Walshe v Prest

State of New South Wales v Moss (2000) 54 NSWLR 536. Malec v JC Hutton Pty Ltd (1990) 169 CLR 638 Rosniak v Government Insurance Office (1997) 41 NSWLR 608 CASES CITED: Graham v Baker (1961) 106 CLR 340 Conway v The Queen (2002) 209 CLR 203 HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd (2004) 217 CLR 640 Stead v State Government Insurance Commission (1986) 161 CLR 141

Cheryll Walshe (Appellant) PARTIES: Tamara Prest by her next friend Darren Prest (Respondent)

S.G. Campbell SC (Appellant) COUNSEL: D.T. Kennedy SC/M.J. Perry (Respondent)

Curwood & Partners (Appellant) SOLICITORS: Taylor & Scott (Respondent)

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40820/04 DC 31 of 2002

GILES JA BASTEN JA CAMPBELL AJA

27 September 2005 CHERYLL WALSHE v TAMARA PREST By her next friend DARREN PREST Judgment 1 GILES JA: I agree with Basten JA. 2 BASTEN JA: On 14 August 1998, the child Tamara Prest (whom I shall call "the Plaintiff") was in child care. She was then 4 years of age. The Appellant (whom I shall call "the Defendant"), an experienced child-care worker, took the Plaintiff and three other children on a picnic to a park in western Sydney. Whilst at the park the Plaintiff was stabbed in the eye by another child with a piece of broken glass. By her next friend (her father) she sued the Defendant in negligence. She was successful in the proceedings in the District Court and received a judgment in her favour in an amount of $219,144.20. This appeal is brought against that judgment. 3 The first basis of challenge was directed to the inference drawn by the primary judge that there was negligence on the part of the Defendant. In the notice of appeal, the challenge was expressed in terms of principle as a failure to identify the content of the duty of the Defendant as a carer. The notice of appeal also challenged certain factual findings of the primary judge. However, as developed in argument, the question was restricted to the issue noted above, namely whether the primary judge was correct in drawing the inference that there had been a failure to provide reasonable care in the circumstances of the case. 4 A second group of challenges concerned her Honour's assessment of damages. These fell into two parts, namely a challenge to the calculation of future economic loss and, secondly, a challenge to the calculation of future out-of-pocket expenses.

Liability 5 In order to identify the nature of the challenge to the finding of negligence, it is necessary to note the circumstances in which the finding was made. The four children who accompanied the Defendant to the park were the Plaintiff and another child, Courtney, both four years of age, a boy, Jesse, who was two years of age and the Plaintiff's younger brother, Braiden, who was less than one year. The incident, as described by the Defendant, occurred as she was packing up at the end of the picnic. The young child Braiden was in a stroller and the other three children were described as "hanging on to the stroller". Tamara reached into the stroller to give her younger brother a hug, at which time Jesse sought to do the same. Tamara pushed the boy away with her hand on his chest, at which he responded by pushing his right hand, holding a piece of glass, into Tamara's face, causing a cut to her forehead and a laceration of her left eye. 6 The case for the Plaintiff focused on three particular circumstances, in seeking to establish that the Defendant failed to exercise reasonable care for the children's safety. First, it was suggested that the reason for the trip to the park on that day had been that the 16 year old son of the Defendant was engaged in trials for selection to a baseball team. The inference sought to be established was that the Defendant's attention was elsewhere and she was not taking proper care of the children. However, the primary judge accepted her evidence that her son had already qualified for selection and, at least implicitly, accepted that she was not distracted by his activities. 7 Secondly, there was evidence that Jesse was an aggressive child with a propensity for violence towards the other children. However, her Honour expressly rejected the suggestion that his behaviour was abnormal or unusual for a two year old. 8 The third and critical issue revolved around the Defendant's knowledge that the children had been playing with glass prior to the incident. Amongst the documents produced by the Defendant was an "incident book" in which she had made an extensive handwritten notation of the events of 14 August 1998. Part of the record, at the bottom of one page and continuing to the next, stated: "Softball finished at 1-30 and I proceeded to [pack up] gathering the children close. Tamara, Jesse and Courtney holding on to pram, to return to the car. I lifted pram shield to see if Braiden was awake. He smiled up at me and Tamara lent in to give him a cuddle … as did Jesse but Tamara pushed him back and he lashed out at her with his hand. He had had a piece of glass in his hand which later fell from pram when this folded up."

