Michael Trevor O'Connor v Conka Stavreski [1992] ACTSC 66; (1992) 108 FLR 35 (2 July 1992)

SUPREME COURT OF THE ACT

MICHAEL TREVOR O'CONNOR v. CONKA STAVRESKI
No. SC 18 of 1991
Appeal from Magistrate - Cross-appeal
[1992] ACTSC 66; (1992) 108 FLR 35

COURT

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

CATCHWORDS

Appeal from Magistrate - appeal by way of rehearing against award of interest on damages - interference with discretion of Magistrate - injustice - wrong principle.

Magistrates Courts - practice - discretionary power to award interest - general principles - whether dissection between past and future non-economic loss necessary for calculation of interest - applicability of commercial rates of interest to past non-economic loss - award of interest on out-of-pocket expenses and damages for future loss.

Cross-appeal - inadequacy of damages - interference with discretion of Magistrate - general principles.

Magistrates Court (Civil Jurisdiction) Act 1982

Lock v. Gordon (1966) VR 185, O'Bryan J.

Gamser v. The Nominal Defendant [1977] HCA 7; (1977) 136 CLR 145

Moore v. The Canberra Dutch Club Incorporated (unreported, Supreme Court of the ACT, 26 September 1991)

Cullen v. Trappell [1980] HCA 10; (1980) 146 CLR 1 at 17

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

Duralla Pty Ltd v. Plant [1984] FCA 146; (1984) 54 ALR 29

Petreski v. Cargill (1988) 79 ALR 235

HEARING

CANBERRA
2:7:1992

Counsel for the appellant: Mr C. Whitelaw

Solicitors for the appellant: Crossin Power Haslem

Counsel for the respondent: Mr G. Lunney

Solicitors for the respondent: Barker and Barker

ORDER

THE COURT ORDERS THAT:

1. The appeal be upheld and the judgment and orders of the

Magistrate of 8 February 1991 and 23 February 1991 be set aside and in lieu thereof there be judgment for the respondent in the sum of $19,661.82.

2. The cross-appeal be dismissed.

3. The appellant pay the respondent's costs in the Magistrates Court.

4. Each party pay his and her own costs of the appeal.

DECISION

The respondent sued the appellant in the Magistrates Court for damages for personal injuries sustained in a motor vehicle collision on 23 June 1985. She obtained interlocutory judgment on 17 August 1990. The proceedings were continued "for the purpose of the assessment of the amount to be recovered" pursuant to sub-s.39(2) of the Magistrates Court (Civil Jurisdiction) Act 1982 (the Act). Magistrate Ward heard evidence on 4 February 1991 and handed down his decision on 8 February 1991. He assessed the respondent's total damages at $16,661.82. Judgment was entered formally in the following terms:

"1. It is this day ordered that judgment be entered for the
plaintiff against the defendant in the sum of $16,661.82 plus costs
to be taxed.
2. Defendant to pay interest at the prescribed rate from 23 June
1985 to date.
3. That no interest be added to the judgment debt if paid in
full within 28 days."

2. On 23 February 1991 the matter was listed before the Magistrate. The respondent's solicitor said that he was there for interpretation of the order as it related to the prescribed rate of interest. The solicitor handed up a calculation of the interest at the rates prescribed under sub-s.227B(2) of the Act. The solicitor for the appellant submitted that there was no prescribed rate under s.227A and that the two sections did not "connect". The Magistrate responded by holding in effect that he was functus officio ("I can't go back on what I've ordered"). He rejected a submission that pursuant to the slip rule he could correct what he had previously ordered and he further ordered that the interest awarded on 8 February 1991 be fixed at $17,568.51, the figure which had been calculated by the respondent's solicitor. There appears to have been no dispute that that amount was correctly calculated as a matter of arithmetic on applying the rates prescribed from time to time pursuant to sub-s.227B(2) of the Act. The Magistrate further ordered the appellant to pay the costs of the hearing on 23 February 1991.

