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[2014] NSWCA 127
Court of Appeal (NSW)
2014-04-17
Beazley P, Hoeben JA, Leeming JA
Original judgment source is linked above.
allowed as to apportionment but otherwise dismissed. Legislation Cited: Civil Liability Act 2002 Cases Cited: Dell v Dalton (1991) 23 NSWLR 538 Graham v Baker [1961] HCA 48; 106 CLR 340 Graham Barclay Oysters v Ryan [2002] HCA 54; 211 CLR 540 House v The King [1936] HCA 40; 55 CLR 499 Medlin v The State Government Insurance Commission [1995] HCA 5; 182 CLR 1 Moran v McMahon (1985) 3 NSWLR 700 Podrebersek v Australian Iron & Steel Pty Ltd [1985] HCA 34; 59 ALJR 492 Voli v Inglewood Shire Council [1963] HCA 15; 110 CLR 74 Category: Principal judgment Parties: 2012/245212 WB Jones Staircase & Handrail Pty Ltd - Appellant Peter Richardson - First Respondent Mirvac Constructions Pty Ltd - Second Respondent JMKG Pty Ltd - Third Respondent
2012/246067 Mirvac Constructions Pty Ltd - Appellant Peter Richardson - First Respondent WB Jones Staircase & Handrail Pty Ltd - Second Respondent JMKG Pty Ltd - Third Respondent
2013/116979 JMKG Pty Ltd - Appellant Peter Richardson - First Respondent Mirvac Constructions Pty Ltd - Second Respondent WB Jones Staircase & Handrail Pty Ltd - Third Respondent Representation: Counsel: Mr R Cavanagh SC - WB Jones Staircase & Handrail Pty Ltd Mr R Sheldon SC/Ms LJ Friedwald - Peter Richardson Mr DJ Russell SC/Mr J Catsanos - Mirvac Constructions Pty Ltd Mr JE Sexton SC/Mr PJ Gow - JMKG Pty Ltd Solicitors: Turks Legal - WB Jones Staircase & Handrail Pty Ltd Brydens Law Office - Peter Richardson McCabes - Mirvac Constructions Pty Ltd Kennedys Lawyers - JMKG Pty Ltd File Number(s): 2012/245212 2012/246067 2013/116879 Publication restriction: --- Decision under appeal Date of Decision: 2012-07-11 00:00:00 Before: Cogswell SC DCJ File Number(s): 2009/337542
JUDGMENT 1BEAZLEY P: I agree with Hoeben JA. 2HOEBEN JA: Nature of appeal In 1998 - 1999 Mirvac Constructions Pty Ltd (Mirvac) built a project home for Peter Richardson (the plaintiff) at Penrith. Mirvac contracted with a staircase manufacturer and installer, WB Jones Staircase & Handrail Pty Ltd (WB Jones) to manufacture and install a staircase, including a balustrade, on the first floor of the house. WB Jones manufactured the balustrade and contracted with JMKG Pty Ltd (JMKG) to install it. 3In 2006 an accident happened when the balustrade on the first floor gave way under the plaintiff's foot causing him to fall and injure his back. The plaintiff brought proceedings for personal injuries in the District Court against Mirvac in negligence and contract and against WB Jones and JMKG in negligence only. It was common ground that the proceedings were governed by the Civil Liability Act 2002 (CLA). 4The proceedings were heard before Judge Cogswell SC on 27, 28, 29 and 30 September, 14, 15, 16, 17 November 2011, 30 April, 1, 2, 3, 4 May and 11 July 2012. 5The plaintiff succeeded in establishing negligence against Mirvac, WB Jones and JMKG but failed in his contract claim against Mirvac. He was awarded damages of $826,891 which were reduced to $750,000 because of the jurisdictional limit of the District Court. Liability was apportioned as to 30 percent against Mirvac, 30 percent against WB Jones and 40 percent against JMKG. 6WB Jones has appealed against the finding that it was negligent, that its share of responsibility was 30 percent and against those damages which were awarded for economic loss, domestic assistance and non-economic loss. Mirvac has appealed against the finding of negligence against it, that its share of responsibility was 30 percent and against damages. JMKG has appealed against those damages awarded to the plaintiff in respect of economic loss, domestic assistance and non-economic loss. Factual background - Liability 7Mirvac was a project home builder, operating in the Greater Sydney Metropolitan area. In the 1990's WB Jones commenced contracting with Mirvac to manufacture and install staircases and balustrades in Mirvac's project homes. During the same period, WB Jones was subcontracting staircase and balustrade installation work to JMKG. 8In June 1998 the plaintiff purchased a house/land package in a new subdivision at Penrith. In September 1998 he entered into a contract with Mirvac for the construction of a two-storey home on the land. In November 1998 WB Jones received a purchase order from Mirvac for the staircase and balustrade. In December 1998 or January 1999 WB Jones contracted with JMKG to install the balustrade. The balustrade was installed on 24 February 1999. The accident occurred on 29 October 2006. 9The following facts were agreed by the parties at the commencement of the trial (Blue 892-893). "1 (i) The balustrade was erected in the plaintiff's home in 1999. (ii) The balustrade was of a standard design with standard componentry as specified by Mirvac. (iii) Mirvac engaged WB Jones to manufacture and install the balustrade in accordance with Mirvac's specifications. (iv) WB Jones engaged JMKG to undertake the whole of the installation. (v) The arrangement between Mirvac and WB Jones and WB Jones and JMKG was one that had been put in place on many occasions over many years in respect of the installation of balustrades without earlier incident or complaint. However, Mirvac was not aware of the arrangement between WB Jones and JMKG or that JMKG was installing the stairs and balustrade. (vi) Mirvac was a specialist home builder who agreed to provide a home which included a balustrade. (vii) WB Jones was a specialist contractor involved in the manufacture and installation of staircases and balustrades. (viii) Mirvac designed and specified the balustrade. (ix) WB Jones manufactured the component parts of the balustrade. (x) JMKG installed the balustrade. (xi) WB Jones billed Mirvac for the construction and installation of the balustrade with no reference to the involvement of JMKG. (xii) WB Jones did not attend at the plaintiff's premises at any time during installation and had last attended when asked to measure up the area for the purposes of being ready to manufacture the component parts. (xiii) JMKG attended the premises of WB Jones to collect the component parts and selected its own fasteners. It then set about the installation. The installation work was not inspected by WB Jones. (xiv) The balustrade remained in situ without incident or apparent problem between 1999 and 29 October 2006. (xv) On 29 October 2006 parts of the balustrade came away. Those parts comprised the metal in-fills and the timber base plate. The timber handrail and the wooden posts at each end remained in situ. 2 There is general agreement by the experts that: (i) The nails used by the third defendant to affix the timber base plate were not: (a) of sufficient length; (b) of sufficient gauge (ii) The third defendant used a nail gun rather than a hammer to install the nails; (iii) Some of the nails were driven into a gap thereby resulting in a reduced level of tension. (iv) There was no defect in any of the component parts and there is no criticism of any part of the manufacture of the component parts." Liability proceedings in the District Court 10As a preliminary matter, the primary judge found that because Mirvac and WB Jones had retained independent contractors, each owed a duty to Mr Richardson to retain competent contractors. This finding was not challenged in the appeal although in my opinion the duty should be differently expressed. 11There was an issue at trial as to the plaintiff's credit, but this was decided decisively in the plaintiff's favour. No appeal has been brought against that finding. 12There was an issue at trial as to whether the balustrade was a structural component. If it were the "design of ... structural elements in a building must be in accordance with" AS 1720.1 - Timber Structures Code. His Honour accepted the evidence of Messrs Allsop and Cosentino, engineers qualified on behalf of the plaintiff, to the effect that the balustrade was a structural component and had to conform to AS 1720.1. In doing so, his Honour rejected the evidence of Mr Nixon, a builder who gave evidence on behalf of Mirvac. 13There was an issue at trial as to the method of affixation which should have been used in relation to the balustrade so that it could conform with AS 1720.1. Messrs Allsop and Cosentino did not accept that the use of a nail gun was appropriate. Their evidence was that nails "driven by hand only" should have been used. They said that this was because the relevant joint in the balustrade was a "type 2 joint" and because of a warning about the use of gun driven nails set out in AS 1720.1. 14The relevant standard provided as follows: "4.2.2.3 Type 2 Joints - Characteristic capacities for Type 2 joints are as follows: (a) Withdrawal loads from side grain (see Figure 4.4(a)) The characteristic capacities for nails, driven by hand only, in withdrawal from the side grain of unseasoned timber are given in Table 4.2(A) and in seasoned timber are given in Table 4.2(B). Note: Withdrawal loads for gun-driven plain shank nails may be considerably less than withdrawal loads for the same nails driven by hand." (Blue 140L - N) 15The primary judge set out his conclusion on this issue as follows: "28 In my opinion what clause 4.2.2.3 means relative to this case, is that there were no specified withdrawal loads for the design of the joint because gun driven nails were used, but there was a warning that the withdrawal loads could have been "considerably less". The use of gun driven nails should put the installer and anyone else with responsibility for the stability of the joint on notice that there was a considerably increased risk of failure in the joint." (Red 126V - 127E) By "withdrawal loads" his Honour was referring to the extent to which the nails would resist being pulled out. 16His Honour went on to consider which of the three defendants had responsibility for the stability of the joint. His Honour accepted that JMKG had such responsibility and analysed the responsibilities on this issue of Mirvac and WB Jones. In doing so, his Honour expressly excluded the proposition that either Mirvac or WB Jones was vicariously liable for the negligence of an independent contractor such as JMKG. 17His Honour identified part of his task as follows: "31 In addition to duties to select competent independent contractors, did Mirvac and WB Jones have duties to inspect the work done to ensure it was competently executed?" (Red 128D) 18When considering the obligations of Mirvac, his Honour relied upon the evidence of the senior Mirvac employee to give evidence, Craig Spriggs, a construction director. His evidence was that Mirvac had an overall responsibility to home owners to ensure that that which it had agreed to give the home owner was given. He said that if Mirvac was complying with its usual procedures and systems, the floor sheeting on the first level of the plaintiff's home would have been inspected when it was completed by the floorer and before gyprock was placed in position. Mr Spriggs accepted that any defects in the floor sheeting would have or should have been picked up by Mirvac. His Honour noted that the reference to a defect in the floor sheeting was a reference to a gap which had emerged because of the misalignment of some structures in the flooring. 