Duro Lukic v John Holland Constructions Pty Limited [1986] ACTSC 48 (16 June 1986)

SUPREME COURT OF THE ACT

DURO LUKIC v. JOHN HOLLAND CONSTRUCTIONS PTY. LIMITED
S.C. No. 1031 of 1983
Damages

COURT

IN THE SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
Miles C.J.(1)

CATCHWORDS

Damages - personal injury - claim for profits that might have been made as a carpentry sub-contractor - profits made by other sub-contractors rejected as a basis for calculation of loss - no question of principle.

HEARING

CANBERRA
16:6:1986

ORDER

There be judgment for the plaintiff in the sum of $167,778.22.

DECISION

On 14 March 1986 I announced that the plaintiff had established liability on the part of the defendant and I stood the case over to a further date to hear argument on damages. Having heard that argument on behalf of the parties I now state my findings on the question of damages.

2. The plaintiff was born in Yugoslavia on 2 April 1949. He left school at the age of 15 years and completed an apprenticeship as an office machine mechanic. After finishing his national service he came to Australia in 1971. He worked at first in various jobs associated with electrical contracting at first in Sydney and later in Canberra. Sometime after 1973 he went into partnership with his brother in Canberra carrying out sub-contracting carpentry work. It appears that the plaintiff has no particular training as a carpenter but had acquired skills in the area over the years. He married about 15 years ago and has four children ranging from 13 years to 3 years of age. His wife is not in employment outside the home.

3. As an immediate result of the accident on 20 September 1982 the plaintiff suffered a fracture of the left medial and anterior malleoli, fractures of the upper and lower left pubic rami, general bruising and concussion. In fact he lost consciousness for a brief time, probably a couple of minutes, and was taken to the Calvary Hospital thereafter. The fracture of the ankle was reduced under general anaesthetic after a few days and fixed with screws. The plaintiff was discharged on crutches on 28 September 1982. The ankle remained in plaster for about six weeks during which time the problems in the pelvic area and head resolved. From 11 October 1982 he was placed on physiotherapy. He remained on crutches for a further month and for a further week thereafter got around with the assistance of a stick. Physiotherapy was continued more but somewhat intermittently until February 1983. By about January 1983 the treating doctor, Dr Geoffrey Stubbs, formed the view that the plaintiff should return to work wearing a supporting boot, although there was still substantial loss of movement in the ankle, about one quarter loss of range of dorsiflexion and one half of plantar flexion. In February Dr Stubbs noted that the plaintiff had unsuccessfully tried working for a couple of days. When Dr Stubbs saw the plaintiff in June 1983 the situation had not changed although Dr Stubbs thought that the outlook was becoming bleaker with the plaintiff's continued absence from work. According to the plaintiff's evidence-in-chief, which was not challenged on the point, he acted in accordance with the medical advice to seek to return to work with the defendant. The application was refused and the plaintiff was referred on behalf of the defendant to another company which was carrying out building work on the same site. The plaintiff in fact commenced work with that company but after about two days his supervisor complained that he was not carrying out his duties satisfactorily and suggested he stay at home on the ground of unfitness for work. The plaintiff said that he followed this advice. He said in his own evidence that he again saw Dr Stubbs at about this time and was referred to the Rehabilitation Centre at the Woden Valley Hospital. It is difficult to fit the plaintiff's evidence into the chronology otherwise established in the evidence. According to the evidence and the more or less contemporaneous records of Dr Stubbs he saw the plaintiff on 6 June 1983 when he was told that the plaintiff had been unable to return to work. He next saw the plaintiff in March 1984 at which stage he directed the plaintiff to the Woden Valley Hospital Rehabilitation Unit and according to his report of 23 October 1984, Dr Stubbs did not at that stage know the outcome of the rehabilitative measures. According to Dr Corry, a rehabilitation specialist, the plaintiff had already been referred to the regional rehabilitation unit of the Department of Social Security on 19 October 1983 and was referred to the Woden Valley Hospital Rehabilitation for further treatment, responding sufficiently to be recommended to return to light carpentry work by 14 February 1984. However, as at 10 April 1984 the information received by Dr Corry was that the plaintiff had not yet been able to gain employment.

