Frank Italiano v Guiseppe Barbaro Sca [1992] ACTSC 39 (30 April 1992)

SUPREME COURT OF THE ACT

FRANK ITALIANO v. GUISEPPE BARBARO
S.C.A. No. 99 of 1991
Appeal from Master - Negligence - Duty of care - Evidence - Damages

COURT

IN THE SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
Miles C.J.(1), Beaumont(1) and Ryan(1) JJ.

CATCHWORDS

Appeal from Master - award of damages for personal injuries.

Negligence - duty of care - special relationships - alleged insurance fraud conspiracy - whether driver owed duty to passenger.

Duty of care - special relationships - onus of proof - sufficiency of evidence.

Negligence - defences - illegality of respondent's activity - whether activity dangerous.

Evidence - similar facts - to prove system.

Evidence - admissibility of circumstantial evidence.

Damages - assessment of damages - discount for existing disabling condition.

Damages - future loss of earning capacity - whether actuary based conclusions on erroneous assumptions - whether Master erred in calculating award.

Damages - measure of damages for pain and suffering and loss of enjoyment of life - assessment of interest on past element of damages.

Gala v. Preston [1991] HCA 18; (1991) 172 CLR 243

Criminal Code (Q)

Smith v. Jenkins [1970] HCA 2; (1970) 119 CLR 397

Martin v. Osborne [1936] HCA 23; (1936) 55 CLR 367

D.F. Lyons Pty. Ltd. v. Commonwealth Bank of Australia (1991) 28 FCR 597

Hoch v. The Queen [1988] HCA 50; (1988) 165 CLR 292

Chordas v. Bryant (Wellington) Pty. Ltd. (1988) 20 FCR 91

MBP (S.A.) Proprietary Limited v. Gogic [1991] HCA 3; (1991) 171 CLR 657

Hallet v. Schoevers (unreported, 5 March 1992, Supreme Court of the ACT)

Protonotarios v. Zapasnik (unreported, 5 March 1992, Supreme Court of the ACT)

HEARING

CANBERRA
30:4:1992

Counsel for the appellant: Mr F. Costigan, QC with Mr J. Hartigan

Solicitors for the appellant: Abbott Tout Russell Kennedy

Counsel for the respondent: Mr T. Bellanto, QC with Ms A. Katzmann

Solicitors for the respondent: Macphillamy Cummins and Gibson

ORDER

THE COURT ORDERS THAT: 1. The appeal against the decision of the Master in favour of the respondent be dismissed.

2. The appeal in respect of the award of damages be allowed.

3. The award of damages by the Master of 1 July 1991 be set aside and in substitution therefor the respondent be at liberty to enter judgment for the sum of $136,816.75.

4. The appellant pay the respondent's costs of the appeal.

DECISION

This is an appeal by Frank Italiano from a judgment of Master Hogan awarding Guiseppe Barbaro an amount of $142,816.74 by way of damages for injuries sustained in a motor vehicle collision on 15 March 1982.

2. The respondent had been a passenger in the rear seat of a car which had collided with a second vehicle when the second vehicle stopped suddenly in front of it. The second vehicle was then being driven either by a Mr Wolfgang Reich or his wife.

3. As a special defence to the respondent's action in negligence, the appellant, through his insurer, contended that any damage sustained by the respondent was caused not by the negligence of the appellant, but by a collision which was deliberately contrived by the appellant with the consent of the respondent. It was further said that the collision was one incident in a wide-ranging series of events forming part of what has loosely been described as a "conspiracy". It was accepted, on behalf of the appellant, that unless he could make good this defence, there was no other defence available to the respondent's claim.

4. For convenience, we shall continue, as the learned Master did, to describe the alleged arrangements as "the conspiracy". The essence of the conspiracy alleged was that claims for damages for physical injuries actually or purportedly sustained in contrived "accidents" involving motor vehicles were made and pursued to judgment or settlement with intent to defraud the relevant third party insurers.

5. The learned Master found that Mr Reich had been involved with a Mr Pangallo in the "staging" of a motor vehicle collision at Queanbeyan in September 1981 in which Mr Pangallo had been a passenger in a car driven by Mr Reich. As a result, Mr Pangallo had made a claim which was settled for a large sum of money. It was also found that Mr Reich and Mr Pangallo came to a further arrangement to "stage" a collision on the evening of 15 March 1982.

6. However, the Master found that the conversation between Pangallo and Reich in which that further arrangement was struck "was made in the context of a discussion about an accident that was to be staged to enable Mr and Mrs Reich to make a claim and that they were to be in the vehicle that would not be in the wrong". The findings in the reasons for judgment then continue:
"For all that the statement demonstrates it could be

that the plaintiff was to be present as driver of the
vehicle that would be in the wrong, or as a mere witness.
It does not demonstrate that it was also a purpose of
staging the accident that the plaintiff would be able to
claim damages also. The most that could be said is that
such an additional purpose would not be inconsistent with
what was said."