The words "pack up", which were the first words on the second page, had been crossed out and a further sentence had been added later at the top of the second page, which read as follows: "Prior to this I had taken pieces of glass of [sic] both Jesse and Tamara and moved them to pack up. Courtney was playing with her doll." 9 This passage was of considerable significance, as it indicated that the Defendant had prior knowledge that the children had been playing with glass and that both Jesse and Tamara had been holding pieces of glass. In examination in chief, the Defendant was taken to the additional sentence at the top of the second page. She gave the following evidence: "Q. And above that there are three lines of writing above the double lines? A: Yes. Q: Are you able to tell her Honour whether those three lines at the top of the page were recorded at the same time as the rest of the document or at some later time? A: It was later. Q: Do you remember doing it? A: Yes, I do. Q: Do you remember when it was? A: Later that weekend."

She was later asked by her counsel whether she saw a piece of glass in Jesse's hand and denied it. The questioning continued on the same topic. "Q. And similarly at the top of the page you refer to 'pieces of glass' in the added words at the top of the page. A. Yes. Q. Is that something you saw? A. No. Q. Can you explain to her Honour why it is that you've recorded that? A. When the children had moved off the rug they were just running and playing and my attention was taken with folding up the rug and one of the parents had said the children are throwing something and it was later suggested that maybe it was glass." 10 The Defendant was cross-examined about this evidence, counsel reading the additional sentence and continuing: "Q. You knew there was glass there before the incident, didn't you? A. No, I didn't. … Q. What you've written in the book as to taking pieces of glass off both Jesse and Tamara prior to the event happening is correct, isn't it, that's the truth? A. No."

In further questioning, she expressly stated "I didn't personally take glass off them". She was then cross-examined as to a marking with an orange texta highlighter, placing the sentence in parenthesis. She admitted that she had been responsible for doing that days before the Court hearing, because she realised it was "incorrect". 11 The trial judge referred to this aspect of the evidence and concluded at [46]: "I am persuaded on the balance of probabilities that this entry of a contemporaneous nature is a reliable entry, and allied with the evidence she gave of the children throwing something around previously I am satisfied the defendant was aware, a) there was glass around and b) given her extensive child-care experience was aware small children have a propensity to play with items found in their vicinity. In such circumstances she should have properly made an inquiry or search of the children to ensure that none of them had any objects which were capable of being thrown around, or more particularly pieces of glass. Tamara and Jesse were both in the vicinity of the stroller at the time of the accident. Glass was found in the stroller when it was being packed up and it seems that Tamara was struck in the eye by an object such as a piece of glass wielded by Jesse. In such circumstances I am satisfied on the balance of probabilities that the plaintiff's case should succeed and I find the defendant has failed in its [sic] duty of care to her." 12 At the hearing of the appeal, counsel for the Defendant sought to rely on the apparent acceptance by the trial judge of the added statement in the incident book, namely that the Defendant had "taken pieces of glass" from two of the children. That demonstrated, it was submitted, that she had indeed undertaken precisely that step which the trial judge inferred she had not taken, which omission constituted a lack of reasonable care. The conclusion was said thus to be inconsistent with the facts found. 13 The difficulty underlying this submission is that the fact relied upon was expressly denied by the Defendant on at least three occasions in her evidence, including at least two occasions in her evidence in chief. Her own credibility was put squarely in issue by her own evidence. The trial judge found that she was aware that the children had found pieces of glass but did not take reasonable steps to ensure that the glass had been removed. This was, pre-eminently, a matter for her Honour to determine. Although, as put by the Defendant, it is true that her Honour made no express finding that she did not believe the Defendant, nevertheless, that is the inference which must be drawn from the conclusion reached. It was open to the judge to find that the Defendant had prior knowledge that the children had picked up pieces of glass, but had not carried out a reasonably careful search to see they had none. The reasoning could have been more fully articulated, but there is no inconsistency and no basis for appellate intervention. The appeal with respect to the finding of liability should be dismissed.