19In order to understand his Honour's findings and the parties' submissions, it is necessary to say something about the "gap" to which reference has been made. 20The evidence established that the balustrade in question was effectively the barrier along a landing on the first floor of the premises. The floor of that landing was made of wooden bearers. Onto those bearers was placed floor sheeting. Once the floor sheeting was in place, gyprock was affixed to the vertical surface of the end bearer, forming a bulkhead. The gyprock butted up to the edge of the floor sheeting. The bottom plate of the balustrade sat over the floor sheeting and returned vertically down the gyprock attached to the end bearer. The balustrade was fixed by way of nails, which were inserted into the bottom plate of the balustrade, through the gyprock sheeting and into the wooden bearer (Black 382S - 383V and exhibits A and B, Blue 40-45). 21The "gap" was a gap between the gyprock sheeting and the end bearers and it was caused by the floor sheeting overhanging that bearer so that in some parts, the gyprock did not sit flush against the bearer. There was a dispute at trial as to the size of the gap with evidence varying between 10 mm and 30 mm. 22Because of this air gap between the edge of the flooring and the gyprock, when a nail was inserted through the front of the timber plate, it would go through the gyprock and then through an air gap and then into the joists. The expert evidence was that if a tradesman was nailing by hand, he or she could tell when there was no resistance to the nail and could tell, even without seeing the gap, that the gap was there when suddenly the nail jumped through a couple of millimetres and then hit timber again. With gun-driven nails, the operator would have no idea of the existence of a gap when he or she was shooting them in because the operator would not have the same feel as with a hand-driven nail. 23In relation to the evidence of Mr Spriggs, his Honour found: "36 I accept Mr Spriggs evidence in preference to the evidence of the two other employees of Mirvac, namely Mr Whiticker and Mr Nightingale, on the issue of the appropriate conduct of Mirvac, its responsibilities and its liabilities. Specifically I find that Mirvac should have detected the poor craftsmanship in the laying of the floor on the first level. I find that the laying of the flooring and the fixing of the balustrade should have been inspected following on its completion and before concealment to make sure they were to an appropriate standard and contained no defects or errors. I find that Mirvac should have ensured compliance with relevant codes and standards by either certification or referencing themselves. I find that Mirvac could have seen that the fixture was made by gun-driven nails by inspecting it. Whilst it was entirely appropriate for Mirvac to discharge much of its responsibility to Mr Richardson by engaging competent contractors, it is acknowledged by a very senior member of Mirvac's staff that Mirvac should have inspected the work of those contractors. 37 I prefer Mr Spriggs' evidence on the question of inspection over Mr Nixon's assertion that an inspection was not needed because "that is what is in the industry". I accept Mr Catsanos' submission that retaining specialists is normal and appropriate for a builder, that the builder is not expected to look over the trades people's shoulders and that so far as Mirvac was concerned WB Jones was an excellent staircase installer." (Red 130V-131Q) 24In relation to WB Jones and JMKG his Honour found: "40 ... I accept that WB Jones regarded JMKG as a competent installer. WB Jones regarded inspection of the final product as important but assumed that Mirvac would do the inspection. If it knew that Mirvac was not inspecting then WB Jones would "make arrangements" to inspect. Mr Jones, a principal of WB Jones, acknowledged that at T.762. The arrangements would include "inspections, reports and callbacks if necessary" (at T.771). (Red 132Q - V) 25His Honour's conclusion in relation to WB Jones was: "41 In my opinion WB Jones breached its duty of care in allowing the affixing of the balustrade by gun-driven nails. It was reasonable to delegate to JMKG because it had a basis for regarding it as competent, but WB Jones' wrong understanding regarding type 2 joints and the applicability of the code meant that in fact it failed to retain a competent contractor. It assumed that Mirvac would inspect. Mr Spriggs confirmed that and past practice with reports and callbacks made that assumption reasonable. Mr Allsop confirmed that gun-drive fasteners were a deficiency. WB Jones also should have reported the gap, although it shared responsibility with JMKG. Mr Wilkinson, WB Jones' employee, must have seen the gap. Mr Cosentino regarded gun-driven nails as prohibited." (Red 133K - S) 26His Honour's conclusions as to JMKG were: "42 JMKG as installer must bear primary responsibility for the failure of the joint. MFI 26 was a document which contained agreed facts by the parties. It recorded agreement by all parties that there was "general agreement by the experts" that "the nails used by the third defendant to affix the timber base plate were not: (a) of sufficient length; (b) of sufficient gauge". I reject the argument that it was simply a matter of Mr Nixon and WB Jones having a different point of view about the applicability of the relevant standard." (Red 133U - 134E) 27In relation to apportionment, his Honour said: "92 Mirvac was on site practically all of the time and in my opinion should have inspected the site. It had overall control and it was in the closest relationship with Mr Richardson. It had an acknowledged duty to inspect the work of the contractors and to deliver a safety component. It should have seen the gap and recognised the nails were not hand driven. WB Jones was not on site all of the time, although Mr Wilkinson, an employee, was and should have seen the gap, which in my opinion diminished the effectiveness of gun driven nails. WB Jones had undertaken to Mirvac that it would install the balustrade. WB Jones also agreed with the use of gun driven nails, which in my opinion was contrary to the standard. JMKG installed the balustrade negligently and used gun driven nails when it ought not to have. It must have also seen the gap." (Red 153G - P) His Honour then made the apportionment to which reference has already been made. Mirvac Submissions and Consideration 28A first step in considering the appeal by Mirvac is to articulate the duty of care which it owed to the plaintiff. His Honour sought to do so at Red 120W. In the course of the appeal it was accepted that this statement of duty was probably expressed at too high a level of generality and that a more appropriate statement of it would be "a duty to take reasonable care to avoid foreseeable risk of injury in the construction of the subject house". In relation to the duty suggested by JMKG at Orange 94F, I agree with Mirvac that inclusion of the words "from defective workmanship" unduly limits the relevant duty although it would probably form part of the content of the duty of care. 29The scope or content of the duty of care was contentious. Mirvac submitted that it should not have been required to inspect and check the adequacy of work performed by an experienced contractor such as WB Jones. It argued that the obligation to "take reasonable care" did not include such a requirement. It submitted that it was entitled to rely upon the expertise of WB Jones because WB Jones had installed stairs and balustrades for it for many years without any problem arising. Mirvac submitted that it was a general builder and as such had an overall knowledge of building requirements but did not have the specific knowledge concerning the installation of balustrades, which would make it reasonable for it to carry out such inspections. 30Mirvac argued that the function of such persons as Mr Whiticker was not to check the adequacy of the work performed by an expert contractor such as WB Jones, but to co-ordinate the various trades so that when one trade finished its task, the next trade would be able to perform its function without delay. While it conceded that some inspection of the finished work would be carried out by a person such as Mr Whiticker, that inspection would be of a kind expected of a general builder not of an expert in the balustrade field, i.e. giving the balustrade a shake to test its strength. 31Mirvac submitted that even if it had an obligation to inspect the work of a balustrade installer such as WB Jones, the defects identified by the trial judge would not have been detected because it was unreasonable to expect a general builder to have knowledge of clause 4.2.2.3 of AS 1720.1. Such knowledge would be necessary to appreciate the increased risk of failure in the connection of the balustrade to the joists of the landing if a nail gun were used. This was particularly so in circumstances where there was a gap of at least 10 mm between the bottom plate and the end bearers. It submitted that this level of knowledge would not reasonably be expected of a general builder engaged in the construction of a project home. It submitted that many different trades were required to perform their work in such construction and it was not reasonable to expect a general builder to have knowledge of the particular standards applicable to each of those trades. 