7. After reviewing the evidence, the learned Master reached the following conclusions:

"When all the evidence is taken into account, I find
that I am not persuaded that the plaintiff had consented
to be a party to any staged accident, or that he had
conspired with Mr Reich, Mr Pangallo and Mr Italiano to
make a fraudulent claim for damages.
If it were necessary, I would also find that the
accident in which he was injured was not the accident that
Mr Pangallo and Mr Reich were planning to stage in order
that Mr and Mrs Reich would make a fraudulent claim. It
happened unexpectedly while they were returning to the
club to discuss the details of the proposed staged
accident. The negligence of Mr Italiano which gave rise
to his injuries was therefore not a step if Mr Barbaro
had been a party to that purpose."

8. The critical evidence given by Mr Reich which tends to support an inference that the respondent was a party to the conspiracy was that on the evening of the collision Mr and Mrs Reich drove to the vicinity of the Workers' Club where they saw an old Valiant car occupied by Mr Pangallo, the appellant and the respondent. According to Mr Reich, he and Pangallo got out of their respective cars and had a discussion about looking for a place at which to stage the accident, whereupon he, Reich, returned to his car and drove off followed by the Valiant. It was shortly afterwards that the collision occurred.

9. The evidence of both the appellant and the respondent was that they had travelled from Belconnen in a Valiant car which the appellant had bought from Mr Pangallo. The appellant was driving and the respondent was a passenger in the rear seat because, he said, the front near side door had jammed. Both the appellant and the respondent asserted that Mr Pangallo did not travel in the Valiant and was not at the scene of the collision. Both also testified that they were going to the Workers' Club for a drink, and were on their way there when the collision occurred. According to the respondent, he did not know the occupants of the other car.

10. The learned Master did not make an explicit finding of fact in respect of all of the issues on which the evidence which we have just recounted differed so significantly. However, he was "satisfied that in broad outline Mr Reich's evidence should be accepted". The reasoning which led him to prefer Mr Reich's evidence concerning the conspiracy to the denials of it by Mr Pangallo and the appellant is outlined in the following passage:

"Despite Mr Bellanto's (Counsel for the respondent)
criticism of Mr Reich as a perjurer and fraud, I am so
persuaded because I accept his evidence about his
conversion, which explains, as nothing else could, the
evidence that he gave. He had no motive to harm the
plaintiff by giving deliberately false evidence in this
case. Despite the Certificate which was granted he placed
himself in some danger of prosecution by giving the
evidence that he did. Accepting the evidence of his
conversion as I do, I do not accept the denials
of the conspiracy given by Mr Pangallo and Mr Italiano."

11. The Master saw the crucial question for him to resolve as being whether the respondent was a party to the conspiracy. He imputed to the respondent certain false denials but did not regard them as fatal to the plaintiff on the issue of complicity in the conspiracy, saying:

"In cross-examination the plaintiff not only denied any
complicity in any conspiracy, he also denied any knowledge
of who Mr or Mrs Reich were, or even that he was aware
that the defence was going to be based on an allegation of
conspiracy. Those denials about the state of his
knowledge are not credible, in the light of the
interrogatories that were administered to him, and what
his legal advisers must have told him the case was about.
It does not follow, of course, that his denial of
complicity in the conspiracy must also be rejected. In
weighing up that question the following matters seem to me
to be the most significant."

12. Reference was then made to the absence of direct evidence of any conversation between the plaintiff and any of the three men found to be implicated in the conspiracy. It is true, as the Master noted, that Mr Reich gave evidence that Mr Pangallo had told him, Reich, that he had people organized to be in the other car and that two of his, Pangallo's, "partners", the appellant and the respondent, would be involved. However, that evidence is not, of course, admissible against the respondent.

13. Master Hogan then went on to observe:

"While I have accepted Mr Reich's evidence about the
existence of the conspiracy, it does not follow that his
recollection is trustworthy with respect to all the
details of his evidence. In giving his evidence he was
often loquacious and difficult to keep to the point,
whilst being vague and lacking in precision and
particularity. The conversations and details about which
he was testifying had happened over nine years ago.
But even if it were safe to place reliance on the
evidence of that conversation, it must be noted that it
was made in the context of a discussion about an accident
that was to be staged to enable Mr and Mrs Reich to make
a claim, and that they were to be in the vehicle that
would not be in the wrong. For all that the statement
demonstrates, it could be that the plaintiff was to be
present as driver of the vehicle that would be in the
wrong, or as a mere witness. It does not demonstrate that
it was also a purpose of staging the accident that the
plaintiff would be able to claim damages also. The most
that could be said is that such an additional purpose
would not be inconsistent with what was said."

14. That observation seems directed to what the learned Master later identified as the ultimate question to be determined on the issue of liability when he said:

"But to succeed the defence must demonstrate that the
accident that happened was staged, and that he had in fact
agreed to be present during that accident in order to make
a false claim for damages."

