received (my underlining) under the Act as a factor in assessing damages."

The solicitor's counsel also referred to the unreported decision of Lee J in the Queensland Supreme Court in Lee v Mogg (supra). On the pages referred to by counsel in his written submissions the learned judge dealt only with the deduction of workers' compensation payments already made and, accordingly, the decision provides no support for the contention made by the solicitor in this court that the point under consideration was raised at the trial.

In the circumstances to which I have adverted it is not easy to resolve the question whether the point under consideration was taken at the trial. I have concluded that counsel for the solicitor in his oral submissions did not make any reference to the need to make allowance for the plaintiffs workers' compensation entitlements in assessing damages for the impairment of his future earning capacity. Further, the written submissions themselves speak only of workers' compensation payments and I would read them as referring to payments already made. Notwithstanding, counsel relied upon the principle to be found in Lee v Mogg and at 128-9 of Adams (supra). That principle, shortly stated, was that it was necessary to take account, in circumstances relevantly similar of payments received or to be received in order to prevent double recovery. The application of the principle required not only that account be taken of payments received by the plaintiff prior to the date of the notional trial but also in the period between the notional and actual trial and in the future. Counsel for the solicitor submitted, and his Honour accepted, that it was necessary to take account of payments made after the date of the notional trial. Insofar as his Honour awarded damages upon the basis that past wage loss was calculated only up to 31 May 1987, being the date of notional trial, it follows that the payments made by way of workers' compensation after that date were taken into account in making an appropriate allowance for impairment of future earning capacity. If payments already made were to be deducted from the allowance for impairment of future earning capacity (calculated from 31 May 1987) it is difficult to see why future entitlements should not also have been taken into account.

Clearly the oral submissions of counsel for the solicitor did not bring home to counsel for the plaintiff or his honour the contention that in order to prevent over compensation it was necessary to take account of the plaintiff's continuing workers' compensation rights but that does not necessarily mean that the point was not sufficiently taken. The reference to the particular pages of Adams was a

reference to a principle which required, inter alia, that allowance be made for workers' compensation entitlements in the assessment of damages for the impairment of future earning capacity.

In some circumstances a reference of that nature may not be adequate. But the circumstances of this case were, in a sense, unusual. The point under discussion related to damages. There was no reference to it in the pleadings. Nor should there have been. Furthermore, it was not incumbent upon counsel for the solicitor to raise the point prior to his closing address at the end of all the evidence. It was for the plaintiff to prove his case on damages and, subject to the requirements of a fair trial, it was open to the solicitor to make any submissions which his counsel thought fit in relation to the assessment at the close of the evidence. If counsel had made the statement attributed to him by Miss Boyd then, if the plaintiff wished to lead evidence on the valuation of the future workers' compensation entitlements, it would have been necessary for his counsel to seek leave to reopen.

The point is that the taking of evidence had concluded before the occasion arose for the making of submissions. Any failure clearly to take the point after the evidence had concluded would not have effected the course of the trial except insofar as counsel might have sought and been granted leave to reopen and to call further evidence in support of the plaintiff's claim. Although it is possible that, if leave had been sought, his Honour would have granted the plaintiff that indulgence it is by no means certain that that would have occurred. If no application to reopen had been made, or if it had been made and been unsuccessful, then all the evidence upon which the assessment of the damages for the impairment of future earning capacity would have been before the court. Consequently, when counsel for the plaintiff submitted to this Court, as he did, that there was a real possibility that further evidence would have been called if this point had been made he overlooked the fact that it is by no means certain that he would have been permitted to call that further evidence.

The question whether the point was sufficiently taken is not without difficulty but, having regard to the fact that his Honour reserved his decision and, I assume, indicated his intention to do so to the parties, I have concluded that in the light of the reference to the specifically relevant pages of Adams it should not be held that the solicitor's counsel failed adequately to take the point.

Although I have determined that it is now open to the solicitor to take the point it is desirable, in my opinion, that I consider also the question whether, assuming that the point was not taken at the trial, the solicitor should be permitted to take it on the appeal.

The solicitor submitted that the material upon which an assessment of the value of the plaintiffs entitlements to workers' compensation was before the court with the consequence that the appropriate allowance could simply have been worked out by his Honour as a matter of mathematics in much the same way as damages for an impairment of future earning capacity are regularly calculated in the courts. There was, counsel submitted, no possibility that evidence would need to be called because all the relevant evidence was before the court and his Honour was simply called upon to assess the value of the entitlement upon the basis of that evidence. In addition counsel submitted that the fundamental principle was that the point should be entertained, whether or not it was taken at the trial, if the interests of justice were better served by permitting it to be taken.