32There are difficulties with Mirvac's submissions. A "foreseeable risk of injury" for a builder in the circumstances of this case, would encompass the risk of injury from defective workmanship. That would include not only work performed by the builder but by contractors retained by the builder. Mirvac did not submit to the contrary. Its response to that foreseeable risk was to rely entirely upon the expertise of WB Jones and on a somewhat cursory inspection by its own representative on site, Mr Whiticker. An important question, whether it be related to the content of the duty or the issue of breach, was whether that was an adequate satisfaction of the obligation "to take reasonable care to avoid a foreseeable risk of injury in the construction of the subject house". 33I do not accept that an entity such as Mirvac should be treated in the same way as a non-technical builder, like an owner/builder, who was working entirely through contractors and who had little expertise in the building field. As was submitted by JMKG, Mirvac was not only the builder but it had designed the balustrade. Mirvac accepted that contractually it was obliged to ensure that the house was built in accordance with relevant legislation, standards and codes and that it expected subcontractors to maintain those standards (Mr Spriggs, Black T830.11 - 18). Mr Spriggs said that Mirvac in fact took steps to make sure that this occurred. In view of that evidence, it is difficult to accept that if Mirvac had assumed a contractual obligation to do this, such an obligation was unreasonable or unduly onerous when considering tortious obligations. 34Given the contractual obligations of Mirvac, which were conceded in the appeal, it is also difficult to accept the proposition that it did not have an obligation to inspect or assess the load-bearing capacity of an item such as a balustrade. This is particularly so when this balustrade was above a void and was adjacent to one of the bedrooms so that a failure on the part of the balustrade, could produce very serious consequences for an occupier of the house. Against that background, it seems reasonable that the contractual obligations of Mirvac would inform the scope and content of the duty of care. 35I am satisfied that Mirvac as the builder with a representative on site most days of the week (although, not as it happened, on 24 February 1999), who was not only co-ordinating the trades but seeking to ensure that it satisfied its contractual obligations, had as part of its duty of care an obligation to exercise reasonable care in inspecting the work carried out by the contractors. This formed part of the content of its overall duty of care. 36As with all cases in negligence, the obligation is not to be expressed in absolute terms but as the exercise of reasonable care when carrying out an inspection. This, of course, gives rise to the next question, i.e. what did the exercise of reasonable care when inspecting the work of contractors entail? It must include taking reasonable care to detect and remedy defects. That obligation is to be qualified in that due regard has to be had to those parts of a contractor's work which involve special expertise, e.g. electrical work carried out by an electrician. It does not require the builder to closely supervise and otherwise control the work of a specialist contractor, but it does encompass the inspection and detection of defects which were there to be seen by an appropriately qualified builder. 37This raises the issue of whether Mirvac should have been aware of the Australian Standard with its warning about the use of nail guns and the opinion of the two engineering experts to the effect that nail guns should not have been used to secure the bottom plate of the balustrade to the bearer. The basic proposition is that if Mirvac knew or ought to have known about the standard, it should have concluded that gun driven nails were not suitable for this task, particularly when a gap, albeit perhaps a small one, had been allowed to remain. 38While I accept the general proposition that a designer/builder such as Mirvac should not be expected to be aware of every standard which was applicable to the construction of a project home, (e.g. the standard applicable to a specialist trade such as that of an electrician) clause 4.2.2.3 of AS 1720.1 was not of that kind. A substantial part of this house was made of timber. The standard related to the fastening of one piece of timber to another where that timber was expected to bear a structural load. The proposition that a project builder such as Mirvac should not be expected to be aware of such an important standard is surprising and should not be accepted. In the construction of a house where substantial quantities of timber are used, knowledge of that standard would be fundamental. 39I have concluded that for Mirvac to have exercised reasonable care in carrying out inspections to detect and remedy defects, it should have done so with an awareness of the standard. If it had done so, it would have been obvious that the nails had been inserted by a nail gun, rather than by hand. To inspect the work of contractors without having knowledge of the standard, would not satisfy the test of acting reasonably in carrying out the inspection. Even if an inspection were not possible, a simple inquiry as to whether a nail gun had been used would be sufficient. As JKMG submitted, once it was ascertained that a nail gun had been used, the response was relatively simple, i.e. to hammer in more nails by hand. All this is consistent with, and confirmed by sections 5B and 5C CLA. 40Those sections provide: "5B General principles (1) A person is not negligent in failing to take precautions against a risk of harm unless: (a) the risk was foreseeable (that is, it is a risk of which the person knew or ought to have known), and (b) the risk was not insignificant, and (c) in the circumstances, a reasonable person in the person's position would have taken those precautions. (2) In determining whether a reasonable person would have taken precautions against a risk of harm, the court is to consider the following (amongst other relevant things): (a) the probability that the harm would occur if care were not taken, (b) the likely seriousness of the harm, (c) the burden of taking precautions to avoid the risk of harm, (d) the social utility of the activity that creates the risk of harm. 5C Other principles In proceedings relating to liability for negligence: (a) the burden of taking precautions to avoid a risk of harm includes the burden of taking precautions to avoid similar risks of harm for which the person may be responsible, and (b) the fact that a risk of harm could have been avoided by doing something in a different way does not of itself give rise to or affect liability for the way in which the thing was done, and (c) the subsequent taking of action that would (had the action been taken earlier) have avoided a risk of harm does not of itself give rise to or affect liability in respect of the risk and does not of itself constitute an admission of liability in connection with the risk." 41As indicated, the "risk of harm", i.e. "of defective workmanship" was readily foreseeable and was a risk which Mirvac should have been aware of. The evidence of Mr Spriggs as to the inspection routine which he said Mirvac should and did carry out, would indicate an actual knowledge of the risk. 42The risk was clearly not insignificant, given that defects in timber joints which carried a structural load were likely to have serious consequences if the joint failed. This was particularly so in relation to the place where this balustrade failed, i.e. outside a bedroom above a void. 43As to whether a reasonable builder should have carried out inspections of contractors' work, the requirements of s5B(2) have been satisfied. There was a high probability that harm would occur if a defect in a timber structural component was not identified and rectified. If the balustrade failed, the harm would not only be serious but life-threatening. The burden of taking precautions to avoid the harm, according to the evidence of Mr Spriggs, was relatively modest in that such inspections were required in order to satisfy Mirvac's contractual obligations. It was Mr Spriggs' evidence that such inspections were in fact being carried out. 44Only s5C(a) is applicable to the facts of this case. The precautions identified, i.e. inspection of the work of contractors, take into account that not only would inspections of the balustrade installation have taken place but of all other work by contractors on the site. That was the effect of the evidence of Mr Spriggs. At no time was there any suggestion by Mr Spriggs or by anyone else, that such inspections would impose an unreasonable burden on Mirvac. 45It follows that breach of duty on the part of Mirvac has been established, at least in relation to the use of a nail gun to attach the balustrade fasteners. It was argued in the appeal that because the "gap" was only 10 mm, Mirvac did not breach its duty in relation to not detecting or doing anything about it, because the evidence of Mr Allsop was that a gap of that size was of little importance. That misunderstands the evidence on this issue. It was both the gap and the use of a nail gun which contributed to the weakness of the connection of the bottom plate of the balustrade to the bearers. Whereas a 10 mm gap of itself may not have been of significance, a 10 mm gap with the use of a nail gun exacerbated the existing problem created by the use of a nail gun, in that the strength of the connection of the balustrade to the joists was further weakened. 46Even if that were not the case, the evidence upon which Mirvac relied for the proposition that the extent of the gap was only 10 mm, was not particularly persuasive. There were differing estimations given as to the size of the gap by Mirvac employees and these estimations were based on the viewing of photographs in the witness box. By contrast, the plaintiff actually measured the gap with a scribe and found spaces of up to 15 mm. The evidence of Mr Whiticker was that a 15 mm gap required attention (Black 891.6 - 24). Accordingly, it was well open to his Honour to find that it was negligent of Mirvac not to locate the gap and if it had noted the gap, not to remedy it. 47It follows from the above that the primary judge's findings at Red 130V - 131Q should be upheld. This is so in relation to his Honour's finding as to the requirement for an inspection by Mirvac. His Honour's finding that "Mirvac should have ensured compliance with relevant codes and standards" is unfortunately expressed but the basis for the finding is sound. Strictly speaking, the finding should have been that "Mirvac should have taken reasonable care to ensure compliance with relevant codes and standards. ..." 