15. A basis for rejecting Mr Reich's evidence of the meeting in the vicinity of the Workers' Club and the presence there of Mr Pangallo was indicated in this passage from the reasons for judgment below:

"I also note that what was put to the plaintiff in
cross-examination by senior counsel for the defence was
that Mr Reich would give evidence that he went to the
Workers' Club on that night and met the plaintiff there,
that he met the plaintiff and Mr Frank Pangallo, and that
he then said, or Mr Frank Pangallo said in the
plaintiff's presence, "Now we'll drive around and look for
a suitable spot for the accident".
When Mr Reich came to give evidence, that is not what
he said. His evidence was that there was a discussion
between himself and Mr Pangallo when
they were in the vicinity of the Workers' Club. That
discussion took place outside the cars. The others did
not get out of the cars. The plaintiff was not present.
His understanding was that they were going to decide on
the place for the accident, and then return to the Club to
plan the details. The actual accident happened before
they got to the Club, and while they were driving towards
it."

16. However, the Master did not fix on that discrepancy between the earlier statement, presumably given by Mr Reich to the respondent's legal advisers, and his actual evidence as a ground for expressly rejecting that evidence as far as it tended to establish the meeting in the vicinity of the Workers' Club, or Mr Pangallo's presence there or at the scene of the collision.

17. The next passage in the Master's reasons which bears on the issues of whether there was a meeting in the vicinity of the Workers' Club and whether Mr Pangallo was present there or at the scene of the accident is in these terms:

"His (Reich's) actual evidence was that the white
Valiant appeared to him that it was going to shoot across
his path, and he momentarily braked to avoid a possible
collision with it, and then the car behind hit him.
Asked, "Why did you apply your brakes?", he replied,
"Because it was something that happened fairly
instantaneously and I assumed that he was going to come
across by the motion of the car. He wasn't going very
quickly but he was going further than what I would have
thought would have been somebody that was going to stop".
Mr Reich seems to have thought that the Valiant car in
which the plaintiff was a passenger was Mr Pangallo's and
that Mr Pangallo arrived at the scene of the discussion
in it. It seems clear that, although it had formerly
belonged to Mr Pangallo, it was at the time Mr
Italiano's car, and there is no evidence that Mr Pangallo
travelled in it from the home of the plaintiff's brother
to the scene of the accident."

18. Given the evidence that the Valiant car was registered in the name of Frank Pangallo until 10 March 1982 when it was transferred to the appellant and was later, on 1 April 1982, transferred to John Pangallo, Mr Reich's belief that it was still owned by Frank Pangallo does not make his evidence on what we regard as the important issues less likely to be true.

19. We are not entirely clear about the purpose of the Master's observation that "there is no evidence that Mr Pangallo travelled in it (the Valiant) from the home of the plaintiff's brother to the scene of the accident". That observation is true if it is understood as confined to direct evidence from anybody who saw Mr Pangallo travelling in the Valiant to the scene of the collision. However, Mr Reich gave evidence which the Master summarised as follows:

"On the evening of 12 March (which apparently should
read 15 March) 1982, Mr Reich met Mr Pangallo at about
7.00 pm at his video shop. The arrangement was confirmed
that there was to be a meeting at the Workers' Club. Mr
and Mrs Reich drove off in that direction. Mr Pangallo
drove away in his vehicle, an old Valiant.
In the vicinity of the Workers' Club he saw that
vehicle with three people in it, whom he identified as
Frank Pangallo, Frank Italiano and the plaintiff.
He and Pangallo got out of their car and had a
discussion about looking for a place to stage the
accident. His understanding was that they were going to
decide on the place, and then return to the Club to plan
the details.
He drove off, with the Valiant car following. As he
drove along a street which he did not identify, but which
I took to be Hutton Street, a white Valiant came out of a
car park on his right, appearing to him as if it was going
to cross his path. He braked to avoid a collision, and
the car behind hit him. His car mounted the gutter and
the car behind collided again with the rear of his car.
The police were called. He discovered his licence had
expired. There was a discussion between Pangallo,
Italiano and himself in which it was decided to tell the
police that Mrs Reich had been driving."

20. If that evidence were accepted in the relevant respects, it would provide support for the inference that Mr Pangallo had travelled in the Valiant from the video shop to the vicinity of the Workers' Club and thence to the scene of the collision.

21. A basis for rejecting the respondent's evidence on the significant issues was outlined as follows by the Master:

"The plaintiff's very presence at the scene, his
relationship with Mr Pangallo and Mr Italiano, who were
undoubtedly conspirators, and his unsatisfactory answers
to some of the questions put to him in cross-examination
must give rise to considerable suspicion about his purpose
in being in the defendant's vehicle that night."

22. However, it is only the last of those considerations which can properly be called in aid to impugn the respondent's credit in attempting to resolve the critical conflict between his evidence and that of Mr Reich.