Where, as here, evidence could not have prevented the point from succeeding there were no considerations of justice which supported the view that the point should not be considered by the Court.

The principles upon which both parties relied are well settled and appear in a number of cases including Suttor v Gundowda Pty Ltd (1950) 81 CLR 418, at 438; O'Brien v Komesaroff (1981-2) 150 CLR 320; Coulton v Holcombe (1986) 162 CLR 1 and Holcombe v Coulton (1988) 17 NSWLR 71, at 75-77. The plaintiff relied particularly upon the last of those cases in which McHugh JA emphasised the importance of finality in the administration of justice. In my view these authorities support the proposition that a point should not be allowed to be taken for the first time on appeal in circumstances where, if the point had been taken below, evidence could possibly have been called which would have prevented the point from succeeding or would otherwise have been relevant to the issue which arose once the point was entertained. They do not lay down a principle that before a party can successfully resist an application to raise a new point on appeal it must establish the possibility that evidence could have been given which would have defeated the point.

Of course, if the resisting party can show that there is a possibility that evidence could have been called which would have defeated the new point then, according to those authorities, the application for leave to rely on the new point should, in all but exceptional cases, be refused. It seems to me, however, that the reasons underlying that conclusion would apply equally to a case in which there was a possibility that the resisting party could have led evidence below which, although not decisive, would have had a material impact upon the decision. This follows from the application of the principle expressed by Lord Herschell in The "Tasmania" (1890) XV App Cas 223. In that case his Lordship said, at 225:

"... A court of appeal ought only to decide in favour of an appellant on a ground there put for the first time, if it be satisfied beyond doubt, first, that it has before it all the facts bearing upon the new contention, as completely as would have been the case if the controversy had arisen at the trial;"

In the present case counsel for the plaintiff has submitted that if the solicitor had sought to rely on the point now being agitated at the trial then he would have sought to meet it. One way he could have done that was by calling actuarial evidence to establish the present day value of the continuing entitlement. The response to that submission was that there was incontrovertible evidence of the net amount of workers compensation being received each week by the first respondent and it was submitted that the court should have proceeded to assess the present day value of that in the same manner that it determined the future impairment of earning capacity. In this case Wood J determined that aspect of the damages by adopting a comparable wage as at 31 May 1987 of $300 per week, projecting it for 21 years on the 3 per cent table, in order to ascertain the present value of such loss, and subjecting the final figure to a discount of 30 per cent for identified contingencies.

According to the submissions of the solicitor's counsel the appropriate way for this Court to calculate the deduction would be to adopt the established net worker's compensation weekly payment of $156, project it for 21 years on the 3 per cent table and apply the same discount as was applied to the calculation made by the trial judge. If that is correct then a deduction should have been made from the allowance for future impairment of earning capacity of $89,151. Counsel recognised that the contingencies bearing on future receipts of workers compensation were somewhat different from those which may be relevant to a

consideration of impairment of future earning capacity but submitted that mathematical accuracy was neither possible nor desirable in the calculation of damages at common law and that it was correct in principle to adopt broadly the same approach to the valuation of the allowance for impairment for future earning capacity and the benefits of workers compensation payments to be received in the future.

This is, as it seems to me, an attractive approach. While it may be that an actuary would have concluded that a different figure should be calculated it is difficult to accept that the difference could be very great. More importantly, subject to the observations I have made about contingencies, it is difficult to see why the same process should not be followed both in relation to the relevant element of damages and the calculation of the allowance. Further, there is reason to doubt that the plaintiff would have been granted leave to reopen to call an actuary.

Another, and the principal, way the plaintiff could have met the point, according to his counsel, was by calling evidence to establish the amount which would be received by the first respondent upon the redemption of his entitlement under, presumably, s15 of the Workers Compensation Act 1926. It was submitted that this sum would be appreciably lower than $89,151 and that it was the more appropriate figure to adopt. There is, I think, force in this submission for the redemption figure is one which is determined by the court - albeit that in practice the court might approve the figure agreed between the parties - and represents the view of a specialist judge as to the proper present day worth of a worker's entitlements under the Act.