48Accordingly, that part of Mirvac's appeal which is directed to the finding of negligence against it should be dismissed. WB Jones Submissions and Consideration 49The primary judge's findings against WB Jones at Red 133 L-S (at [25] hereof) require some explanation. I read them as a finding that WB Jones breached the duty which it owed to the plaintiff by not taking reasonable care to oversee or check on the work performed by JMKG (otherwise it would have been aware of the dangers associated with securing the balustrade with gun driven nails) and because it failed to exercise reasonable care to appoint a competent contractor. I am of the opinion for the reasons which follow that these findings were not only open to his Honour, but were correct. 50The third basis for negligence identified by his Honour was the failure on the part of Mr Wilkinson to identify the gap. Implicit in that finding was an obligation on the part of Mr Wilkinson to then advise Mirvac of that fact. I have concluded that his Honour erred in that finding. 51I have reached that conclusion on two bases. The first is that the evidence as to when Mr Wilkinson attended the site is confused and confusing. It is based entirely upon inference and speculation. Nor is it clear what stage the erection of the house had reached when he attended. Mr Jones (a principal of the company) was definite that the gyprock would not have been laid at the time of his attendance. Even though Mr Jones' evidence was based on "usual practice", there was no persuasive evidence to the contrary. Even if Mr Wilkinson had noticed at the time of his visit that there were overhangs in the floor sheeting, it would not have been unreasonable for him to have assumed that before the gyprock was laid, the overhangs would be properly trimmed. That such proper trimming of the flooring may not have been subsequently undertaken, would not have been something Mr Wilkinson could have possibly known or foreseen. 52The second reservation which I have is that even if Mr Wilkinson had said something about overhangs in the floor sheeting, there was no evidence that Mr Whiticker, or anyone else on behalf of Mirvac, would have done anything about it. Between the positioning of the floor plate and the laying of the gyprock, a considerable amount of time passed during which Mr Whiticker must have observed the overhang, but did nothing about it. 53In order to understand the particulars of negligence found against WB Jones, it is necessary to articulate the duty of care which it owed to the plaintiff. WB Jones submitted that apart from any contractual terms, the only duty owed by it was to exercise reasonable care in the performance of the work it undertook. By that it meant that its duty of care was limited to the construction of the balustrade not its installation. That limited statement of the duty of care should not be accepted. 54A more correct approach is that suggested by JMKG, where it submitted at Orange 50Q - V that: "5 The duty of care owed by WB Jones to Richardson arises only because of the work which WB Jones undertook contractually with Mirvac to do. There was no other connection between WB Jones and Richardson. Therefore the "contractual responsibilities between Mirvac and WB Jones" must be relevant as informing a duty of care owed by WB Jones to Richardson including by identifying "the task upon which WB Jones entered". That task included installation which was something WB Jones was paid to do ..." 55JMKG went on to articulate the duty of care as follows: "The duty owed by WB Jones is appropriately formulated as being to take reasonable care to avoid foreseeable risks of harm from defective staircases and balustrades." (Orange 51E) That statement of duty is too specific and seeks to express the duty in terms of breach. Such an approach was disapproved by the High Court in Graham Barclay Oysters v Ryan [2002] HCA 54; 211 CLR 540 at [106] McHugh J and at [191] - [192] Gummow and Hayne JJ. A better statement of the duty of care owed by WB Jones is: "To take reasonable care to avoid foreseeable risks of harm arising from the manufacture and installation of the balustrade." 56No issue arises from the manufacture of the balustrade. The contentious area concerns its installation. WB Jones argued that it satisfied its duty of care by retaining JMKG to install the balustrade in circumstances where JMKG was not only an acknowledged expert in that field, but had performed work of that kind for WB Jones for in excess of 10 years without problems arising. It argued that since it had not undertaken the installation of the balustrade, it did not owe a duty of care to the plaintiff to do so with care. WB Jones submitted that it did not have an obligation to inspect the work of JMKG, or inspect the work of any other contractor which might have impacted on the way the installation work could be performed. It argued that its obligation to the plaintiff was to exercise reasonable care in selecting a competent contractor to install the balustrade and that it had satisfied that obligation by retaining an expert installer like JMKG. 57There are difficulties with that submission. WB Jones was not in the position of a principal who engages an independent contractor to do work which the principal is unable to do for itself. It was common ground that WB Jones was an expert in installing balustrades and had done so on a number of occasions in the past. In those circumstances, it is difficult for WB Jones to argue that it was entitled to rely entirely upon the expertise of JMKG and not carry out any supervisory role itself. 58That difficulty is compounded by the evidence of its principal, Mr Jones, who recognised in his oral evidence that the installation work done by JMKG required inspection by either WB Jones or Mirvac (Black 761.10 - 35, 771.44-49, 792.2 - 5). Inspection in this case was particularly important, given Mr Jones' recognition that if a balustrade failed, it could result in injury or death to a person (Black 756.8). 59While it is true that the evidence of Mr Jones is not determinative of the content of the duty owed by WB Jones to the plaintiff, that evidence together with the contractual context in which JMKG was retained by WB Jones, enables this Court to more easily give content to the duty of care so that included in it was an obligation to inspect the installation work of JMKG. 60The same result is achieved by the application of first principles. It was reasonably foreseeable that if the installation of the balustrade was not properly carried out, serious injury could result. Was it a sufficient discharge of the obligation to take reasonable care to retain another expert installer, or was something in addition required? In my opinion, something more was clearly required and that something more was the need to inspect the work and this requirement formed part of the content of the duty of care. 61The discussion of relevant principle in Voli v Inglewood Shire Council [1963] HCA 15; 110 CLR 74 at pp84 - 85 is useful when considering this issue: "... whether a duty of care arises from a particular situation or relationship may be, and often is, a question of law; but whether or not that duty was performed is ultimately a question of fact, to be judged by what, in the circumstances of the particular case and in the light of the apparent risks, a reasonable man would or would not do. ... ... neither the terms of the architect's engagement, nor the terms of the building contract, can operate to discharge the architect from a duty of care to persons who are strangers to those contracts. Nor can they directly determine what he must do to satisfy his duty to such persons. That duty is cast upon him by law, not because he made a contract, but because he entered upon the work. Nevertheless his contract with the building owner is not an irrelevant circumstance. It determines what was the task upon which he entered." 62If as I have found, the duty of care owed by WB Jones to the plaintiff included a requirement that it inspect the work of JMKG, was that obligation discharged by its assumption that Mirvac would inspect that work? Can a requirement to inspect ever be delegated in this way? Even if it can be so delegated, the application of s5B(2) CLA arises. When considering the "probability that the harm would occur if care were not taken" it is necessary to keep in mind that the assumption by WB Jones that Mirvac would carry out such an inspection was made without checking that Mirvac was in fact performing that function. 63The only basis for the assumption by WB Jones was its belief that in previous jobs Mirvac had performed this function. No check was made as to whether such an inspection was happening on this site. Had such a check been made, it would have been obvious that no adequate inspection of the work of JMKG was taking place. In the absence of any adequate inspection process, there would always be a reasonable probability that work would not be done properly and because a balustrade was involved, the consequences of the failure of a structural joint could be very serious. 64It is no answer to say that an inspection by WB Jones would have achieved nothing because it would not have appreciated the dangers associated with the use of a nail gun. WB Jones cannot rely upon its own ignorance of a matter which it should have known in that way. It is implicit in the requirement for an inspection that it be an adequate inspection, i.e. one carried out by a person with adequate knowledge and training. Even allowing for Mr Jones' ignorance of the dangers of using a nail gun on a structural joint in a balustrade, an inspection by him or another employee may well have discovered that quite apart from the use of a nail gun, the nails used were inadequate, both as to length and gauge. 65The other particular of negligence found against WB Jones was that it failed to exercise reasonable care in using JMKG as a contractor. 