23. If by "the plaintiff's very presence at the scene" the Master was referring only to the respondent's presence at the scene of the collision, that was a neutral fact essential to the respondent's having a cause of action at all. On the other hand, if the reference is to the respondent's presence at the scene of the discussion between Reich and Pangallo in the vicinity of the Workers' Club, it entails an acceptance of Mr Reich's version and a rejection of the respondent's denial that his vehicle stopped near the Workers' Club and that Pangallo was present at all.

24. Likewise, the fact that the respondent was a business and social associate of Mr Pangallo and the appellant does not, of itself, make it more likely than not that he was a participant in what the Master has found to be their conspiracy. It equally supports the innocent explanation which the plaintiff gave that his purpose in being in the appellant's car was to accompany the latter to the Workers' Club for a drink.

25. The absence of an express finding on some of these issues may be attributable to the Master's view that the appellant had to discharge the onus of proof on each of three matters. That view was expressed in the following passage, part of which we have already quoted:

"But to succeed the defence must demonstrate that the
accident that happened was staged, and that he had in fact
agreed to be present during that accident in order to make
a false claim for damages.
A number of common indicators of such a false claim are
absent. He had no pre-existing disabilities to include in
a claim for compensation. He did not exaggerate his
injuries. He made no attempt to suggest that problems
that he had with his lower back were in any way
exacerbated by the accident. He has made genuine efforts
to get back to work. He consulted the same general
practitioner who had been treating him for years. He
insisted on a second opinion before undergoing neck
surgery."

26. The Master concluded:

"When all the evidence is taken into account, I find
that I am not persuaded that the plaintiff had consented
to be a party to any staged accident, or that he had
conspired with Mr Reich, Mr Pangallo and Mr Italiano to
make a fraudulent claim for damages."

The Master went on to say, as has been noted, that:

"If it were necessary, I would also find that the
accident in which he was injured was not the accident that
Mr Pangallo and Mr Reich were planning to stage in order
that Mr and Mrs Reich would make a fraudulent claim. It
happened unexpectedly while they were returning to the
Club to discuss the details of the proposed staged
accident. The negligence of Mr Italiano which gave rise
to his injuries was therefore not a step in the execution
of any common illegal purpose, even if Mr Barbaro had
been a party to that purpose."

27. On behalf of the appellant, reliance is now placed upon the reasoning and decision in Gala v. Preston [1991] HCA 18; (1991) 172 CLR 243 where a passenger in a motor car was injured as a result of the driver's careless driving which they had earlier stolen and were unlawfully using contrary to s.408A of the Criminal Code (Q). It was held that the passenger could not in the circumstances recover damages from the driver.

28. Mason C.J., Deane, Gaudron and McHugh JJ. there stated that the onus of establishing the existence of facts giving rise to a relationship between a driver and a particular passenger of a special kind under which it would be unreasonable to fix the duty of care owed by a driver by reference to the ordinary standard of care lies on the party who asserts it (at 253-4). Their Honours said (at 254):

"When attention is given to the circumstances of the
present case it is difficult to see how they can sustain a
relationship of proximity which would generate a duty of
care. The joint criminal activity involving the theft of
the motor vehicle and its illegal use in the course of a
spontaneously planned 'joy ride' or adventure gave rise to
the only relevant relationship between the parties and
constituted the whole context of the accident. That
criminal activity was, of its nature, fraught with serious
risks. The consumption by the participants, including the
first appellant, of massive amounts of alcohol for many
hours prior to the accident would have affected adversely
the capacity of a driver to handle the motor vehicle
completely."

Their Honours went on to say (at 254):

"..... each of the parties to the enterprise must be
taken to have appreciated that he would be encountering
serious risks in travelling in the stolen vehicle when it
was being driven by persons who had been drinking heavily
and when it could well be the subject of a report to the
police leading possibly to their pursuit and/or their
arrest. In the special and exceptional circumstances that
prevailed, the participants could not have had any
reasonable basis for expecting that a driver of the
vehicle would drive it according to ordinary standards of
competence and care."

29. The other members of the High Court agreed that, in the circumstances, the passenger could not recover but gave reasons for this conclusion which differed from the reasoning of Mason C.J., Deane, Gaudron and McHugh JJ. Brennan J., following Smith v. Jenkins [1970] HCA 2; (1970) 119 CLR 397, said (at 273) that the "normative influence of s.408A would be destroyed by admitting a duty of care." Dawson J. said (at 277) that, in the circumstances, "as a matter of policy the law refuses to erect a duty of care ..... the policy being the refusal of the law to condone the commission of a criminal offence by granting a civil remedy." Toohey J., also following Smith v. Jenkins, held (at 292) that a duty of care did not exist, "not because of the difficulty of defining a standard of care but because of the participation by the parties in the criminal activity which resulted in the injury."

30. In our opinion, for present purposes, this Court is bound by the reasoning of the majority, Mason C.J., Deane, Gaudron and McHugh JJ., in Gala. It must follow that the appellant bore the onus of establishing the existence of facts giving rise to a relationship between the appellant as driver and the respondent as passenger of a special kind.

