Koznjak v Andreco-Hurll Refractory Services Pty Ltd & anor [2000] ACTSC 10 (11 February 2000)

Last Updated: 29 February 2000

Koznjak v Andreco-Hurll Refractory Services Pty Ltd & anor

[2000] ACTSC 10 (11 February 2000)

CATCHWORDS

DAMAGES - Assessment - Personal injury - Motor vehicle accident - Soft tissue injuries to the head, chest, abdomen, and right arm - Significant liver laceration - Two fractured ribs - Economic loss - Partnership business - Plaintiff's economic loss not limited to his share of the partnership proceeds - No issue of principle.

No. SC 164 of 1998

Coram: Master T Connolly

Supreme Court of the ACT

Date: 11 February 2000

IN THE SUPREME COURT OF THE )

) No. SC 164 of 1998

AUSTRALIAN CAPITAL TERRITORY )

BETWEEN: MICHAEL KOZNJAK

Plaintiff

AND: ANDRECO-HURLL REFRACTORY SERVICES PTY

LTD ACN 000 872 962

First Defendant

AND: JAMIE O'NEILL

Second Defendant

ORDER

Judge Making Order: Master T Connolly

Where Made: Canberra

Date of Order: 11 February 2000

THE COURT ORDERS THAT:

1. Judgment be entered for the plaintiff in the sum of $147,526.

2. The defendants pay the plaintiff's costs.

1. This is a claim for damages for personal injuries arising from a motor vehicle accident which occurred on 12 February 1997 on the Hume Highway near Tarcutta in New South Wales. The plaintiff, who is a resident of Canberra, was driving his vehicle in a southbound carriageway on his way to Melbourne. As the highway crossed a bridge the vehicle coming in the opposite direction, driven by the second defendant and owned by the first defendant, swerved onto the plaintiff's side of the road, and a collision occurred. The defendants admitted breach of duty of care, but pleaded issues of contributory negligence, which were not proceeded with at the hearing. I am satisfied that the plaintiff was not at fault at all in the circumstances of this accident, and the matter proceeded before me by way of an assessment of damages only.

2. The real issue before me was the assessment of the plaintiff's economic loss. There is no dispute that he sustained quite significant injuries in the accident. At the time of the accident he was 67 years of age, but claims that he would have continued to work for a considerable time, and the matter is particularised as a claim for past economic loss and a future loss claim for five years from the date of the hearing. The defendants invited me to find that the plaintiff had been forced to significantly cut down on his activities before the accident due to heart problems, and that it is more likely than not that he would have eased out of the workforce and be fully retired by the date of the hearing. The defendants made it clear that they in no way attacked the plaintiff's credit, and accept the plaintiff's claim that he intended to continue to work on as an active partner in a home building business well into his 70's as an honestly held aspiration, but an aspiration that I should find, in all the circumstances of the case, to have been unrealistic.

3. There is no question that the plaintiff has been a hard worker all of his life. He was born in Croatia in 1929, and came to Australia as a 26 year old carpenter in 1957. He married in 1960, originally by proxy in Croatia, and brought his bride to Australia. He worked as an employed carpenter, and in about 1965 began to work in the Canberra/Queanbeyan area. By the mid 1970's he was working as a foreman, and had obtained a C class builders licence, which enabled him to build single story structures on his own account. In 1976 he obtained a B class licence, which enabled him to build structures of up to three stories. He formed a partnership with another builder for a couple of years, but from the late 1970's he operated on his own as a subcontractor and speculative builder in the Canberra residential housing market. He operated his business as a partnership with his wife, as M & V Koznjak, but I am satisfied that her involvement was quite limited, being restricted to occasional cleaning up work on sites prior to hand over. Although for taxation purposes the income from the business was split equally between the plaintiff and his wife, I am satisfied that the business was driven essentially by the plaintiff's efforts, and that, in accordance with the decision of the High Court in Husher v Husher (1999) 165 ALR 384, [1999] HCA 47, the plaintiff's economic loss should not be limited to his share of partnership proceeds, but must be assessed on the basis of his loss of capacity.

4. The plaintiff and his wife have two children, a daughter born in 1962 and a son, John, born in 1971. He qualified as a commercial pilot and worked for some years in Papua New Guinea, but from 1994 he has worked with his father while undertaking a course of study towards a diploma in building at the Canberra Institute of Technology. Although he did not complete the formal qualification his study and experience working with his father enabled him to obtain a C class builders licence in January 1996. He continued to work with his father in the residential home market. In June 1995 they formed a new partnership, J&M Essential Homes, with a 50% profit share to the plaintiff and his wife equally, and a 50% profit share to John Koznjak. The plaintiff put capital in to the start of this venture.