66WB Jones accepted that if it did not perform installation work itself, it owed a duty to the plaintiff to exercise reasonable care in choosing a contractor to do that work. WB Jones chose JMKG which was a company which it knew consistently used nail guns when affixing fasteners to structural wooden joints. This is clear from the evidence of Mr Jones (Black 775.4 - 20) and from the JMKG invoice. WB Jones did not know but ought to have known that this was a dangerous practice and contrary to the applicable standard. As with the duty to inspect, WB Jones cannot rely on its own ignorance of what it should have known as an excuse. 67The effect of his Honour's reasoning is that WB Jones retained a contractor which it should have known was using an unsafe system to insert nails in balustrades. By doing so, it was in breach of the duty which it agreed it owed to the plaintiff. It is no answer to that proposition that based on previous history, it believed JMKG had done a good job and no problems had been encountered. 68WB Jones made a general complaint that it had been found liable on a case which had never been pleaded against it. That is not how I read either the pleadings or the way in which the evidence was adduced. Particulars of negligence (q) - (t) all relate to a failure to properly attach the balustrade to the joists. The word "ensure" is used. While I have some difficulties with the use of that word in a negligence claim, it is broad enough to encompass an obligation not only on the entity carrying out the work but also an entity responsible for the inspection of the work. Inspection was specifically raised in particular of negligence (w) as follows: "(w) Failing to conduct a proper safety inspection of the balustrade upon its installation." In my opinion, the pleadings were sufficiently wide to encompass a failure to inspect. 69In relation to the way in which the trial was conducted, issue was joined fairly and squarely on the issue of whether WB Jones should have inspected the work of JMKG. The same can be said concerning its failure to exercise reasonable care in selecting a contractor to perform the installation work. A considerable body of evidence was adduced to the effect that the use of nail guns by JMKG was inappropriate and dangerous and that WB Jones should have been aware of this. 70It follows that the findings by the primary judge of negligence on the part of WB Jones in those two respects should be upheld and its appeal on this issue dismissed. Apportionment 71JMKG submitted that this Court should not interfere with the apportionment by the primary judge. It submitted that the apportionment involved a discretionary exercise and that no House v The King [1936] HCA 40; 55 CLR 499 error had been identified. It submitted that such a discretionary finding should not be lightly reviewed and unless error was identified in the primary judge's approach, it was not appropriate for this Court to substitute its own opinion (at [27] hereof). 72While I agree with that statement of principle, I do not accept its applicability here. His Honour's treatment of apportionment did not identify how it supported a conclusion that JMKG's responsibility was only slightly greater than that of either Mirvac or WB Jones. That permits review in accordance with House v The King. What is required is an investigation, albeit not a detailed one, of the relative culpability and causal potency of the actions of the negligent parties. 73Those principles were summarised in Podrebersek v Australian Iron & Steel Pty Ltd [1985] HCA 34; 59 ALJR 492 at 494 where the High Court (Gibbs CJ, Mason, Wilson, Brennan and Deane JJ) said: "The making of an apportionment as between a plaintiff and a defendant of their respective shares in the responsibility for the damage involves a comparison both of culpability, i.e. of the degree of departure from the standard of care of the reasonable man (Pennington v Norris [1956] HCA 26; (1956) 96 CLR 10, at p 16) and of the relative importance of the acts of the parties in causing the damage: Stapley v Gypsum Mines Ltd (1953) AC 663, at p 682; Smith v McIntyre (1958) Tas SR 36, at pp 42-49 and Broadhurst v Millman (1976) VR 208, at p 219 and cases there cited. It is the whole conduct of each negligent party in relation to the circumstances of the accident which must be subjected to comparative examination." 74Applying those principles, the causal potency and relative culpability of Mirvac and WB Jones was very much the same. Both had a supervisory role in relation to the work carried out by JMKG. They failed in that role. Mirvac's opportunity to intervene was greater than that of WB Jones in the sense that it was in control of the whole site and had a number of opportunities to intervene. On the other hand, WB Jones had particular expertise in the installation of balustrades and was in an ideal position, had it acted appropriately, to intervene on the day that the balustrade was installed. It should also have been aware over a substantial period of time that the use of nail guns by JMKG when installing balustrades was unsafe. 75The culpability of JMKG and its contribution to the accident were, however, substantially greater than that of the other two appellants. It held itself out as an expert. It installed the balustrade. Not only did it use a nail gun but it allowed nails to be driven into a gap and the nails which it used were not of sufficient strength or of sufficient gauge. 76I would apportion liability as follows: JMKG - 50 percent Mirvac - 25 percent WB Jones - 25 percent. Damages 77The primary judge assessed damages as follows: Past out of pocket expenses (agreed) $ 4,113.00 Future out of pocket expenses $ 27,000.00 Non-economic loss - 38 percent $ 197,500.00 Past attendant care services $ 57,618.00 Future attendant care services $ 185,460.00 Past loss of earning capacity $ 70,000.00 Future economic loss $ 250,000.00 Past superannuation $ 7,700.00 Future superannuation $ 27,500.00 Total $ 826,891.00
The total was reduced to $750,000 having regard to the jurisdictional limit of the District Court. 78The only matters challenged by the appellants were the award of non-economic loss, past and future attendant care services and past and future economic loss. 79In relation to non-economic loss, the thrust of the appellants' submissions was that between 2006 and 2009, according to his employment records, the plaintiff had only taken a total of 18 days off work, plus a further 3 weeks following surgery to his back. They submitted that the plaintiff had continued to perform his normal job until he lost it in 2009 for reasons unrelated to his injury. They submitted that the medical expenses incurred by the plaintiff were modest and that he did not seem to have received any medical treatment since 2008. Most particularly, the appellants invited an adverse inference because there was only one report from the plaintiff's treating surgeon and it pre-dated the surgery. That report said nothing about the accident. The appellants were critical of the fact that there were no up-to-date reports from the plaintiff's general practitioner. The primary judge inferred from the absence of reports from the treating surgeon that those reports would not have assisted the plaintiff. 80The difficulty for the appellants in challenging the award of damages for non-economic loss is that all of the medical evidence before the primary judge, including that tendered by them, favoured the plaintiff. He had consistently complained of low back pain from the time of the accident. This was confirmed, not only by the plaintiff's own testimony, but by that of his wife and daughter and by one of his employers, Mr Nasser. 81Mr Nasser's evidence was that before the accident, the plaintiff was employed as a logistics manager by Innovative Precasters Pty Ltd (Innovative). That job involved physical work comprising driving trucks and loaders backwards and forwards between sites. He said that given the plaintiff's position in the company, he could take time off when he needed to attend doctors. 82Mr Nasser described the plaintiff's work following the accident as follows: "We were all aware that Pete had a bad back. He wasn't doing his tasks like he used to when he was employed. He couldn't do his tasks. It's as simple as that. He was just clerical then." (Black 269N) "He just wasn't doing what he - Peter just wasn't physical anymore. He couldn't lift props. That's all I can sort of say. He wasn't physical like he used to be, jumping up and down and doing - . (Black 269W) 83By June 2007 the plaintiff had developed left leg pain. He underwent an L3/L4 left sided discectomy in February 2008. Despite the operation, his back pain continued. 84The Court had before it a series of reports of Dr Max Ellis, who is an orthopaedic surgeon. In a report dated 10 February 2010 Dr Ellis took a history that the plaintiff was then working about 30 hours a week in casual light work in educational training and the assessment of trainees involved in industrial work, forklift competency and transport warehousing. The plaintiff was complaining of low back pain, aggravated by bending, lifting, prolonged standing, sitting and walking for more than 15 minutes. Pain extended into the back of the left leg and into the foot. The assessment of Dr Ellis at that time was as follows: "He is now permanently unfit for physically demanding work requiring bending and lifting and is fit only for light duty work. If he attempts to return to physically demanding work in the future, recurrence and exacerbation of his condition can be expected with increasing impairment. He was retrenched from his job as a logistics manager as he was unable to do site work because of his back injury and works currently part time self-employed in educational training and assessment of workers involved in transport and warehousing." 85Dr Ellis estimated that he required 4 hours of domestic assistance twice per week and that that requirement would continue. 86The most recent report from Dr Ellis was dated 7 July 2011. The findings on examination were the same. Dr Ellis said: "His lifestyle is degraded with loss of recreation activities. His working ability and potential are significantly reduced." 