3. On 26 February 1991 the appellant filed a notice of appeal in this Court against the Magistrate's decision of 8 February 1991. The grounds of appeal, paraphrased by me, were that the Magistrate was wrong in the following respects:-

1. The order to pay interest was contrary to paragraphs
227A(1)(a) and (b) and sub-s.227A(4) of the Act and "contrary to
correct principles".
2. The order that interest be paid at "the prescribed rate" was
contrary to sub-s.227A(1) and s.227B of the Act.
3. The method of calculation of interest was manifestly wrong and unjust
4. The amount of interest calculated was manifestly excessive, wrong
and unjust.

4. On 18 July 1991 the respondent filed a notice of intention, which is in the nature of a notice of cross-appeal, appealing against the inadequacy of the damages awarded.

5. The Magistrate's reasons for judgment on the questions of damages and interest read as follows:

"The particulars of claim specify the plaintiff's injuries as
follows: shock, whiplash injury to the neck, blow to the right
frontal region of the head, severe bruising and injury to the right
wrist, grazes and bruises to the knees. The plaintiff was off work
for one week as a result of the injuries, but complains to this day
of sequelae to the accident involving pain in the wrist, neck and
headaches. She had to change jobs as a result. Her present
employer is more tolerant. Dr Chandran in his report dated 30
November 1990, thought the symptoms may persist for three or four
years.
In my opinion, the injuries and their results merit an award of
$15,000.00 by way of general damages. I have included an amount in
the general damages for loss of sick leave, and the possibility of
future economic loss. Special damages have been agreed at
$1,661.82."

6. At the outset it must be acknowledged that there is a question whether these remarks constitute reasons for judgment.

7. In Lock v. Gordon (1966) VR 185, O'Bryan J. said at 187:

"It has been said over and over again that it is the duty of a
magistrate or a judge who is adjudicating on facts to state his
reasons for arriving at the conclusions to which he comes. I am
quite unable sitting here as a court of appeal to say whether this
magistrate did or did not fall into error in making the
determination which he did ... It is entirely unsatisfactory not to
have reasons for judgment..."

8. In Gamser v. The Nominal Defendant [1977] HCA 7; (1977) 136 CLR 145 at 149, Stephen J. said:

"... so long as awards of damages for personal injuries are to
be assessed ... by judges ... with the accompanying advantage of the
existence of stated reasons, those reasons should condescend to some
degree of particularity concerning the process by which the
particular award of damages has been arrived at.
... if an award is to be the result of a process of reasoning, often
quite complex, that process should be exposed, both for the
satisfaction of the parties and for the enlightenment of appellate
courts should there be an appeal."

9. I find myself in a similar position in that the expressed reasons do not expose the process by which the award of damages was arrived at. However, the point has not been the subject of a ground of appeal or of cross-appeal and I propose to say nothing further about it.

10. Another unsatisfactory feature of the appeal is that although this Court is bound to have regard to the evidence before the Magistrate (s.282G of the Act), that evidence has not been placed before me. It appears that a transcript of evidence taken before another Magistrate on 25 May 1987 has been substituted in error. The cross-appeal was the subject of written submissions, and it is unfortunate that at the hearing it was not noticed that the references in the written submissions did not match the transcript which had been placed in the file. In order to avoid further costs to the parties and to the public, I decided not to re-list the matter in order to put these matters right. Instead, I arranged for a copy of the transcript of the proceedings on 4 February 1991 to be obtained from the Magistrates Court and I have considered the submissions in the light of that transcript.