4. The plaintiff was obviously less than frank with the doctors on the question of his ability to return to work. His evidence-in-chief on this matter was also not impressive. He stated in his evidence-in-chief that he was doing work of a fixing carpenter from October following rehabilitation. In the context he seems to have been talking about October 1983. Later in his evidence-in-chief he said that he had done "a lot of renovations for people in the homes" up until the middle of 1983, and that thereafter he worked as a fixing carpenter. The first time the plaintiff told Dr Stubbs that he had returned to work seems to have been in about July 1984. In cross-examination the plaintiff conceded that he had been working as a handyman at premises at Watson from 3 February 1983 until 15 June 1983. The question arose as to whether he had disclosed the income earned over that period for tax purposes. I am not convinced that there was a complete failure to disclose that income, as there is a strong suggestion that it was disclosed as income for the following tax year. However, the fact is that he did not inform the doctors of returning to work in February 1983, and he was at the least very vague about it in his evidence-in-chief. Furthermore the plaintiff received worker's compensation payments from the date of the accident until July 1983 without disclosing that he was earning income from his work as a handyman. In the 1983/84 tax year he received unemployment benefits of $7,167, again failing to disclose to the Department of Social Security his earnings as a carpenter. His credit as a witness was substantially reduced by these matters, and he declined to be cross-examined about them on the basis that the answers would tend to incriminate him.

5. In the end, however, I do not think that this materially affects the case. There is no doubt that the plaintiff suffered an injury to his ankle which prevents him from carrying out a full range of the duties he performed prior to the injury. The extent of his incapacity in the past is, I think, in the end amply displayed by the records relating to his earnings. There was a great deal of documentary material in the case and upon which the plaintiff was subjected to extensive cross-examination, but once again in the end I do not think that this needs to be discussed in detail for the purposes of my decision. There are some small areas in which I regard the plaintiff's evidence with some scepticism, but on the whole it is not so much that I reject the plaintiff as a witness of truth as that I do not accept in whole the claims made on his behalf, particularly as they relate to loss of earning capacity in the future.

6. I accept Dr Stubbs' assessment that the possibility of arthritic degeneration cannot be ruled out. However, Dr Stubbs said that another three to four years would be needed before it became clear whether the ankle was undergoing continuous degenerative change or whether the slight changes already shown on x-ray had stabilised. All the indications are however that, as Dr Stubbs himself said, the disability now seems stable and amounts to a 15% loss of efficient use of the ankle because of the stiffness of the subtalar joint. Dr Stubbs does not completely rule out the plaintiff's ability to climb ladders, but thinks that if the plaintiff did so his ankle would be liable to become more painful. Indeed, Dr Stubbs did not seem to think that climbing would present any particular danger except insofar as the ankle might give way. Dr Stubbs saw no impediment to the plaintiff driving a truck and in fact doing whatever carpentry the plaintiff's pain threshold permits. I agree with that assessment. The award of general damages and the calculation of the value of loss of future earning capacity will take into consideration the fairly remote contingency that the plaintiff's condition might worsen.

7. Evidence was given by an accountant, Mr. Adriaanse, who analysed the tax returns of the plaintiff for the years immediately prior to the injury and for the years up until the end of the 1984/85 tax year. Mr. Adriaanse also prepared some figures assessing what he called the projected disposable income after tax for the period 1 July 1985 to 30 June 1986. I do not propose to set out the figures in detail. Mr. Adriaanse states that a conclusion that could be reached from the figures is that there has been a marked decline in net disposable income in the period following the accident. I do not accept that that is necessarily correct, because in the tax year 1982/83, the year in which the accident occurred, the plaintiff's net disposable income increased by more than $2,000. The position is complicated further by the fact that in the tax year 1983/84 the plaintiff received $7,167 by way of unemployment benefits, for which the defendant has to be given credit but which tends to confuse the picture when one is attempting to assess loss of earning capacity by reference to income earned for tax purposes. In the written submissions which I invited from counsel, a number of alternative approaches have been set out on the plaintiff's behalf relating to the way in which past and future loss of earning capacity should be assessed. No single approach appeals to me as being obviously superior to the others. What I propose to do is to look at some of the approaches which seem to be most appropriate and then to compare the results which they yield. Part of the submissions put on behalf of the plaintiff used as a base figure the plaintiff's average net wage at the time of the injury and this was calculated according to plaintiff's counsel at $397.40 per week. This is clearly wrong as an arithmatical calculation if one averages out the net amount paid to the plaintiff in the twelve pay periods prior to the week of the injury. These are set out on pages 1 and 2 of the documemts relating to the year 1982 forming part of exhibit 0. The error appears to lie in the inclusion of sub-totals appearing in pencil in the document. The proper average figure is $285.25 per week.