87There was also before the court a report dated 7 February 2011 from Dr Machart, an orthopaedic surgeon qualified by the solicitors for WB Jones. Dr Machart diagnosed an injury to the lower lumbar discs, including a disc protrusion at L3/4. He set out his conclusion as follows: "He is not fit for physically demanding work. He should be given work options where frequent changes of position are allowed, to cope with inability to sit for more than 2 hours. It is reasonable for him to work in reduced capacity, perhaps 6 hours a day, essentially office or supervisory type work. He should avoid bending or lifting. ... Essentially sedentary work with the opportunity to walk around at intervals." 88Dr Machart assessed the plaintiff as not being able to do any domestic work at that time and estimated that he required assistance with domestic duties at the rate of about 6 hours per week. 89Dr Stephenson, an orthopaedic surgeon, was qualified on behalf of the solicitors for Mirvac. He provided a report dated 1 March 2010. He commented that the history and findings were consistent with the need for discectomy at the L3/4 level for a lateral disc protrusion on the left side. He thought the symptoms of lumbar pain, left lower limb discomfort and reduced ability and agility from the physical point of view were a reasonable response to the back injury and operation. He thought that in the future the plaintiff would have to use care and avoid heavy lifting and excessive bending and twisting activities because of his lumbar spine condition. 90In relation to prognosis Dr Stephenson said: "The prognosis remains guarded. It is likely there will be continuance of some discomfort in the back and the left leg region. Due care will be required and avoidance of future heavy and physical activity. This could impact on his future employment choice. It is reasonable that he avoid heavier physical activity as future employment. I accept that Mr Richardson was likely to have required some assistance about the house and home, probably for at least 3 months post injury and then again post surgery, for example, for yard garden care and the associated activities of daily living in that respect." (Blue 524D-H) 91Dr Stening, a consultant neuro-surgeon, provided a report for the solicitors for Mirvac, dated 23 August 2010. He diagnosed the plaintiff as having sustained a disc derangement at the L3/4 level producing a bulge into the intervertebral foramen causing irritation of the left L3 nerve root. He noted that following the operation his radiculopathy improved but he was left with some low level back pain. 92His prognosis for the future was: "I would regard him as having reached maximal medical improvement. I would regard him as fit for his former duties which did not appear to involve heavy physical exertion and which were mainly office and supervisory work. I would regard him as unfit for heavy physical exertion in the future and he would be unfit for any work involving such exertion or repeated bending. This low level of impairment, however, is permanent." (Blue 526O-Q) 93The plaintiff's daughter, Kayla, was aged 18. She gave evidence that following the accident her mother had to do "yard work outside. Like mowing. Garden - general gardening. Inside everything." (Black 295K) 94The plaintiff's wife gave evidence. She said that because of financial need, she had returned to work after the plaintiff was injured and had been working fulltime for about 3 ½ years. She had not been working before the accident. 95When describing what the plaintiff had done around the house before the accident she said: "He would put in a lot of work at home. He was great. ... He mowed the lawn, he would whipper-snip, he would sweep down all the cement paths. He would wash the bins, bring the bins in, take them out and always clean them every week, roll up the side ... Yes, many things inside. He would always vacuum the house. We had a two-storey house. So he would do upstairs or if the case, he would vacuum the whole carpet area and I would mop, he would do the bathrooms, vacuum the bathrooms." (Black 303F-L) 96She said that following the accident, he found that vacuuming was stressful and he stopped doing it. He found it difficult to bend down and load the dishwasher. She said that she had to do the work around the house that he used to do. Sometimes when his back was particularly sore, she used to tie up his shoelaces, but she did not do it every day. (Black 307J) Her estimate was that she spent about an hour and a half per day doing work that before the accident the plaintiff used to do. 97The evidence of the plaintiff, which his Honour accepted, was more detailed but was substantially corroborated by the evidence of Mr Nasser, his wife and his daughter. 98Accordingly, there was ample evidence before his Honour, both in relation to pain and suffering, interference with his enjoyment of life, limitations on what he could around the home and restrictions in his work ability to justify the finding of non-economic loss of 38 percent of a most extreme case. This is particularly so when an assessment of this kind is based very much on matters of opinion, impression and estimation which are not readily susceptible to appellate review (Dell v Dalton (1991) 23 NSWLR 538). It could not be said that the primary judge made "a wholly erroneous estimate of the damage suffered" (Moran v McMahon (1985) 3 NSWLR 700 at 718, 723 per Priestley JA; Kirby P and McHugh JA agreeing). 99I agree with the submissions of the appellants as to the paucity of reports from the treating surgeon and in particular, the absence of any reports concerning the operation and its sequelae. If there had been a genuine medical issue supported by reports from doctors qualified by the appellants, this could have been an important consideration. In the present case as the primary judge appreciated, all of the medical evidence was one way. It supported, in varying degrees, the plaintiff's case. Accordingly, although it is surprising that such reports from the treating surgeon were not served, it does not greatly affect the outcome of the medical issue. Past and Future Economic Loss 100The appellants submitted that the primary judge's award of past economic loss was not supported by the evidence and that in relation to future economic loss he had not complied with the requirements of s13 CLA. That section relevantly provides: "13 Future economic loss-claimant's prospects and adjustments (1) A court cannot make an award of damages for future economic loss unless the claimant first satisfies the court that the assumptions about future earning capacity or other events on which the award is to be based accord with the claimant's most likely future circumstances but for the injury. (2) When a court determines the amount of any such award of damages for future economic loss it is required to adjust the amount of damages for future economic loss that would have been sustained on those assumptions by reference to the percentage possibility that the events might have occurred but for the injury. (3) If the court makes an award for future economic loss, it is required to state the assumptions on which the award was based and the relevant percentage by which damages were adjusted." 101There is some force in these submissions. The primary judge's treatment of economic loss was sparse. In relation to past economic loss, it assumed a knowledge of the competing submissions of the parties. Had his Honour approached the assessment of future economic loss by reference to s13, it is unlikely there would have been any basis for the complaint now made by the appellants. 102What his Honour said in this case was: "87 I turn now to loss of earning capacity up to the present time. In MFI 27, Mr Gilbert argues for an allowance of about $101,000 based on the calculations referred to in item 4 of MFI 27. Mr Catsanos on the other hand argues that an amount of $28,000 would be appropriate. This figure is not open to precise calculation, but because I am estimating a loss in earning capacity and there are various contingencies which need to be taken into account, I would regard an appropriate figure to represent Mr Richardson's loss in earning capacity up to the present time as being $70,000." (Red 150V-151F) 103The plaintiff's submissions, to which the primary judge referred, are set out at Blue 896. They proceeded on this basis: at the time when the plaintiff's ceased employment with Innovative in March 2009, he was earning $1,167 net per week. Thereafter, he variously earned $741 net, $525 net and $522 net until 2011. These figures were based on his post-accident tax returns. The plaintiff's calculations of past economic loss were calculated on the difference between what he would have earned had he remained with Innovative as a logistics manager up to the date of trial and what he had actually earned. On that approach, the average difference per week was $645 net, amounting to the figure of $101,000 claimed on the plaintiff's behalf. 104In order to understand the approach of the appellants, it is necessary to have regard to the findings which his Honour made at Red 147U-148V as to the plaintiff's post-accident work. His Honour found that the plaintiff's employment with Innovative came to an end for reasons not related to his injury. He found that the plaintiff had refused an offer of re-employment by Innovative for reasons unrelated to his injury but which "had more to do with tension within the ownership of the employer" (Red 148K). Nevertheless, his Honour accepted the evidence of Mr Nasser that after the accident, the plaintiff's physical capacity was reduced so that his loss of employment became "a contingency unrelated to his injuries which threw him onto the open labour market where his reduced earning capacity impinged on his income". (Red 148P) 105It was common ground that following the cessation of his employment at Innovative, he undertook work as a contractor, training people to operate different types of equipment and machinery. It was not clear for how long he had carried out this work but it seems that he did so for about 11 months. Thereafter, he started his own business and continued training people to operate machines at the time of trial. The business was known as "Australian Based Training" (ABT). He said that he was working 30 hours per week - "it might jump up a bit, it might go down a bit" (Black 51.35). 