Finally, the plaintiff contended that even if the court entertained the point it was bound to fail. That is because the Compensation Court retained a right to review awards (see, for instance, s60 of the Workers Compensation Act 1926) and it would be open to the Commission to take the damages into account and to end the weekly payments. This submission should, in my opinion, be rejected. There had been no review at the time of the assessment of the damages and it was incumbent upon the trial judge to take account of the plaintiff's rights, past and future, under the workers compensation legislation in respect of the 1979 injury in order to avoid over compensation of the plaintiff (see Scott (supra) and Adams (supra)). Whether or not a judge of the Commission could or would review the award upon the basis of the judgment is a moot point particularly as there is no relevant precedent. Quite apart from these considerations, the simple fact is that the solicitor has no right to seek a review of any workers compensation award and it is difficult to see why an employer should succeed in a review application upon the ground that a judgment had been obtained from another party. In any event the principle upon which the damages should be assessed is clear and should have been applied.

In these circumstances the court is faced with a situation where if the point is not allowed to be taken there is clearly a considerable overpayment to the first respondent who, it is admitted, is entitled to receive ongoing payments by way of workers compensation as well as his damages in respect of the 1979 injury. On the other hand if the point is permitted to be taken it may be that, if the court assesses the deduction on the evidence called at the trial, it will allow a greater deduction than may have been allowed if evidence had been called by the first respondent.

On one view the court is precluded from entertaining the point by the decisions to which I have referred. However, the principle for which they stand may not be conclusive in a very exceptional case. This was recognised in Maloney v Commissioner for Railways (NSW) (1978) 52 ALJR 292 at 294. Again in Water Board v Moustakas (1988) 62 ALJR 209 the majority said, at 212:

"Tt is true that in Maloney it was recognised that in 'very exceptional cases' a plaintiff's omission to put at trial a case formulated on appeal may not be conclusive against him. But it was pointed out that the opportunity to assert the new case at another trial should only be granted where the interests of justice require it and such a course can be taken without prejudice to the defendant."

I tend to think that this may be one of those exceptional cases bearing in mind the course of the trial to which I have already adverted and the fact that the requirement that allowance be made in respect of future workers' compensation entitlements in assessing the impairment of earning capacity is a legal requirement which does not depend upon evidence. In a sense, therefore, the point which the solicitor wishes to raise is a legal point which, it was accepted, did not depend on evidence. Although the measurement of the deduction could well be different depending upon evidence which was led on the issue the plaintiff had, as I have earlier pointed out, concluded his case before the points at issue on damages were defined in final addresses.

But it is unnecessary to reach a conclusion on this question because there is another reason for allowing the point to be entertained. The judgment under appeal will be set aside for other errors. I have already mentioned one and another will emerge later in this judgement. At least in respect of the second matter the court will be required to determine whether it should grant a new trial or reassess the damages. If a new trial is granted then the point which is now under consideration would be available and, clearly enough, the assessment would be made on the evidence called and upon the basis that allowance needs to be made for the future worker's compensation entitlement. Similarly, as it seems to me, the court in reassessing the damages should apply the correct legal principle. In some circumstances it may be necessary to order a new trial rather than to reassess so that further evidence may be given if the interests of justice so require. On the other hand this court may itself admit fresh evidence, not for the purpose of deciding the appeal, but in order to carry out a reassessment (see generally Warr v Santos (1973) 1 NSWLR 432 at 437). In this case it is more appropriate that the court reassess the damages. That course will be more efficient and achieve a significant saving of costs for the parties.

If the matter is approached in this way the question is not, in substance, whether the point should be entertained on the appeal but whether, the court having determined to allow the appeal on other grounds, the court should apply the relevant principle in reassessing the damages. In my view it should because that course would be taken if a new trial was ordered and otherwise it would be reassessing damages otherwise than in accordance with law. In the end, and on either view, the submission of the appellant should be accepted and the allowance for future economic loss set aside.

The next ground argued by the solicitor related to his Honour's award of interest on the amount of the damages during the two and a half year period between the date of the notional trial in May 1987 (being the date upon which the trial would have proceeded but for the solicitor's negligence) and the date of his Honour's judgment in November 1989. His Honour allowed interest during this period at the rate of 18 per cent per annum. Senior Counsel for the solicitor

submitted that his Honour was in error in adopting the commercial rate insofar as he made no allowance for the probability that had the first respondent obtained judgment against the second respondent in 1987 he would not have invested the whole of the judgment moneys at a commercial rate.