The assessment of future economic loss 14 The assessment of future economic loss in relation to a 10 year old child is an exercise which is fraught with difficulty and uncertainty. As explained by Heydon JA in State of New South Wales v Moss (2000) 54 NSWLR 536 at [71]: "Evaluation of the worth of a loss of capacity to earn - of a lost chance to earn - is of its nature a more imprecise inquiry than calculation of a lost income. It rests on the hypothesis - that the plaintiff will have undiminished capacity - which has been rendered false by events. It does not depend on calculating the income from a particular career which is no longer possible, but in calculating the damage to a capacity to carry on various careers. It is an exercise in estimation of possibilities, not proof of probabilities."

It is, as his Honour noted, a calculation to be carried out in accordance with the principles set out in Malec v JC Hutton Pty Ltd (1990) 169 CLR 638. 15 Heydon JA also made also made reference to the situation with young children, in terms which are apt to apply to the present case, at [84]: "An illustration of the court's readiness to award damages for diminution of earning capacity arises when very young children are injured. Strictly speaking it would be impossible to prove that the child would have had an earning capacity as an adult or would have exploited it. But it is conventional to rely on the occupations, attitude to life and work histories of parents and other relatives… ."

His Honour further noted at [93]: "It is much harder to value a chance where, as here, the plaintiff was a school child and the source of income lost is a professional business, not income from labour which is governed by awards or capable of establishment by reference to market rates. But since the obligation to value it cannot be shirked, deficiencies in the materials advanced may be tolerated." 16 Those difficulties are clearest in the case of a child who has not yet finished her schooling, or even her primary schooling at the date of trial. Those difficulties do not, of course, allow the Court to abandon the necessary assessment, nor did the Defendant suggest otherwise. They do, however, limit the scope for challenge on appeal, because of the imprecise boundaries of the permissible range of damages. 17 In the absence of any basis for variation from the average, the appropriate course is to adopt as a basis for calculation the average weekly earnings at the date of judgment: see Rosniak v Government Insurance Office (1997) 41 NSWLR 608 at 624 (Mason P, Meagher JA agreeing and Clarke AJA also agreeing and adding some further comments at 628). 18 The first complaint made in relation to the assessment by the trial judge was that her Honour failed to take account of the fact that the injury might diminish earning capacity, but not be productive of financial loss, as required by Graham v Baker (1961) 106 CLR 340 at 347. The error was said to be demonstrated by her Honour's acceptance of a 10% impairment of earning capacity, applied across the period of her likely working life, without further diminution on account of the possibility that she might in fact suffer no such loss. The Defendant sought to reduce the calculation undertaken by her Honour by 50%. 19 This complaint has an air of artificiality. The same result would have been achieved if the trial judge had expressly accepted the possibility that there might be no financial loss, together with the possibility that there might be a 20% financial loss and had allocated a mid-point as an appropriate basis of calculation. The Court was taken in the course of argument to the transcript of submissions made by both parties in relation to future economic loss. The submissions for the Defendant were put on the straightforward basis that there would be no financial loss, other than for a period of six months following an operation which the medical evidence indicated would be necessary. Further, counsel took her Honour to various passages in Malec, with respect to which her Honour indicated (understandably) that she was familiar. It is not possible to infer that her Honour failed to apply appropriate principles in the manner suggested by the Defendant on appeal. Nor should such an inference be drawn merely by reference to the figure awarded for future economic loss. This aspect of the challenge to the award should be rejected. 20 The second aspect of the challenge has more substance. In the notice of appeal, it was suggested that her Honour had undertaken a calculation on the basis of gross wages, rather than a figure net of income tax. That challenge could not be sustained, because her Honour expressly stated that she was using a net figure for average weekly earnings. At the hearing of the appeal, the ground was recast, in effect, as a complaint that the real figure for average weekly earnings, as at the date of trial, was $807.70 per week gross and $621.36 net. 21 It was clear from the transcript of submissions that her Honour understood that the gross figure "is probably about $800" and that the net figure was between $600 and $650, as suggested by the Defendant. Counsel for the Plaintiff then stated that "the average weekly earnings of females as at 17 May 2002 [was] $815.60", the inference being that, as at the date of trial, namely 12 August 2004, the figure might be higher. However, the error which was ultimately asserted derived from the manner in which her Honour expressed her conclusion at [60]: "At the time Tamara enters the workforce at an assumed 18 years of age I do not believe it unrealistic to expect her earning capacity to be in the vicinity of $800 net per week."