8. In March 1984 a man called Boyle was employed in a position similar to that of the plaintiff with the defendant and received a wage which the plaintiff could have expected to receive. Boyle's wages therefore from 5 March 1984 may be used as a guide to what the plaintiff may have expected had he continued to be employed by the defendant. They are shown in part of exhibit P.

9. I am satisfied that the plaintiff was wholly incapacitated for work from the date of injury until a date towards the end of February 1983, in effect a period of six months. Thereafter he continued to improve so that between 24 October 1983 and 21 February 1984 he earned a total of $4,600, without allowing for business expenses of about $1,300. This would be roughly equivalent to $180 net per week as an employee. By June 1984 I am satisfied he reached his present state. The ankle continues to give trouble after a hard day's work, but he is able to manage his affairs as a contractor by taking breaks and working carefully and slowly so that for a good deal of the time the ankle is painless. Although he is physically capable of working from a ladder, there is a safety factor involved so that it would be unwise for him to undertake work which necessitates climbing ladders or working from ladders, although I would not exclude the odd occasion when it may be necessary for him to mount the bottom rungs of a step ladder. He is not capable of carrying out the sort of work that requires walking over rough and uneven ground for any substantial distance or period of time, nor is he capable of carrying out carpentry work that requires moving across joists, for instance for the purpose of laying flooring. He is perfectly capable, however, of carrying his equipment, weighing up to 20 kilos, from his van to a typical work site. Further he is capable, if he so wishes in order to command the income, to work a full working day and beyond for five or six days a week. The limitation in the use of the ankle would have the normal and expected results in relation to his domestic life, but there is no particular sporting activity, for instance, with which it interferes. However, he says, and his wife supports him in this, that he sometimes does have pain in the ankle at night when the ankle can be heard to click. He is not under any medication or treatment. Whilst deterioration of an arthritic nature in the future may not be excluded, there is no sign of that at present, and, in my view, the likely need for operative treatment as a result of his injury plays no part in the case. The injury does not prevent the plaintiff from driving his van and he still holds a licence for driving a semi-trailer which he obtained some seven years ago.

10. The major problem in the assessment of damages is to put a figure on loss of earning capacity.

11. The plaintiff relies upon the wages of Boyle as providing a yardstick for what the plaintiff might have expected to earn if he had not been injured. The records for Boyle unfortunately do not go beyond 25 November 1984. I take Boyle's net wage to average $420 per week. (The figures submitted by counsel for the plaintiff calculate the average to be $455 per week, but this is based on the extraordinary hours worked by Boyle in his last six weeks which I do not accept as being typical.) In any event, using the method suggested on the plaintiff's behalf, the wages which he might have expected to earn but for the injury may be summarised as follows:

26 September 1982 to 4 March 1984

75 weeks at $285 per week $21,375

5 March 1984 to 24 June 1984
wages paid to Boyle $ 5,831

25 June 1984 to date
100 weeks at $420 per week $42,000
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Total: $69,206
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12. From the total shown in the summary the amount actually earned by the plaintiff over the period may be deducted and the result is put forward as representing to be the plaintiff's loss of earnings to date.

Assumed earnings but for injury, say $70,000

Less total net earnings since injury
including unemployment benefits but
excluding workers' compensation $48,000
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Loss $22,000
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13. An alternative method of assessing past loss of earning capacity which is directed less at mathematical accuracy than at attempting to put a round figure on the loss to date is to regard the plaintiff as totally incapacitated for 6 months immediately after injury and gradually improving until he reached his present condition in June 1984. For reasons set out below, I assess his present and continuing loss of earning capacity as $120 per week. Accordingly, on this broad brush approach the past loss may be calculated as follows:

6 months from 20 September 1982
at $285 per week $ 7,270

March 1983 to June 1984 at $285 per
week, say 60% thereof $11,115

June 1984 to June 1986 @ $120 per week $12,000
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Total loss $30,385