11. It is appropriate to consider first the respondent's challenge to the adequacy of the damages awarded.

12. The respondent gave evidence that in the collision she hit her head, knees, right hand and wrist. She said that she lost consciousness but she apparently remembered being taken to hospital. She was discharged after, at most, a few hours. She was off work for a week. Six months later she returned to hospital, so she said, complaining about the hand, right shoulder, headaches and knees, in particular the right knee. The hospital records do not support that contention. She said that the headaches continued, frequently at a low intensity and severely two or three times a week. She had treatment from her local doctor, Dr Niewiadomski, with physiotherapy and medication. She was referred to Dr Andrews. Upon her return to work at Royal Canberra Hospital, she had pain in the neck when operating a polishing machine. She changed to a job as a seamstress in the sewing room of the hospital. She complained of continuing neck pain and persisting headaches requiring darkening of the room and the taking of tablets three times a week. She claimed she "can't stay at work" about once a fortnight. She claimed that pain in the wrist stops her from doing heavy housework and interferes with her work at the hospital when she uses scissors. Her husband is in the cleaning business and she helps him, light duties only, for a few hours most week nights. Their sons also help. It sounds like a family business. She said that she continued to see Dr Niewiadomski two or three times a month for her troubles, but she does not claim great sums by way of expenses as she uses her Medicare card.

13. In cross-examination the respondent appeared to concede that she had taken time off from work for a corneal abrasion in April 1986 and two days for a reaction to a tetanus injection in September 1986, but had not otherwise applied for sick leave since the injury.

14. The respondent's husband gave evidence of her complaints which was supportive of her case. He added that she exhibited signs of nervousness. Cross-examination on behalf of the appellant elevated the symptoms to a change of personality.

15. No medical evidence was called but some reports were tendered. Several appear to have come from the file of Dr Niewiadomski. Dr Niewiadomski's own contemporaneous notes are almost illegible. They are on two pages. I deal with the first page. There is no record of any visit to any doctor in 1985. The only record for 1986 states "Allergic to tetanus (hospital)". There are two entries for 1987. One dated 7 May 1987 states "car accident 4-5.05.87". The other states, "There are old injuries caused by car accident 23.6.85 front seat passenger head on accident". There are two entries for 1990. They appear to note prescriptions for medication for pain-killers and sedatives.

16. The second page of Dr Niewiadomski's notes begins with an entry dated 1.9.87 which refers to injury to "R. forehead, whiplash injury". When I read the rest of the entries on this page it made me doubt whether it was about the respondent at all. I then looked carefully at the top of the page and deciphered the words "Varelas Kate", those words being crossed out. I do not know what weight the Magistrate put on this piece of paper but as far as I am concerned it is worthless.

17. Hospital records suggest that the injury to the respondent was to her right wrist with grazes to both knees. There were three return visits with no complaints of neck pain or headaches.

18. In early 1988 after the respondent was referred to Dr Andrews and he found no abnormal signs on x-ray, he referred her for physiotherapy and to Dr Chandran, apparently for a second opinion. There are two reports from Dr Chandran to Dr Niewiadomski. The first, of 25 February 1988, records complaints of neck pain mainly in the right side of the neck, seeming to radiate into the right arm, with tenderness over the low facet joint. Dr Chandran arranged a facet block injection which at review on 1 June 1988 had not improved the symptoms. The respondent rejected any suggestion of surgery at that stage, the significance of which is, I think, that it indicated that the pain was not of great intensity.

19. Dr Lieu's report to Dr Niewiadomski of 14 December 1989 stated that, after acupuncture and other alternative therapy, the neck pain and headaches were much relieved.

20. There are other medical reports which were sent to the respondent's solicitors. Dr Niewiadomski in a report of 29 May 1989, considered that she suffered a severe whiplash injury with longstanding pain in the neck and right "upper extremity" and chronic post-traumatic headache. The report has to be read in the light of the paucity of contemporaneous notes.

21. Dr Andrews, on 30 November 1987, found it "difficult to know what is happening in her cervical spine and why she is having these migraine headaches".

22. The history given to Dr Chandran both on referral from Dr Niewiadomski, and from the respondent's solicitors on 24 November 1990, seems to have been that the respondent suffered continuing symptoms from the time of injury. As vascular headaches are "well known to ensue after neck injuries", Dr Chandran thought that they were likely to persist for three or four years.