31. In our view, the appellant failed to discharge this onus. Although the facts of the case are complicated and, in some respects, still uncertain, it is common ground that the respondent's injuries were suffered when an unexpected and genuine accident occurred, that is, the collision which happened was not the contrived event that was the subject of the conspiracy alleged. It is the appellant's case that the respondent was injured when the parties concerned were driving around looking for a suitable site at which to stage the collision. The incident which in fact occurred did not arise out of circumstances, such as those found in Gala, where it could be said that the criminal activities, in the course of which damage was suffered, were by their nature "fraught with serious risk". On the contrary, in the present case, the accident occurred in ordinary circumstances in terms of traffic and driving conditions. Applying the reasoning of the majority in Gala, the fact that the injuries may have been sustained in the course of preparing for the subsequent execution of an alleged illegal scheme is only of significance for present purposes if the activity, in the course of which damage is sustained, is dangerous in itself. This cannot be said of the present accident. It is not even suggested that the attention of the appellant as driver was distracted by looking for a suitable site to locate the "collision". In our view, it is a case which, in principle, gives rise to the ordinary relationship of driver and passenger.

32. Of course, if instead of what in fact happened here, the respondent's injuries had been sustained in the course of the planned "collision", the holding of all of the members of the High Court in Gala would have led, albeit for different reasons, to the conclusion that no duty of care existed.

33. It follows, in our opinion, that even if it be assumed, for the sake of the argument and without deciding the point, that the respondent had been a party to the conspiracy alleged, in the circumstances in which the collision actually occurred, the appellant owed the respondent the ordinary duty of care. This conclusion must, we think, follow from the majority reasoning in Gala, even if the reasoning of the other members of the High Court might have led to a different result given the assumption we have made. That being so, the challenge to the conclusion that the appellant was liable to the respondent in negligence must fail.

34. The appellant sought at the trial to tender a substantial body of evidence to the effect that parties, with whom the respondent was said to be associated, had conspired to stage many collisions so that significant numbers of claims for compensation could be made. Master Hogan rejected this evidence on the ground that it had not been shown that the respondent had been a party to, or in any way connected with, the earlier incidents.

35. The appellant now seeks to challenge this ruling on two grounds. First, it is said that the material in question was admissible for the same reason that, in some circumstances, "similar fact" evidence can be received, that is, because it "allows for the admeasuring of the probability or improbability of the fact or event in issue" (see Martin v. Osborne [1936] HCA 23; (1936) 55 CLR 367 per Dixon J. at 375 and per Evatt J. at 385; Hoch v. The Queen [1988] HCA 50; (1988) 165 CLR 292 per Mason C.J., Wilson and Gaudron JJ. at 294-5; D.F. Lyons Pty. Ltd. v. Commonwealth Bank of Australia (1991) 28 FCR 597 per Gummow J. at 603-4). As Mason C.J., Wilson and Gaudron JJ. pointed out in Hoch (at 294):

"The basis for the admission of similar fact evidence
lies in its possessing a particular probative value or
cogency by reason that it reveals a pattern of activity
such that, if accepted, it bears no reasonable explanation
other than the inculpation of the accused person in the
offence charged....."

36. It is further contended, on behalf of the appellant, that the evidence in question should have been received because it was circumstantial material from which may be inferred the involvement of the respondent in the conspiracy in respect of the collision the subject of these proceedings.

37. In our opinion, there is force in the submission of the respondent that merely circumstantial evidence of this kind was inadmissible. As has been said, it is not suggested that the respondent was a party to what are said to be the earlier conspiracies; and the fact that the respondent had business, family or social connections with the persons who are claimed to have been parties to the previous arrangements may not amount to material from which an inference could properly be drawn that the respondent was a party to the several dealings which are claimed to have taken place earlier. It may be that the evidence was too remote, that is, too removed from the respondent, to be received upon the footing that an inference concerning his participation in the present incident should be drawn, bearing in mind the serious nature of the allegation. This is not to say that material could not be received for the different purpose of putting direct evidence of the event in question in its proper context. Having regard to the conclusion we have reached with respect to the relevant duty of care owed by the appellant to the respondent in the circumstances we have been prepared now to assume in favour of the appellant, it is not necessary for us to express a concluded view on the admissibility of any of this material whether circumstantial or direct. As we have already said, we are prepared to assume, without deciding, that the respondent was a party to the conspiracy alleged. Even on that assumption, we are of the view that the appellant owed the ordinary duty of care in the particular circumstances in which this accident is said by the appellant to have occurred.

38. It follows that, on the issue of liability, the appeal fails.

39. The appellant also appeals against the Master's award of damages on the ground that some components of the award were excessive.