14. With all the above factors in mind I award $25,000 for past loss of earning capacity.

15. As to the future, there are a number of ways of approaching the assessment of the plaintiff's earning capacity. I accept the calculation of Mr. Adriaanse that the plaintiff's present net disposable income per week is $207.55. A simple method of calculating the future loss is to deduct that figure from the average earnings of Boyle calculated when last known at $420 per week. This would yield a figure of $212 per week representing the current and future periodic loss. As I have said, however, Boyle worked remarkable hours in his last few weeks. It was submitted on behalf of the defendant that the sum calculated by Mr. Adriaanse should not be taken as representing the plaintiff's present earning capacity, but that regard should be had to the current award earnings of truck drivers. The range of rates payable under the Transport Workers' (Australian Capital Territory) Award is considerable. The award variation as at 11 December 1975 shows a weekly wage of $257.30 payable to a driver of a motor lorry or van or similar vehicle of one ton weight or under through to a rate of $320.80 per week for the driver of a semi-trailer or similar vehicle of 40 tons weight. I think it reasonable to assess the plaintiff as being capable as working as the driver of a motor lorry or van up to about 10 tons in weight which would command a gross wage of about $250 per week, which is very close to the $207 per week calculated by Mr. Adriaanse as the plaintiff's actual net disposable income. The defendant also urged that I should have regard to award wages rather than the rate paid to Boyle as representing the sort of income that the plaintiff might have expected but for injury. The current award rate is about $360 per week gross for 40 hours per week which would be, I should think, about $300 net per week.

16. Another and simple way of approaching the question is to take the plaintiff's evidence, which I accept, that he uses as a basis for quoting for contracts an hourly rate which is about $3-4 per week less than the hourly rate which is used by his competitors. What happens is that he is able to quote a lower figure in order to successfully tender for the job, but the builders to whom he contracts have to accept that he will be slower in completing the work. Accordingly, if the plaintiff worked a 40 hour week he would receive $120 to $160 gross per week less than his competitors. The plaintiff does not necessarily suffer that loss because he does not restrict himself to 40 hours work per week, but the figures to which I have just referred are a yardstick. It should also be observed that the plaintiff is precluded from the higher paid work of carpenters who are not restricted to interior fixing jobs but who can carry out roofing and general carpentry.

17. It was submitted on behalf of the plaintiff that I should have regard to the earnings of other sub-contractors who were called to give evidence, namely a Mr. Music and the plaintiff's brother. I am not convinced that there is any probative value in seeking to compare the earnings of other sub-contractors. It is well known that those who succeed in the building trades can do well financially. It is equally notorious that many who go into business in the building trades fail, as the bankruptcy lists witness. I think it appropriate to use as a basis for calculating the plaintiff's future loss of earning capacity a sum of $120 net per week. If one applies the 3% discount tables to the periods from now until the time when the plaintiff would turn 60 years of age and 65 years of age, the figures are $104,520 and $120,280 respectively.

18. It was submitted on behalf of the plaintiff that the assessment for future loss of earning capacity should not be reduced for vicissitudes, because it was suggested that the plaintiff might have been very successful as a sub-contractor if he had not been injured. I have already made reference to the possibility of failure in business. I think it appropriate to reduce the figure for future loss of earning capacity for vicissitudes and to round out the result to $100,000.

19. A claim was made for an alleged loss incurred on the completion and sale of a house that the plaintiff had partly erected at the time of injury. I reject the claim. The plaintiff has not shown that a loss in any relevant sense was sustained, or if it was, that it was caused by the injury.

20. I think it appropriate to award $30,000 for pain and suffering and loss of enjoyment of life. I take into account the need to avoid over-lapping of heads of damages. The other components in the award of damages were agreed and damages will in summary be as follows:

Past loss of earning capacity $ 25,000.00

Future loss of earning capacity $100,000.00
Pain and suffering and loss of enjoyment
of life $ 30,000.00

Out-of-pocket expenses $ 3,808.25

Fox v. Wood component $ 1,357.97
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Total: $160,166.22

21. Interest is claimed. I am told that the plaintiff received worker's compensation payments of $10,980.59. If this is deducted from the sum awarded for past loss of earning capacity, the plaintiff may be awarded interest on $14,000. I award interest also on one half of the award for pain and suffering. In each case interest is calculated at 14% per annum and the result reduced by half to allow for the fact that the loss was sustained but not at the beginning of the period but more or less evenly throughout. Interest in respect of past economic loss is $3,675 and on past pain and suffering $3,937. These amounts will be added to the damages. The plaintiff is to have judgment for $167,778.22. I shall hear the parties on costs.