The inference to be drawn from that statement was, the Defendant suggested, that her Honour intended to adopt a figure for average weekly earnings, but incorrectly identified it as the figure applicable in eight years time. It was conceded that her Honour might have adopted a figure other than average weekly earnings if of the view that Tamara had demonstrated above average abilities, but the judgment does not suggest such a conclusion. Accordingly, her Honour erred in principle in taking a figure at a future date. 22 This exercise, it was submitted, also demonstrated the third error in approach, namely a failure to calculate a lump sum based on deferred enjoyment, as earnings would not commence for some eight years (or possibly 10 years if tertiary education were taken into account). The Plaintiff did not challenge the principle that deferred commencement should be reflected in the outcome, but argued that the kind of mathematical precision proposed by the Defendant was not appropriate. 23 Each of the second and third complaints made by the Defendant have substance, as a matter of principle, but the first, as already noted, does not. If there had been no appeal in relation to liability, questions of assessment would only have come before this Court on an application for leave to appeal. Given the manner in which the case was conducted below, leave might not readily have been forthcoming to agitate these matters. 24 Nevertheless, if the points of principle have merit, this Court may be required to reassess future economic loss on the basis adopted by her Honour, but making appropriate corrections to the calculations. Given that the matter is dealt with by way of rehearing, the relevant calculations should be undertaken as at the date of judgment in this Court, but no current figures were provided by the parties. Accepting her Honour's assumptions that the Plaintiff would commence work at 18 and enjoy an ordinary working life of 47 years, a 3% multiplier should be applied for that period. The amount so calculated should be further reduced according to the 3% deferred multiplier for a period of eight years, the plaintiff being ten years of age at the date of judgment. 25 The calculation proposed by the Defendant on appeal adopted a figure of $807.70 for average weekly earnings of all persons, at the date of trial. Use of this figure was sought to be justified by reference to the judgment of Mason P in Rosniak v Government Insurance Office (1997) 41 NSWLR 608 at 621F-622C. However, I do not read that passage in his Honour's judgment as supporting the approach suggested. It is devoted to rejecting the argument that median wages, rather than average wages, should be the relevant yardstick. In State of New South Wales v Moss (2000) 54 NSWLR 536, calculation of future loss for a female student was undertaken by reference to the average net wage for full-time adult female workers in New South Wales: no issue was taken with that calculation in that case, and no reason was presented to this Court to support the conclusion that the adoption of that yardstick by the trial judge involved error. In my view it did not. However, the tables relied upon by the Defendant in her submissions show that the average full-time weekly total earnings of adult females in New South Wales, as at 21 May 2004, were $913. The same tables indicate that, in round terms, the net wage after income tax, on that figure, would be approximately $700. 26 Multiplying that figure by the relevant 3% table for 47 years (1,325.3), reducing the result by 15% for vicissitudes, and taking 10% of the result, being the plaintiff's diminution of earning capacity, produces a figure of $78,855. Applying to that figure the 3% deferred table for eight years (.789) results in a sum of $62,216. As was noted in the course of the hearing, no allowance was made by her Honour for the six months during which the Plaintiff would be unable to work following anticipated surgery, nor for the usual 9% on account of lost superannuation, nor interest. If these factors are taken into account, as it would seem they should be, the ultimate result is in the order of $80,000, a reduction of $20,000 on the figure allowed by her Honour. 27 The principle that the Court should not order a retrial, even where error has been demonstrated in the proceedings below, unless "some substantial wrong or miscarriage has been thereby occasioned" is now to be found in Part 51, r 23 of the Supreme Court Rules. As noted in Conway v The Queen (2002) 209 CLR 203 at [27] and [28] the principle derives from the general law and is consistent with long-standing practice in civil cases at common law in New South Wales. That practice derived from appeals with respect to jury trials. In relation to other appeals, the powers of this Court are identified in s 75A(6) and (10) of the Supreme Court Act 1970 (NSW). The power to give a judgment which "ought to have been given" in the Court below permits the dismissal of an appeal in circumstances where, despite apparent error, the judgment below did not result in a substantial miscarriage of justice. Thus, in HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd (2004) 217 CLR 640 at [50], the Court dismissed an appeal with respect to damages suffered as a result of negligent advice and misleading and deceptive conduct, with the following statement: "Let it be assumed in favour of the defendant that the true value [of the property] in April 1997 was above $130,000 … . The verdict of the trial judge, on the present approach, can only be upheld if the true value in April 1997 was about $130,000. But even if it was above that figure, so that that component in the award was wrong, the total sum for which the trial judge ordered judgment has not been shown to be so wrong as to have caused an injustice to the defendant. That is particularly so when it is remembered that in certain other respects the trial judge appears to have made errors in calculating damages which are adverse to the plaintiff."