5. The plaintiff's accident related injuries were well described by Dr Davis, a consultant surgeon, in his report of 9 May 1997. He said

"Mr Koznjak was involved in a road traffic accident on the Hume Highway on 12 February 1997. He was initially taken to Wagga Wagga Base Hospital and was transferred to the Canberra Hospital for convalescence on 17 February 1997. His injuries include multiple soft tissue injuries to the head and scalp, his right chest and abdomen, and right arm. He also had significant liver laceration which did not require surgical intervention. There were also two fractured ribs in the right lateral chest associated with this. At the time of his transfer from Wagga Wagga Base Hospital to The Canberra Hospital these injuries had largely been stabilized. Whilst in The Canberra Hospital he did develop a transient febrile illness and a productive cough consistent with right lower lobe pneumonia which settled with intravenous antibiotics. Mr Koznjak was discharged from The Canberra Hospital on 22 February 1997."

6. These injuries are consistent with a high speed impact, and with the damage sustained to the plaintiff's vehicle, a photograph of which was tendered as an exhibit.

7. Mr Koznjak had a history of kidney disease of over 20 years duration, and was at the time of the accident under the ongoing care of Dr Carney. He reviewed him in Canberra Hospital given the extensive internal injuries caused by the accident. Renal cysts were noted, which had existed in simple form prior to the accident, but which, in Dr Carney's opinion, were caused to haemorrhage in the left kidney by the accident. He expected in his early reports that this would settle in time, and that the plaintiff's kidney function would return to its pre accident state, which while consistent with long term kidney disease was in no way disabling with appropriate attention. His later reports confirm that this has indeed been the outcome, and that, while the accident related haemorrhage would have incapacitated the plaintiff for about a year, his kidney function has now returned to its pre accident level.

8. After his discharge from hospital Mr Koznjak was confined to bed for a week or so, and then started to be able to walk around the house. He was extensively assisted by his wife during his time of convalescence, and the defendant accepts that there is a case made out for an award of damages pursuant to the principle of Griffiths v Kerkemeyer for this voluntary assistance. He was in considerable pain throughout his body at this time. He was driven to medical appointments by his wife until about May 1997, when he began driving himself again. He continued to have pain in the back and the head, and soreness of the arms and legs. He noted a restriction in his ability to bend his right arm, which has persisted. All of these ongoing symptoms, which I am satisfied are accident related, are clearly relevant to his ability to conduct ongoing carpentry and building work.

9. By the beginning of 1998 the plaintiff thought that he might be able to resume some building activity, and he started to help his son, working about 10 to 20 hours a week. He has told a range of doctors that he worked for these hours, but I am satisfied from the evidence of his son that, while he was indeed on sites, his physical activities remained quite limited, and it would present an unrealistic picture to say that he was working at something like half time as a builder at this time.

10. The plaintiff says that he realised that he would not be able to work again on a full time basis, and he dissolved the partnership with his son eventually taking out the capital, about $120,000, that he had put in to start up the business. He continues to work with his son on various sites, for limited hours, and on an unpaid basis.

11. Mr Koznjak has had two occasions of significant cardiac problems. In August 1994 he was admitted to Calvary Hospital for chest pain, and suffered an arrest in the Accident and Emergency area. Subsequent investigations showed that he had had an anterior myocardial infarct from which he made a good recovery, and he resumed full activities as a builder. In June 1996 he again suffered chest pains while finishing up on a building site, and was re admitted to Calvary. An angiogram was performed, which confirmed coronary artery disease. An overseas trip which the plaintiff had been planning to take with his wife in the later part of 1996 was postponed due to this finding, but was undertaken for three months. During that time he says that he felt well, and did some work on the harvest at a family farm, as well as some construction work on his sisters home. When he returned to Australia in late 1996 he started to look for suitable land on which to construct homes for eventual sale, and had inspected some without making any purchases at the time of the accident. In January 1997 he went to Sydney, and helped his son on a major extension to his sister's home. I am satisfied that this involved heavy building work, including the erection of steel beams.

12. The defendant has filed two reports from Dr Waugh, a consultant physician, which sets out the plaintiff's history of coronary disease, and concludes that

"...there is good evidence for ischemic heart disease in Mr Koznjak. However, his cardiac function appears to be good and his current symptoms are unlikely to be due to his heart disease"

(report of 27 July 1999). In his earlier report of 26 March 1999 Dr Waugh was more specific and said

" I do not believe that there is any evidence that his cardiac condition is currently restricting his ability to work. Rather, most of his disability appears to relate to weakness of the muscles of his lower limbs. It is difficult to see any relationship between this weakness and his motor vehicle accident."

13. The plaintiff's case is that, while he was a very fit man up until the accident, the accident has resulted in a significant loss of fitness and strength which, at 70, is difficult to regain, and in this sense the general weakness observed by Dr Waugh is, in the plaintiff's case, accident related.