106The appellants submitted that it was the plaintiff's own choice not to be re-employed by Innovative and that any loss he suffered was due to that choice. The appellants noted that within a week or two of ceasing employment with Innovative, the plaintiff had commenced work with All Business Learning and Solutions (ABLES) as a contractor and worked with that company between March 2009 and February 2010. During this period, he was receiving gross payments which were more than he had earned with Innovative. In the 2010 tax year he was paid $40,310 by ABLES. 107It seems that in February 2010 a Federal Government subsidy to ABLES ceased and it was then that the plaintiff commenced operating his own company, which was doing the same work as ABLES but without the government subsidy. At Blue 858 the taxable income of the company for the financial years ending 2010 and 2011 is set out. There were no tax returns for the 2012 financial year. 108The appellants submitted that as of the date of trial, the plaintiff's business was flourishing. His participation showed a considerable work capacity. He was training on a face to face basis, the company had invested in a forklift and he was assessing people for competency in driving forklifts. He had taken on a partner. Not long before the trial, the company had moved to new premises at Smithfield and had commenced to engage contractors to assist in the business. The appellants submitted that an allowance of $70,000 for the past was excessive. 109There were clearly a number of issues which his Honour should have resolved in relation to past economic loss. It would, however, involve a significant waste of legal costs for this matter to be referred to the District Court on the issue of damages which could only occur if this Court were satisfied that there were some substantial wrong or miscarriage of justice: UCPR r 51.53. Such was not suggested by any of the parties on the appeal. Accordingly, on this issue, this Court with the assistance of his Honour's findings as to credit, is in a position to assess damages. 110The fact that the plaintiff did not get on with Mr D'Olivera, the director who had taken over Innovative, and therefore declined the offer of re-employment does not particularly assist the appellants' case on economic loss if it be the fact that following the accident, the plaintiff was only capable of restricted duties and had been maintained in employment by a sympathetic employer. The evidence of another director, Mr Nasser, is overwhelmingly to that effect. Mr Nasser explained that the plaintiff was the logistic manager and his work was to be contrasted with that of the construction manager. While there was some physical work, his work was mainly clerical. According to Mr Nasser, after his injury he could not do any of the physical work which he did before he was injured, and the company made allowances for that. 111The factual scenario is similar to that which was considered by the High Court in Medlin v The State Government Insurance Commission [1995] HCA 5; 182 CLR 1. There a 56 year old university professor was injured in a motor accident. Although he could have remained in employment, he took retirement 4 ½ years before he would have been obliged to retire because he did not think he could discharge his teaching and research duties to a sufficiently high level to satisfy himself (as opposed to his employer). The plurality (Deane, Dawson, Toohey and Gaudron JJ) restated the principles in Graham v Baker [1961] HCA 48; 106 CLR 340 at 347 that the two requirements for the recovery of damages for loss of earning capacity were that a plaintiff's earning capacity was in fact diminished and that the diminution of earning capacity was or might be productive of financial loss. 112By reference to the particular case before them, the plurality at p11 posed the relevant question as follows: "... In these circumstances, the relevant question was not whether the plaintiff "should" have continued in his University post or whether his decision to retire was not "reasonable" but whether, in the context of what was reasonable between the plaintiff and the defendant in determining the defendant's liability in damages, the premature termination of the plaintiff's employment was the product of the plaintiff's loss of earning capacity notwithstanding that it was brought about by his own decision to accept voluntary retirement." The plurality answered that question in the affirmative. 113In the same case McHugh J reached the same conclusion by a slightly different method. His Honour posed the question at p17: "9 ... Whether there had been an impairment of the plaintiff's earning capacity was a matter conceptually distinct from the plaintiff's reasons for retiring. The correct question was whether, as a result of the accident, the plaintiff had been rendered less capable of earning income." 114While it is true that for a period of approximately 11 months, the plaintiff received substantial payments from ABELS (Blue 603), his individual tax returns show a much more modest income. It was never suggested to the plaintiff in cross-examination that his tax returns were anything but accurate. Accordingly, I have concluded that the difference must be accounted for by costs incurred by the plaintiff in earning that income. That is an obvious difference between working for one's self and working for an employer where overheads are borne by the employer. 115From the tax returns it is apparent that the plaintiff was suffering an actual and substantial net loss after the cessation of his employment. His Honour's approach of discounting the claim for $101,000 (which was based on tax returns) to $70,000 made appropriate allowance for the fact that what the plaintiff earned in his own company may not have fully reflected his actual earning capacity, had he worked for someone else as an employee. On the other hand, the plaintiff by setting up his own company and working for himself in circumstances where he was significantly disadvantaged on the open labour market because of his physical injuries, showed considerable enterprise which benefited the appellants. If anything, the deduction of $31,000 from the plaintiff's claimed amount was favourable to the appellants. 116His Honour made no attempt to comply with s13 CLA when giving his reasons for his finding of future economic loss. In that regard, his Honour was in error. As with past economic loss, however, this Court is able to make that assessment for itself. 117In relation to future economic loss, his Honour said: "88 Mr Gilbert has calculated the loss of earning capacity for the future for his client also in item 4 of MFI 27. He shows that the figures on one view could demonstrate a weekly loss of almost $1300 but in order to reasonably reflect the uncertainty of this figure, he has discounted the claim to some $500 per week. I think that is a reasonable discount to make. He calculates a figure - using the discount of a 5% multiplier referred to in MFI 27 for the period until a proposed retirement age of 67 of $283,220. I would discount that somewhat more, even though there is already discounted the weekly wage loss and an allowance of some 15 percent for contingencies. I would regard an appropriate figure for future economic loss as being $250,000." (Red 151H-P) 118The claim for future economic loss was put forward by the plaintiff at trial on two bases. The first that was based upon evidence from Mr Nasser that he was paying a logistics/construction manager in a medium size business $130,000 per year. This equated to $2,500 gross or $1,820 net per week. The plaintiff submitted that had he not been injured, he had realistic prospects of obtaining a similar job. Since he was earning approximately $522 net per week at the time of trial, he was entitled to the difference, i.e. $1,298 net per week. 119The alternative basis was that, uninjured, he would have obtained employment of a similar kind to that which he had with Innovative. In those circumstances, the loss per week would be approximately $500 net. On the 5% tables and after deducting 15 percent for vicissitudes, this would produce a figure of $283,220. 120The appellants' submissions at trial and on appeal were similar to those in relation to past economic loss. The appellants pointed to the substantial sums of money which the plaintiff had received when working with ABELS as indicative of his real work capacity and stressed that the cessation of his employment was essentially due to his own choice, rather than because of his low back problem. The appellants referred to the steady expansion of his company and submitted that his Honour had erred because he had not made any allowance for a positive vicissitude, i.e. that the earnings of the plaintiff's company would substantially increase in the future. The appellants submitted that implicit in his Honour's findings was the proposition that the plaintiff's earnings from his company would remain the same or similar for the future. The appellants relied upon the lack of substantial medical expenditure by the plaintiff in the recent past as indicative of a modest injury. 121There was insufficient evidence to substantiate the first basis on which the plaintiff claimed damages for future economic loss. It is true that Mr Nasser said that he was currently employing a manager and paying him $130,000 gross per annum. Under cross-examination it became clear that this manager was not only performing logistics work, but was performing construction work. It also became apparent that the enterprise which Mr Nasser was currently conducting was a much larger one than that which Innovative was engaged in when the plaintiff was employed by it. Apart from the fact that Mr Nasser said he was employing such a person, there was no evidence as to the general availability of such jobs in Australia and in particular, in New South Wales. 122I would not regard the employment of this person as an appropriate indicator of what the plaintiff was likely to have been earning in the future had he not been injured. His Honour was correct in not having regard to that evidence. 123The challenge to the alternative basis put forward on behalf of the plaintiff, fails to have regard to two unchallenged issues. The first is that the plaintiff following the accident has been left with a bad back and that all of the medical evidence is to the effect that he can no longer perform heavy duties and should be restricted to light work. The other is that in his company the plaintiff is working approximately 30 hours per week whereas before, he was working in excess of 40 hours per week. Absent other considerations, those factors are clearly productive of financial loss. 124By reference to s13 CLA, it is reasonable to assume that had the plaintiff remained uninjured, he would have obtained work of a similar kind to that he was performing with Innovative. He was an experienced logistics manager who also (uninjured) had a capacity to perform substantial physical work. It was not submitted, either to his Honour or to this Court, that such was not a reasonable career path for the plaintiff uninjured. 