Further, their Honours concluded at [56]: "The difference between what he did give and what he ought to have given is insufficiently substantial to suggest that the trial judge's verdict was out of line with what the overall justice of the case called for." 28 The Defendant sought to resist a similar conclusion in the present case by reference to the principle established in Stead v State Government Insurance Commission (1986) 161 CLR 141. However, that was a case in which the plaintiff had been deprived of a fair trial by the judge stopping his counsel from addressing in relation to the evidence of a particular doctor, stating that he did not accept the doctor's evidence. Counsel ceased to address on that point as the Court indicated he should, but the judgment entered against the plaintiff was based on the very evidence the Court had said it would not accept. The plaintiff was not accorded a fair trial. An important purpose of a trial is to allow each party to seek to persuade the Court to its view of the facts and law. Stead held that, generally speaking, the loss or curtailment of that opportunity should not be assumed to be the loss of a futility. However, that is not the present case. The question in the present case is whether, on the evidence presented, the trial judge has made an error, but reached the right result, or at least a result which can be seen, objectively, not to involve substantial injustice. 29 If this were the only error identified in her Honour's reasoning, and bearing in mind the danger of seeking more than guidance from the precise calculations undertaken above, in assessing future economic loss of a 10 year old child, I am not persuaded that the errors identified in the assessment undertaken by her Honour involve a substantial miscarriage of justice. The artificiality of undertaking any precise calculation in relation to a young child may, perhaps, have been reflected in the Defendant's approach at trial, which paid less attention than has been paid on this appeal, to the niceties of the calculations.