40. The plaintiff was born in Italy in November 1941, and was educated to primary school level. He was engaged in general farming work there and came to Australia in 1962. Thereafter he worked for several years in various semi-skilled positions in the building trades, and ultimately took up painting. At first he was in partnership with his brother, Saverio, under the name of G and S Painters, but in 1978 his brother retired from the partnership and the plaintiff and his wife carried on the business. His wife's role appears to have been nominal only. She retired from the partnership and took up full-time employment elsewhere shortly prior to the plaintiff's injury in March 1982. In the two years or so before his injury, the plaintiff had an arrangement with several other self-employed painters. One or more of them would tender for government painting contracts, and the successful tenderer would then engage the others as sub-contractors to help complete the work contracted for. In this way the turnover of the plaintiff's business greatly increased, but so did the expenses. The arrangement continued after the plaintiff's injury until the business was eventually terminated in October 1985. The plaintiff himself gave up painting altogether following an operation in 1984, and his income from the business declined markedly after that, so that it was running at a loss in its final year.

41. The plaintiff's injury was brought about by whiplash trauma to the cervical spine which either caused or aggravated a cervical disc lesion. The plaintiff continued to work with increasing difficulty and pain in the neck, shoulders and arms over the two years or so following the injury. He lost about a month or so from his work shortly after his injury and thereafter continued with conservative treatment. He worked at about half his pre-injury capacity. In July 1983 a myelogram confirmed the disc protrusion. A cervical fusion performed by Dr Newcombe in July 1984 relieved the pain in the arms but left the plaintiff with residual neck and shoulder pain. For the next three or four years the plaintiff appears to have done very little work, although it is likely that he worked from time to time for one or other of his brothers. When referred by Dr Newcombe to Dr Corry, a specialist in rehabilitation medicine, in February 1985, the plaintiff responded positively to the rehabilitation programme that was set for him. He made successful efforts to improve his English. He attended a training programme at the National Botanical Gardens which led to a position as a gardener employed full-time with the Royal Australian Navy at the Harman Base. The plaintiff was still working there at the time of the hearing and, according to all the evidence, was coping well, although he found difficulty with some of the heavier tasks. The medical evidence clearly supported the Master's conclusion that the plaintiff remained permanently unfit for work as a painter but continued to be fit for the sort of work he was doing as a gardener. In 1990 the plaintiff had spent some time whilst on holidays to assist his brother in a painting job and found that he could not continue because of the pain.

42. The Master also accepted medical evidence from psychiatrists that the plaintiff had suffered considerably from depression and anxiety over the years following the operation and until the plaintiff started to work full-time again. The Master thought that after the resolution of litigation there would be very few psychiatric symptoms, and again the Master was entitled to come to that conclusion.

43. In general terms it was submitted on behalf of the appellant that the Master failed to take into account the plaintiff's medical history before his injury. In particular it was submitted that the Master had ignored the fact that the plaintiff had from time to time suffered from carpal tunnel syndrome in both wrists and had failed to give proper weight to the degenerative condition in the plaintiff's cervical spine which was advanced at the time of injury. However, it is clear from the Master's reasons for his decision that he took both factors into consideration. Both factors required that the award for loss of earning capacity and also the award for general damages be discounted for the contingency that the plaintiff may have been disabled by one or both of these conditions without the injury for which he sued. However, there was no evidence that the carpal tunnel syndrome would ever have become completely disabling, although it is likely that it would have been a source of trouble from time to time if the plaintiff had continued to work in his occupation as a painter. The degenerative condition of cervical spondylosis which was present in the plaintiff's spine at the time of injury may have caused him to lose time from work or even to cease working altogether in the absence of the subject injury, but the latter possibility was not a strong one. In any event, the Master took it into account to the extent that he found that the spondylosis would have been more likely to cause him symptoms before age 65 if he had continued to work as a painter.

44. The submissions on behalf of the appellant were directed particularly at the award for pain and suffering and loss of enjoyment of life (together with the award of interest on the past component thereof) and the award for loss of earning capacity both past and future. With respect to the award for pain and suffering and loss of enjoyment of life, the Master divided it into $32,000 for the past and $5,000 for the future. The assessment under this head is largely discretionary. It cannot be said that the Master was in error in his assessment. The plaintiff was aged 40 at the time of his injury and nearly ten years had lapsed from then until the time of hearing. That period is well documented by medical reports. The plaintiff had submitted to a myelogram, a discogram and ultimately to the spinal fusion in mid-1984. He had remained more or less out of work for some years thereafter, until he responded positively to the rehabilitation programme set by Dr Corry. There was, as the Master found, a substantial psychological element in his condition in the earlier years which was resolving well at the time of the hearing. Although there is a marked difference between the past component of the award compared with the future component, the Master had the advantage of seeing the plaintiff and making his assessment of him as a person, a matter of distinct importance when considering whether this Court ought to interfere: see Chordas v. Bryant (Wellington) Pty. Ltd. (1988) 20 FCR 91 at 99-100. The total award for pain and suffering and loss of enjoyment of life of $37,000 has not been shown to be excessive in the circumstances and in the light of the evidence and the Master's findings.