125The only issue which was debated in this Court and before his Honour was the value of the work actually performed by the plaintiff in his company. It is true that the company was expanding and that the plaintiff had taken on a partner. It is also clear from the profit and loss statement that the partner was taking 50 percent of the proceeds and that the company had substantial overheads, including amounts paid to contractors. I can see no reason why the actual earnings shown by the plaintiff in his tax returns are not an accurate reflection of his capacity. This takes into account his reduced physical capacity and reduced hours of work. For the purposes of s13 that is a reasonable assumption. 126As was clear from the calculation of past economic loss, a comparison of the plaintiff's tax returns while he was working with Innovative, with those after he left, shows a loss of approximately $645 net per week. I see no reason why, in general terms, that should not reflect the plaintiff's continuing economic loss for the future. 127The criticism that no allowance has been made for positive vicissitudes, i.e. that the earnings of the company would increase, fails to take into account that had the plaintiff been able to continue working as a logistics manager, his earnings would also have increased. There is nothing to suggest that the ratio between the earnings of the company and those of a logistics manager in the future would have reduced. In fact, the figure of $500 net per week used by his Honour for the future is less than the actual difference in earnings for the past (i.e. $645 net per week) and was further reduced by $33,000. 128It follows that the figure of $250,000 for future economic loss was open on the evidence and should not be interfered with. Domestic Assistance 129There was no issue that s15 CLA applied to this head of damage. Section 15 CLA requires that four tests be met: (i) There was a reasonable need for the services to be provided. (ii) The need has arisen solely because of the injury. (iii) The services would not have been provided to the plaintiff but for the injury. (iv) The services are provided or to be provided for at least 6 hours per week and for a period of at least 6 consecutive months. 130The appellants submitted that the primary judge did not carry out the necessary analysis required by s15 CLA but merely took the figure which Dr Ellis had given in his reports and made calculations based on that. The appellants submitted that the primary judge did not identify the particular tasks which would have required 8 hours of assistance. 131The appellants submitted that the fact of the plaintiff working as a trainer operating forklifts and cranes in his own business, meant that he could do most of the activities around the home, such as vacuuming, cooking and hanging washing on the line. The appellants submitted that it was not sufficient to merely rely upon the plaintiff's own estimate, or that of a doctor but that a detailed analysis had to be undertaken by the Court when identifying the nature of the assistance that was required and the hours necessary to provide that assistance. 132The appellants' submissions do not do justice to his Honour's approach. Although his Honour dealt only briefly with attendant care services (Red 150J-T), that assessment was based on findings earlier in the judgment as to incapacity. There his Honour found that the plaintiff continued to experience symptoms which would remain into the indefinite future. Following the accident, the plaintiff was unable to engage in the recreational activities which his Honour enumerated, i.e. golf, water sports, riding, walking, body surfing and canoeing. His participation was prevented by pain. His Honour referred to the evidence of the plaintiff's wife to the effect that on an occasion after the accident, they went camping but the plaintiff was unable to erect a tent. 133In relation to attendant care services specifically, his Honour said: "72 Mr Richardson also gave evidence about the activities which he used to engage in around the house. The jobs which fell to him were maintaining the yard on the outside and putting the bins out. In the house he would put out washing and cook every so often. His job was to vacuum which involved all the wet areas upstairs and downstairs, meaning the bathroom and the laundry. Outside the house he maintained the garden and the lawns, used the whipper snipper and undertook general maintenance of the property. That would include painting and the gardens and initially establishing the gardens. 73 Before the accident Mrs Richardson said that the housework was divided up amongst the family. She said that they as a family "all very equal". She said that Mr Richardson "would put in a lot of work at home. He was great". She said that he "mowed the lawn, he would whipper-snip, he would sweep down all the cement paths. He would wash the bins, bring the bins in, take them out and always clean them every week, roll up the side. Then inside, the dog - he used to help - we used to walk our dog... He would always vacuum the house. We had a two-storey house. So he would do upstairs, or if the case, he would vacuum the whole carpet area and I would mop, he would do the bathrooms, vacuum the bathrooms." Kayla Richardson said that before the accident her father definitely did his share around the house. 74 This changed after the accident. Kayla Richardson said that they had to pick up a lot on his behalf and the person who was primarily responsible for picking up those tasks was her mother. She said that she picked up jobs such as, yard work outside and making the bed in the morning and doing the dishwasher. She said that she had picked up more now that her father could not. She would not be mowing lawns which she or her sister might do them now. Mrs Richardson noticed that there were restrictions on her husband doing the housework after the accident, even pulling the cord on the mower would hurt him, vacuuming was stressful and he does not do it any more. He does not bend down to work the dishwasher, although occasionally he might help with the wiping up. He did not go back to the work he used to do around the house. Her daughter helped her but it is mainly Mrs Richardson who takes up the work which Mr Richardson is not able to do. She even has to tie up his shoelaces now and then." (Red 145M - 146T) 134His Honour accepted this evidence which he did not regard as having been seriously challenged in cross-examination (Red 146V). 135That evidence provided a sound basis for his Honour to consider how many hours he should assess in relation to attendant care services. The plaintiff's estimate was 10 hours per week. That of his wife was 10 ½ hours per week. The estimate of Dr Ellis was 8 hours per week and that of Dr Machart was 6 hours per week. It was well open to his Honour on the basis of the evidence to take 8 hours per week as an appropriate figure for gratuitous attendant care services. Conclusion 136While his Honour's treatment of economic loss was not adequate in that insufficient reasons were provided and there was a failure to comply with s13 CLA, an examination of the evidence supports the conclusions which his Honour arrived at. In relation to damages as a whole, the findings made by his Honour were supported by the evidence and were open to him. The appeals against damages should be dismissed. Costs 137The plaintiff has succeeded fully in the appeal and should have his costs of the appeal. Since there has been a change in the apportionment of liability, there is a need to amend the orders made by the primary judge. The appellants will be given the opportunity to make submissions as to the costs of the appeal. 138The orders which I propose are as follows: (1) Appeals by Mirvac in matter No 2012/246067 and WB Jones in matter No 2012/245212 allowed in part. (2) The orders made by Judge Cogswell SC on 11 July 2012 are set aside, and in lieu thereof order that: (i) Judgment in favour of the plaintiff against all three defendants in the amount of $750,000 plus costs. (ii) In the cross-claim by Mirvac against WB Jones, WB Jones is to contribute 25 percent to Mirvac's liability to the plaintiff for damages and costs. (iii) In the cross-claim by Mirvac against JMKG, JMKG is to contribute 50 percent to Mirvac's liability to the plaintiff for damages and costs. (iv) In the cross-claim by WB Jones against Mirvac, Mirvac is to contribute 25 percent to the liability of WB Jones to the plaintiff for damages and costs. (v) In the cross-claim by WB Jones against JMKG, JMKG is to contribute 50 percent to the liability of WB Jones to the plaintiff for damages and costs. (vi) In the cross-claim by JMKG against Mirvac, Mirvac is to contribute 25 percent to the liability of JMKG to the plaintiff for damages and costs. (vii) In the cross-claim by JMKG against WB Jones, WB Jones is to contribute 25 percent to the liability of JMKG to the plaintiff for damages and costs. (viii) Each cross-defendant is to bear its own costs in respect of each of the cross-claims. (3) Otherwise dismiss the appeals by Mirvac and WB Jones. (4) Dismiss the appeal by JMKG in matter No 2013/11679. (5) The appellants are to pay the respondent Mr Richardson's costs of the three appeals. (6) The appellants are to file any agreed Short Minutes of Order as to costs within 7 days. In default of agreement, the appellants are to file and serve proposed orders and short submissions not exceeding 5 pages and any evidence upon which they wish to rely within 21 days. 139LEEMING JA: I agree with the orders proposed by Hoeben JA and his Honour's reasons for them.
Amendments 17 April 2014 - Formatting error corrected Amended paragraphs: Coverpage DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 17 April 2014
WB Jones Staircase & Handrail Pty Ltd
Richardson & Ors
[1961] HCA 48
[1995] HCA 5
(1991) 23 NSWLR 538
(1985) 3 NSWLR 700
(1956) 96 CLR 10
[1985] HCA 34
[1936] HCA 40