The rate of interest to be awarded was clearly within his Honour's discretion and the reason put forward by the solicitor for interfering with his Honour's allowance discloses no error in the reasoning process. If, for instance, judgment had been obtained in May 1987 but an appeal had been lodged and not been heard for two and a half years then interest at the Supreme Court rate, which was approximately the same as that allowed by his Honour, would have been payable. Clearly there are a number of approaches which could be taken to the problem of determining what was the appropriate rate of interest and I am unable to see that his Honour made any error in this regard.

A second ground of objection to the award of interest was taken which has more substance. It was to this effect - If it was appropriate to allow interest for two and a half years such allowance was made upon the hypothesis that the first respondent would have had the money available for investment at the chosen rate: If he had in fact invested the moneys he would have been liable to pay income tax in respect of the interest received: Therefore a deduction should be made in respect of the tax he would have had to pay. In my opinion the submission is, in substance, correct. I think, this was accepted by counsel for the first respondent. It seems to me that upon a reassessment of the damages the court will itself need to direct attention to the proper method of compensating the first respondent insofar as he did not receive a judgment in 1987 and it may be that the parties may wish to put forward a different approach than the approach taken by his Honour. Because the verdict under appeal will be set aside there is no need at this stage to say any more about this point.

Next it was submitted that his Honour was in error in finding that the 1979 incident was the cause of most of the plaintiff's problems. In this respect it was pointed out that the incident resulted in the plaintiff being absent from work for only eleven days and that, apart from three visits to a general practitioner in November 1979, he was apparently able to carry on at work without difficulty until 29 December 1980 when he had a fall.

According to a specialist, Dr Hefner, the plaintiff gave him a history that at that time he had fallen off a roof and sustained a fracture of the T-12 vertebral body for which he had had a period of time off work and appropriate conservative treatment and in Dr Hefner's opinion there was a very clear history running back to 1981 of the beginning of disc instability.

Counsel also pointed to the fact between 29 December 1980, when the plaintiff had the fall, and 16 March 1984 the plaintiff lost a total of 45 working days with back pain and that between July 1983 and March 1984 he lost no time from work due to his back. It was then submitted by counsel that when that history was considered and compared with the plaintiff's absence from work for sixteen months following the March 1984 incident and the treatment given following that incident there was on overwhelming inference that the major problems had been caused in 1984.

The same arguments were put, no doubt, to the trial judge. He did not agree. His Honour thought that there was at least a significant tearing of the annulus in October 1979 which left the plaintiff's back vulnerable, and that his back was made progressively worse by the several insults which occurred over the following years.

What appears to have been the single most important factor which persuaded his Honour was the fact that the plaintiff never became free of pain after 1979 and there was clear evidence before the 1984 incident of nerve root involvement. Although there are powerful considerations in support of the opposing view it is clear that it was open to his Honour to find that the October 1979 incident caused the major problems and I am unable to conclude that his Honour was in error in so doing.

Finally, the solicitor attacked the costs order which his Honour made against the solicitor. That order, relevantly, read: The second defendant (the solicitor) pay three quarters of the costs of the proceedings on a party/party basis up to the commencement of the Coffs Harbour sittings and thereafter upon an indemnity basis up to and including 7 December 1989.

No complaint was made about the awarding of party/party costs. The solicitor challenged, however, the awarding of costs on an indemnity basis.

When his Honour delivered reasons for judgment he made orders relating to the first respondent's costs on a party and party basis. However, he heard further argument on 7 December 1989 which argument was not reproduced in the appeal book. The court was informed that during that argument his Honour was informed that shortly prior to the commencement of the Coffs Harbour sittings counsel for the employer (the second respondent) approached counsel for the plaintiff (the first respondent) to discuss settlement. He was also informed that the plaintiff's counsel had prepared a crib sheet for negotiation purposes and that he then handed that document to counsel for the employer.

Counsel also told his Honour that within a few minutes of the discussion counsel for the employer returned and said "The case can't be settled, the second defendant (the solicitor) won't put anything in." His Honour was also reminded that the case started on the second day of the second week of the sittings and continued thereafter.

According to the plaintiff's submission no party demurred to that statement.