23. The Magistrate was in a better position to judge the respondent as he saw her both as a witness and a person claiming to be still affected by the sequelae of the injury nearly six years before. The transcript of evidence reads as though the respondent and her husband may have been exaggerating her symptoms somewhat, and I expect that the Magistrate would have come to the conclusion that there was some such exaggeration. The hospital records do not assist the respondent on the nature of her symptoms. The notes of Dr Niewiadomski do not assist the respondent on the frequency of her visits and the extent of her symptoms. The Magistrate would have been entitled, if not compelled, to come to the conclusion that if there were any residual symptoms as at the date of hearing, they were likely to be slight, and, after the hearing, minimal. He was also entitled to regard the causal relationship between the injury and any such symptoms as tenuous. It is unfortunate that he did not say so.

24. The grounds for interfering on appeal with an assessment of damages are well known and should not have to be spelled out in every appeal. The respondent referred to the decision of Cirjac v. Beggs (unreported, 20 June 1991, Full Court of the Federal Court of Australia) in which it was said:

"The grounds on which an appellate court may interfere with a
trial judge's award of damages were discussed in cases such as
Miller v. Jennings [1954] HCA 65; (1954) 92 CLR 190, Precision Plastics Pty.
Limited v. Demir [1975] HCA 27; (1975) 132 CLR 362 and Gamser v. Nominal Defendant
[1977] HCA 7; (1977) 136 CLR 145. For present purposes, it is sufficient to note
that an award of damages is a discretionary or value judgment and
that an appellate court should not interfere unless satisfied that
the judge proceeded on a wrong principle of law or that his
assessment of damages was wholly erroneous. In considering the last
issue, an appellate court may examine the individual items making up
the total award of damages but nevertheless must apply the test to
the ultimate award."

25. The respondent also relied on my own decision in Moore v. The Canberra Dutch Club Incorporated (unreported, 26 September 1991), where I remarked that the Federal Court had set something of a benchmark for general damages in awarding $40,000 to Mr Cirjac, a 61 year old man who had suffered soft tissue cervical damage in a whiplash type injury with the major consequence being considerable loss of self-esteem. Having seen Mr Cirjac and Mr Moore, I thought that Mr Moore should be awarded considerably more than Mr Cirjac for his general damages, mainly because he probably had twice as many years of pain and suffering ahead of him, although a countervailing factor was that he did not feel as sorry for himself as did Mr Cirjac. In both those cases the plaintiffs had suffered substantial loss of earning capacity both past and future. There is no real basis for comparison of those cases with that of the present respondent who lost not much more than a week from work and who continues to hold down a full-time job as a seamstress as well as working part-time in her husband's business. On my own view of the evidence in the present matter, I am not at all convinced that an award of $15,000 was inadequate to cover loss of earning capacity past and future as well as general damages past and future. I am not sure why there should have been any award at all for loss of sick leave. There was no evidence that the respondent forfeited any sick leave as a result of her injury. I do not know why she would have done so. She used up sick leave entitlements of $332.66 (before tax) for the six days lost from work immediately after her injury. Her employer disclaimed any reimbursement of sick leave in the event of her recovering damages. I was told that there was a claim for $2,574.16 for loss of sick leave set out in a document marked for identification. In my opinion, the document has no evidentiary value.

26. In short, the respondent would have to be regarded as a person who had suffered a minor to moderate injury to her right wrist, neck and upper body in mid-1985, the consequences of which had largely resolved about four years later, but which persisted at a very low degree of severity until the date of hearing and were not shown as likely to persist for very long thereafter. The bulk of the award would have to be for general pain and suffering in the past and $15,000 was not at all unreasonable to award for all heads of damage apart from out-of-pocket expenses. The notice of intention to challenge the award of damages will be dismissed.

27. I deal now with the grounds of appeal.

28. The first ground of appeal is that it was inappropriate to award interest on the whole of the damages awarded from 23 June 1985 to the date of the Magistrate's decision because the damages included unquantified components for loss of sick leave and the possibility of future economic loss. That the award of damages did include such components is clear because the Magistrate said so.