Out-of-pocket expenses 30 With respect to future out-of-pocket expenses, the Defendant suggests a reduction in an amount of approximately $15,000. Of this, $3,000 was taken from the cost of pharmaceutical expenses on the basis that "on their face [they] were entirely excessive". 31 Secondly, the Defendant seeks to reduce various amounts relating to attendance on ophthalmologists and the cost of glasses, for which a figure of $15,529.70 was allowed by the trial judge, by applying the multiplier on the 3% tables. The resulting amount would appear to be approximately $6,514, a reduction of $9,000. 32 In relation to the suggested cataract surgery and vitrectomy, the Defendant suggested that the former should be treated as deferred for 25 years and the latter as deferred for 35 years, and subject to a 50% reduction for the chance that surgery will be unnecessary. 33 The first difficulty attending these calculations is that the Defendant did not seek to put before this Court any of the medical evidence on which the figures were based. At the suggestion of the Court, and with the assistance of the Plaintiff's counsel, who happened to have copies of some medical reports available, this material was provided to the Court under cover of a solicitor's affidavit. The solicitor noted that there was real doubt as to how much of this material was before the trial judge. However, in addressing on future out-of-pocket expenses before the trial judge, counsel for the Defendant stated: "Your Honour, the way I approached it was to look at all of the figures that Dr Delaney said might be incurred in the future. … I thought that he gave a more complete set of figures than the treating doctor and by my calculation if you totalled all of that possible future surgery it came to about $8,000 because it's going to be deferred for some unspecified time into the future. There's still doubt as to when that will be so it has to be discounted, so in my submission that's the starting-off point so you take that and discount it." 34 In relation to spectacles, the Defendant submitted that the period could be limited to one ending at age 40 and that the 3% table should be applied. He concluded: "… So that's my submission on the future treatment, your Honour, I think that was all of the heads that had been claimed, so it's probably not a great deal less than what my friend has set out in his schedule 11. It might be a little bit less depending on the amount of discount you apply to the future surgery." 35 It is understandable that, because future out-of-pocket expenses amounted to little more than 10% of the damages claimed, counsel paid brief attention to it. There was no suggestion as to the period for which surgery might be deferred nor as to the extent (if any) to which the need for a vitrectomy should be discounted. Further, the suggestion that her need for glasses, resulting from the injury, would cease at the age of about 40 years does not follow from the medical evidence. That evidence merely adverts to the likelihood that she would need reading glasses when she was in her 40's. However, that did not contradict the statement in the report that she would need spectacles to correct the vision in her left eye "for the foreseeable future". In addition, as the Defendant conceded in the calculations proposed in this Court, the total cost of cataract surgery suggested by Dr Delaney was $5,265, whereas her Honour only allowed $3,850. Similarly, in relation to the vitrectomy, the medical report provided figures totalling $4,435, but the trial judge allowed only $3,000. Finally, the pharmaceutical expenses appear to include expenses associated with surgery and are not patently excessive. No submission was made to the trial judge in relation to that figure, and an amount of $840 claimed for ophthalmologist visits over the ensuing seven years was not challenged. 36 The result of these calculations is that even accepting the Defendant's assertions in relation to future ophthalmologist visits and the cost of glasses, the effect would be a variation of some $6,500, leaving a figure of approximately $21,000, in place of $27,400. Given the failure of the Defendant to address the medical evidence, or even put it before this Court prior to the commencement of the hearing of the appeal, it is not possible to say that any error in the approach of the trial judge has caused a significant injustice to the Defendant. The appeal with respect to out-of-pocket expenses should be dismissed.

Conclusions 37 As noted above, the challenge to the finding with respect to liability should be dismissed. Although the Defendant has established two aspects of the assessment of future economic loss which are suggestive of error in the manner in which the trial judge assessed that item of damages, the figure which her Honour accepted was within an appropriate range, properly assessed, and the appeal with respect to that amount should also be dismissed. The same conclusion has been reached in relation to the assessment of future out-of-pocket expenses. 38 The appeal should be dismissed, but there remains an outstanding issue as to costs. The parties invited the Court not to make an order as to costs without hearing further submissions. It seems likely that the appropriate order should be that the Appellant pay the Respondent's costs of the appeal, on a basis which can be agreed between the parties. The parties are given liberty to file short minutes of orders which can be made by consent or, if that is not possible, to provide proposed orders and written submissions in support thereof within seven days. 39 Accordingly I would propose the following orders:

(2) Appellant to pay the Respondent's costs of the appeal.

(3) If the parties are unable to agree the basis on which costs are to be assessed, both parties have liberty to file short written submissions as to the basis of calculation of costs of the appeal, within 7 days. 40 CAMPBELL AJA: I agree with Basten JA.

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