It would appear from the first page of the transcript of the hearing that during the opening of the matter by counsel for the plaintiff the solicitor's counsel made a concession which led his Honour to note that "liability was admitted by the second defendant but quantum was in issue". It would seem to follow that until that statement was made the plaintiff was bound to proceed upon the basis that liability in the proceedings against the solicitor was in issue and to gather together the relevant evidence on that issue and to have it available at the trial. In the circumstances of this case, of which his Honour was clearly aware, it was within his Honour's discretion to make a costs order which took account of the fact that the plaintiff had been needlessly put to expense in the period between the commencement of the sittings and the time of the statement by counsel for the solicitor admitting liability. This factor alone presents considerable difficulties to the present submission particularly insofar as the trial judge has a wide discretion in making an appropriate costs order.

There is in this case an additional difficulty. The reasons which led his Honour to make the order he made have not been put before the court. In these circumstances, and in view of the matters to which I have already alluded, it is impossible to say his Honour erred in the exercise of his discretion. I would reject this ground of appeal.

For these reasons the judgment should be set aside and the damages reassessed. Upon that reassessment the court should admit such fresh evidence as the first respondent wishes to tender relevant to the assessment of the allowance

which should be made in respect of his claim in respect of the impairment of his earning capacity. The reason which leads me to say that that course should be followed is that it would be unjust, in the circumstances of this case, to evaluate the worth of the first respondent's rights under this Workers Compensation Act in the absence of that evidence. Obviously the considerations affecting the admission of fresh evidence for the purposes of reassessment are different from those which arise in deciding whether to allow an appeal. (See, Tamas v Streimer (unreported, NSW Court of Appeal, 10 July 1981; Warr v Santos (1973) 1 NSWLR 432 at 436; Radnedge v GIO of NSW (1987) 9 NSWLR 235).

Appeal allowed against the judgment in favour of the first respondent against the appellant;

The judgment in favour of the first respondent against the appellant set aside except as to costs;

The damages payable by the appellant to the first respondent to be reassessed by this Court;

The appellant to pay the second respondent's costs of the appeal;

The first respondent to pay the appellant's costs of the appeal (excluding those costs which the appellant is required to pay the second respondent) and is to have a certificate under the Suitors Fund Act in respect of those costs;

The first respondent is to file and serve all affidavits upon which he wishes to rely on the issue of the allowance to be made resulting from the continuing workers compensation rights on reassessment on or before 2 June 1993;

The appellant to file and serve all affidavits on which he wishes to rely in reply in the re-assessment on or before 23 June 1993;

The first respondent to file and serve any affidavits in reply on or before 30 June 1993;

The matter is to be listed for mention before the Registrar for the purpose of fixing a date for the further hearing of the appeal.

Meagher JA I have had the advantage of reading in draft the judgment of ClarkeJA in this matter. I agree with everything his Honour says in his judgment except on the question of whether the appellant solicitor should now be permitted to raise for the first time the issue that some amount should be deducted from the sum awarded for diminution of future earning capacity to reflect the plaintiff's (first respondent's) continuing entitlement to periodic payments under the Workers Compensation legislation. As his Honour points out, the point was never taken in addresses at the trial; it also follows from what his Honour says that if it had been, the plaintiff might have raised additional evidentiary matters, even if the trial judge's leave were required to do so. In these circumstances, it seems to me that the well known trio of High Court decisions Suttor v Gundowda Proprietary Ltd (1950) 81 CLR 418, O'Brien v Komesaroff (1981-2) 150 CLR 320 and Coulton v Holcombe (1986) 162 CLR 1, preclude the appellant from agitating it now. In my view the appeal should be dismissed with costs.

1. Appeal allowed against the judgment in favour of the first respondent against the appellant;

2. The judgment in favour of the first respondent against the appellant set aside except as to costs;

3. The damages payable by the appellant to the first respondent to be reassessed by this Court;

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The appellant to pay the second respondent's costs of the appeal;

The first respondent to pay the appellant's costs of the appeal (excluding those costs which the appellant is required to pay the second respondent) and is to have a certificate under the Suitors Fund Act in respect of those costs;

The first respondent is to file and serve all affidavits upon which he wishes to rely on the issue of the allowance to be made resulting from the continuing workers compensation rights on reassessment on or before 2 June 1993;

The appellant to file and serve all affidavits on which he wishes to rely in reply in the reassessment on or before 23 June 1993;

The first respondent to file and serve any affidavits in reply on or before 30 June 1993;

The matter is to be listed for mention before the Registrar for the purpose of fixing a date for the further hearing of the appeal.

Counsel for the Appellant: J HISLOP QC and D DEY Instructed by: PHILLIPS FOX

Counsel for 1st Respondent: Js COOMBS QC and I ROCHE Instructed by: TAYLOR and SCOTT