29. The discretionary power to award interest, although provided for by statute, must be exercised according to legal principle: Cullen v. Trappell [1980] HCA 10; (1980) 146 CLR 1 at 17, per Gibbs J., as he then was. In that case Gibbs J., with whom the rest of the Justices in the majority agreed on the point, said, after reviewing the authorities, that in general, the distinction between detrimental consequences already suffered and those to be suffered in the future should be regarded by a judge exercising the discretion to award interest both on damages for economic loss and damages for non-economic loss. Where a decision is made to exercise the discretion to award interest, Gibbs J. thought it appropriate to apply a commercial rate of interest both to economic and non-economic loss. It should be noted that his Honour expressly stated (at 21) that it may sometimes be appropriate in the particular circumstances of the case to dissect the award for non-economic loss and to allow interest on the part that is awarded in respect of past non-economic loss, and further that "in many cases it will be unnecessary to make a dissection". Gibbs J. did not say in what sorts of cases the dissection would be unnecessary.

30. Although Gibbs J. was subsequently overruled by a unanimous decision of the High Court in M.B.P (S.A.) Proprietary Limited v. Gogic [1991] HCA 3; (1991) 171 CLR 657 (handed down on 26 February 1991) on his view that a commercial rate of interest is to be applied to the past component of an award of damages for non-economic loss, I do not take anything in the Gogic judgment to otherwise set aside or contradict what Gibbs J. said in Cullen v. Trappell about the circumstances of the exercise of the discretion to award interest. In particular, his Honour's statement stands that "in many cases" no dissection between past and future non-economic loss will be necessary for the calculation of interest. Whether by way of obiter dictum or as part of the ratio decidendi, his Honour's statement must be accepted and applied by this Court.

31. Is this one of the many cases in which the dissection is unnecessary? The brevity of the Magistrate's reasons suggests strongly, almost conclusively, that far from deciding that this was such a case, the Magistrate gave no thought to the question. But it was a question that needed to be addressed. Moreover, the Magistrate appears not to have recognized that sub-paragraph 227A(4)(a) of the Act prohibits the award of interest "in respect of liabilities incurred which do not carry interest". That means that the Magistrate had no power to award interest on a sum representing the respondent's liability for unpaid out-of-pocket expenses, unless interest was incurred by the respondent on that sum. Whether or not any of the out-of-pocket expenses fell into this category was simply not considered by the Magistrate (nor, I dare to say, was his attention drawn to that matter).

32. Similarly, the Magistrate appears not to have considered, and certainly not to have applied, sub-paragraph 227A(4)(c) of the Act which prohibits the award of interest on future loss or damage. He acknowledged that there was a component for future economic loss and it is difficult to understand how on that basis the Magistrate would not also have included a component for future non-economic loss. It may be possible to imagine circumstances in which an injured plaintiff will suffer a loss of an economic nature in the future, without at the same time undergoing a certain amount of pain and suffering and loss of amenity, but I do not know of anything in the present case which could give rise to such a situation. Whether the component for loss of sick leave was in respect of a past or future loss, I am unable, on the material before me, to say. Indeed it might not have been in truth an award for loss of sick leave but for the loss of the right to sick leave, which was a future loss.

33. Accordingly, I hold that the Magistrate was in error in awarding interest on the components of his award of damages which related to future loss and to the respondent's out-of-pocket expenses. The appellant has made out the first ground of appeal.

34. The next question is whether the Magistrate was in error in making an order to award interest "at the prescribed rate". By expressing the rate at which interest was to be awarded as "the prescribed rate" the Magistrate, in my view, must be taken to have been referring to the rate prescribed by sub-s.227B(2). That section provides:

"Judgment by default, confession or agreement - interest
227B(1) Where interest has been claimed under section 227A in
proceedings in respect of which judgment is entered pursuant to
section 41, 42 or 43, an amount of interest for the period between
the date when the cause of action arose and the date when judgment
was entered shall, for the purposes of whichever of those sections
is applicable, be deemed to be part of the amount claimed in respect
of the cause of action and may be included in the amount for which
judgment is entered.
(2) Such an amount of interest shall be calculated at such rate
per centum per annum in respect of such period or part of a period
as is prescribed."