45. In relation to the award for future loss of earning capacity, the Master had before him the evidence of the plaintiff's tax returns for the years 1977/78 to 1989/90 and a lengthy report from an actuary. The actuary arrived at the conclusion that the plaintiff's loss of earnings after tax from the time of injury until 9 July 1990 was $41,339. The conclusion was based on a number of assumptions, including the figures set out in the various tax returns. The actuary appears to have approached the question of assessment of past loss of earning capacity by seeking to compare the plaintiff's actual earnings since injury with expected earnings but for injury. As a matter of principle that was a convenient and conventional method of approach. However, in the calculation of both actual and expected or hypothetical earnings, the actuary's conclusions are open to question, because they are based on figures which reflect the whole of the plaintiff's income for the years in question. That income included not only his earnings from his painting business but his earnings from investments and in particular from an investment partnership with a man called Madefarri. The investment partnership lasted from 1979 to 1985. In the first two years of the period it made a loss, and in the other years it made a profit, sometimes nearly as much as the plaintiff's net earnings from his painting business. The actuary's conclusions assume that the plaintiff's income earning capacity is reflected in his total earnings, including the profit, or loss, from the Madefarri partnership. It was submitted on behalf of the appellant that the assumption is incorrect, and we accept that submission. What is in question is the plaintiff's capacity to earn income from personal exertion. The actuary should have excluded the Madefarri profit, or loss, from consideration. Insofar as the actuary based his conclusions, first, on the average income declared by the plaintiff for the period 1977/78 to the date of injury and, second, on the whole of the plaintiff's declared income, including investment income, from the date of injury to 9 July 1990, the figures are too high. Unfortunately, that observation does not mean that we are in a position to determine with ease or exactitude what the correct figures were.

46. It was also submitted for other reasons that the actuary was in error in his calculation of the plaintiff's earnings as a painter for the tax year 1981/82. The actuary assumed that the plaintiff's income from painting was earned over the eight and a half months of the tax year which preceded the injury. The plaintiff's evidence was, however, that he had gone back to work about a month or so after his injury and continued to work at about half his pre-injury rate. It was submitted on behalf of the appellant that the actuary should have taken into account that the plaintiff's earnings from painting extended over a period longer than eight and a half months during the tax year 1981/82 and that his pre-injury earnings from painting in the tax year were less than what is shown in the tax return. Again, the submission, so far as it goes, is well founded.

47. However, in relation to both these aspects of the case, the submissions on behalf of the appellant fell short of any positive suggestion about what effect the false assumptions of the actuary had on the final figures, or about any alternative approach which would result in a more accurate reflection of the true value of the plaintiff's loss of earning capacity.

48. It is possible, in the terms of the actuary, to "annualise" the plaintiff's earnings from painting by taking the average over the period 1977/78 to 1981/82 and adjusting them for each subsequent year by the CPI index. Assuming that he worked about ten effective months for the whole year in 1981/82 and assuming further that his actual net earnings from painting were, as his tax returns show, just under $4,000 for the year, or $400 per month, his earnings from painting from the commencement of the tax year 1981/82 until the date of injury would have been about $3,400. The average for the tax years 1977/78 to 1981/82 may therefore be calculated as follows:

1977/78 $15,169
1978/79 $11,604
1979/80 $12,852
1980/81 $15,806
1981/82 $ 3,400
Total: $58,831
Average $11,766 per annum.

49. It must be remembered that these are figures before tax. The after tax average (assuming no other income) would have been about $10,000. The actuary arrived at average pre-injury earnings of $12,206 per annum after tax, without stating what the figure was before tax. The actuary appears therefore to have overstated the basis for "annualised" expected earnings after tax by a factor of about one fifth of the true figure. He arrived at a total figure after tax for those expected earnings but for injury of $119,847 over the whole of the period from the date of injury to 9 July 1990. If that figure is adjusted for the error, a figure of about $100,000 is arrived at which, on this method of approach, reflects the value of the plaintiff's earning capacity had he not been injured taken over the whole of the period.

50. In assessing the value of the plaintiff's actual earning capacity following injury, the actuary made an over-estimation by wrongly including income from the Madefarri partnership (although he correctly excluded investment income from an undisclosed source for the tax year 1986/87, the plaintiff's only income in that year). The plaintiff's actual pre-tax income from painting and gardening from the time of injury until 31 June 1990 as shown on his tax returns, was as follows:

1981/82 (estimated) $ 800.00
1982/83 $ 5,339.00
1983/84 $ 6,849.00
1984/85 $ 3,280.00
1985/86 (loss) ($ 674.00)
1986/87 Nil
1987/88 $ 6,092.00
1988/89 $17,975.00
1989/90 $20,410.00
Total: $60,071.00

51. This gives an average of about $6,000 per annum, a figure so low that little tax, if any, would have been payable on it. It may be taken therefore to represent both the pre-tax and post-tax figures.