35. As the heading of the section makes clear, the section applies only to judgment obtained by default, confession or agreement. Judgment by default is a judgment obtained by default pursuant to s.41 of the Act in proceedings instituted by the filing of a special claim. The effect of s.16 of the Act is that a special claim may be made in the case of proceedings to recover a debt or liquidated damages. On the contrary, the respondent's claim in this case was made by way of ordinary claim, as it is termed in the Act. It was not a case of judgment by default under s.41. It was a case of interlocutory judgment by default on an ordinary claim entered pursuant to s.39 for assessment of the recoverable amount under s.40.

36. Nevertheless I think that a liberal construction of the reasons for judgment allows the Magistrate's decision to be approached upon the basis that, for the purposes of fixing a rate of interest for the award of interest under s.227A, he thought it appropriate (as a matter of discretion) to apply the rate or rates that happened to be prescribed by s.227B. At first glance there appears nothing necessarily wrong with that approach. However, when one looks at what the prescribed rates were, and they were produced to the Magistrate on 21 February 1991, it is clear that they are commercial rates of interest. For instance, the rate applicable in the period from 1 March 1989 to 31 August 1989 is 17.875 per cent per annum and from 1 September 1989 to 8 February 1991, 20.75 per cent per annum. As the judgment in Gogic makes clear, commercial rates of interest are not appropriate to apply to past non-economic loss and 4 per cent per annum is the conventional rate currently applied throughout Australia. As this appeal is a re-hearing (ss.282G and 282J), the Court applies the law as it was at the date of the hearing of the appeal: Duralla Pty. Ltd. v. Plant [1984] FCA 146; (1984) 54 ALR 29; Petreski v. Cargill (1988) 79 ALR 235. Accordingly, the Magistrate was in error in applying the prescribed rate insofar as it was applied to past non-economic loss. The fact that the Magistrate declined to identify the component of damages which was attributable to past non-economic loss does not cure the error. The second ground of appeal also succeeds.

37. As to the third and fourth grounds of appeal which rely upon manifest but unidentifiable error, I do not think it appropriate to express a view. As the error has been identified these grounds become superfluous.

38. I am concerned about the cost and delay in this matter. If it were possible for me to do so, I would dissect the appropriate components from the Magistrate's award of damages and apply what I consider to be the appropriate rates of interest. That would be cheaper than remitting the matter back to the Magistrate.

39. In all the circumstances, I think that the appropriate course is to do what the Magistrate might properly have done, that is, in view of the vagueness of the evidence, and the impossibility of being mathematically precise about quantification of past loss, to exercise the discretion to award a lump sum in lieu of interest under para.227A(1)(b) of the Act. I would fix the lump sum at $3,000.00. The respondent would then be entitled to judgment for $18,000.00.

40. The respondent seeks a certificate under s.6 of the Federal Proceedings (Costs) Act 1981. An appeal to this Court from a judgment of another court of the Territory is still a "federal appeal": para.3(1)(h). The discretion is a discretion to grant and not to refuse a certificate. The respondent must show some ground for the discretion being exercised in her favour and it is not enough to show only that the appeal succeeded due to an error of law in the lower Court. The Magistrate would have been assisted in avoiding error if there had been a more precise definition of the issues of fact and law by those conducting the case on behalf of both parties. In my view, this is not an appeal which should be funded by the public. I refuse to grant the certificate. In the circumstances the appellant and respondent should each pay their own costs of the appeal.

41. The appeal is upheld. The cross-appeal is dismissed. The judgment and orders of the Magistrate of 8 February 1991 and 23 February 1991 are set aside and in lieu thereof judgment is to be entered for the respondent in the sum of $19,661.82. The appellant is to pay the respondent's costs in the Magistrates Court. Each party is to pay his and her own costs of the appeal.