52. By using this last method of calculation (which relies simply on the plaintiff's tax returns), a loss to the plaintiff may be shown of about $40,000 after tax over the whole of the period ($100,000 less $60,071). There is no practical difference between this and the actuary's figure of $41,339. Probably the method just used overestimates the plaintiff's loss somewhat because according to his own evidence, he was able to work from time to time in the tax years 1985/86 to 1987/88, although his tax returns show no income from painting during those years. What the exercise demonstrates is that if one tries to adjust the figures to make allowance for the actuary's incorrect assumptions, the result is that the plaintiff's true loss does not appear to be substantially different from what the Master allowed for.

53. The Master appears to have accepted or at least to have noted without rejection, the actuary's under-estimated figure of $41,339 for total past loss of earning capacity. Having noted that figure, the Master then said that "as a matter of judgment" he would award $35,000 for past loss of income. As the actuary's figure for past loss went only to 9 July 1990, and as the Master's judgment was handed down on 1 July 1991, the award for past loss represented a substantial reduction on the calculation made by the actuary. It resulted in an average during the total period of over nine years and three months of about $3,780 a year, or slightly less than $73 per week. There is no reason to doubt that the Master recognized that his award for loss of past earning capacity had this effect. So expressed, the award does not appear to us to be on the face of it excessive having regard to the rest of the evidence and to the Master's findings.

54. As to the future, the Master accepted, as he was entitled to do, that the plaintiff was likely to continue in his employment as a gardener with the Commonwealth. The Master appears to have accepted, in the absence of any reason to do otherwise, the actuary's calculations of the difference between the plaintiff's hypothetical earnings and actual earnings, since taking up employment as a gardener. The difference was in the tax year 1988/89 $2,570 and in the tax year 1989/90 $2,956. As already indicated, the assumptions upon which the actuary calculated the value of the plaintiff's capacity to earn income as a painter were misconceived. On the other hand, the Master, acting as a tribunal of fact, was entitled to take into account his own knowledge of wage rates and industrial conditions in the Australian Capital Territory. Whilst it might have been of assistance in the assessment of the value of loss of earning capacity if either party had taken the simple step of tendering schedules of local rates of pay for painters and gardeners, this was not done, and the Master was left to do the best he could with the actuary's report and the rest of the evidence. Clearly, the actuary's conclusion that the difference of about $50 to $60 per week between the plaintiff's actual earnings and likely earnings in the last two complete years in which he had worked as a gardener did not strike the Master as being inconsistent with any impression he had of the value of the plaintiff's continuing loss of earning capacity. The Master expressly and correctly observed that the simple difference between projected earnings and the present rate of the plaintiff's pay was not necessarily a true measure, having regard in particular to the plaintiff's present secure employment compared with his former lack of security as a self-employed painter. The Master took into consideration the present value of a loss of $50 per week for ten years and fifteen years respectively, discounted at a rate of 3 per cent per annum, and similarly a loss of $55 per week for the same periods. He then decided that "as a matter of judgment" he would award $25,000 for loss of future earning capacity. As it happened, the award is almost exactly equivalent to the value of $55 per week for ten years, bringing the plaintiff to age 59 years, but it is clear that the Master was not committing himself to arithmetical exactitude. The exercise in judgment was to select one figure which was more or less in the middle of several figures, any of which were within the range of a reasonable fact-finding tribunal. The discretionary nature of the selection of one figure within the range was emphasised by the Master's declining to reduce the figure selected by any further discounting factor in order to take into account the so-called "vicissitudes of life". No error has been demonstrated in the Master's award for future loss of earning capacity.

55. Lastly, the appellant challenges the award of interest on the past element of damages for pain and suffering and loss of enjoyment of life. The Master calculated the interest at 4 per cent per annum. It has been held by a Bench of three Judges of this Court that, unless the circumstances require otherwise, the usual appropriate method for awarding interest on this component of damages for personal injuries is to apply a rate of 4 percent per annum (see MBP (S.A.) Proprietary Limited v. Gogic [1991] HCA 3; (1991) 171 CLR 657) to one half of the component, upon the assumption that the loss accrues more or less evenly throughout the period: Hallet v. Schoevers (unreported, 5 March 1992), Protonotarios v. Zapasnik (unreported, 5 March 1992). Counsel for the respondent did not put any submission to the contrary.

56. Accordingly, the award for interest on this component of the damages is to be halved and reduced from $12,000 to $6,000. The appeal will be allowed in order to reflect that reduction.

57. The order of the Court is: the appeal against the decision of the Master in favour of the respondent be dismissed, the appeal in respect of the award of damages be allowed, the award of damages by the Master of 1 July 1991 be set aside and in substitution therefor the respondent be at liberty to enter judgment for the sum of $136,816.75. In the circumstances, the appellant is to pay the respondent's costs of the appeal.