14. A report of 25 February 1999 from Dr Beard, a consultant general surgeon who examined the plaintiff for the defendant, notes that the plaintiff had reduced muscle tone. Dr Beard states

"This is most likely due to inactivity. He went on to state `I like working but I can't do it. Perhaps this is due to not working for such a long time and my muscles have collapsed.' With this I would agree."

Dr Beard said

"Mr Koznjak was involved in a road traffic accident in which he suffered serious injuries. He is fortunate to have survived, let alone to have left hospital so quickly. He sustained a number of injuries, most of which he has recovered from. He has been fully and adequately investigated and treated. He is left with residual problems with tiredness and lack of energy. It is not unusual for people of his age to take a long time to recover. In fact, suffering shock, intra abdominal haemorrhage and multiple injuries to the body is often enough to cause a premature cessation of work. At the time of the accident he was 67 years of age and still working. I doubt that as a builder he would have been able to continue employment for more than two or three years anyway."

15. The principles to be applied in determining compensation in personal injuries cases have been summarised by McHugh J in Nominal Defendant v Gardikiotis [1995] HCA 56; (1996) 186 CLR 49 where His Honour said (at 54):

"When a defendant has negligently injured a plaintiff, the common law requires the defendant to pay a money sum to the plaintiff to compensate that person for any damage that is causally connected to the defendant's negligence and that ought to have been reasonably foreseen by the defendant when the negligence occurred. The sum of money to be paid to the plaintiff is that sum which will put the plaintiff, so far as is possible, `in the same position as he would have been in if he had not sustained the wrong for which he is now getting his compensation'."

16. In this case I must assess the plaintiff in relation to general damages on the basis of serious internal injuries and soft tissue injuries requiring a significant period of hospitalisation and recuperation. I note that while he has recovered from many of his injuries and is able to get about and indeed spend some time in his garden and at building sites, he still is restricted in his movements and activity, and in his recreational pursuits, particularly. I am satisfied from the evidence of the plaintiff, his wife and son, and all of the medical evidence, that he has been significantly less active since the accident. Taking all of this into account, I would assess general damages in the sum of $55,000, with $35,000 attributable to past loss generating interest of $2,096, amounting to a total award of $57,096.

17. Out of pocket expenses include the sum of $2,081.25 which I am satisfied represents the amount repayable to the Health Insurance Commission in respect of consultations relating to this accident. The plaintiff's solicitors provided me with a letter setting out those consultations which it is said relate to the accident, and I accept this, noting that the plaintiff was under medical care before the accident, and so it would not be appropriate to attribute all treatment since to the accident. There have also been expenses for pharmaceuticals and some sundry expenses around the time of the accident, and a significant hospital fee in the sum of $3,225 from the Canberra Hospital. Taking all of these factors into account I would award the sum of $7,500 for past out of pocket expenses.

18. A claim was made pursuant to the principle of Griffiths v Kerkemeyer, which was particularised as running from the date of discharge from Canberra Hospital to October 1997 declining from 35 hours a week to 4 hours a week. Counsel indicated that the claim would be pursued on the basis of extensive assistance of about 14 hours a day for the first two weeks, and then at the rate of seven hours a day over the next three months. Counsel for the defendants acknowledged that there was a compensable component of assistance provided by Mrs Koznjak, but submitted that it would be more limited. I am satisfied that the plaintiff's wife did provide near constant assistance and companionship for the plaintiff throughout the first year after the accident, and indeed this must have assisted with his recovery from his serious injuries. Much of this, however, falls beyond the boundaries of what is properly compensable and the responsibility of the defendants. I am satisfied that the plaintiff's injuries were such that he required intensive assistance during the first two weeks after discharge, and it seems to me that for this period an award based on 10 hours a day at the present rate of $15 an hour, being about half what ACT Home Help charge as their "third party" rate is appropriate. I have previously heard evidence that this rate is about double the market rate for cleaning and domestic assistance services, and I put it to counsel that I would, unless I heard persuasive argument to the contrary, adopt this rate. For the next three months I am satisfied that the plaintiff gradually improved and became ambulatory, and progressed to driving himself, and that his accident related need gradually diminished. It seems to me that a rate of three hours a day over about 90 days would properly compensate the plaintiff in these circumstances, and this amounts to an award of $6,150 for the two periods. As I have based this on a present rate it seems to me that this should be regarded as inclusive of interest.

19. The plaintiff's claim for economic loss presents some difficulties in this case, as his financial records cover two partnership periods, as well as some investment income which must be disregarded. I am satisfied that the accident has effectively prevented the plaintiff from working from the accident to the date of this decision, and that, but for the accident, and taking into account his pre existing health, he would have continued in his activities. I must also take into account the fact that he had been winding down his activities as at June 1996, expecting to take his holiday, when the heart condition meant this was postponed. He thus started 1997 with no jobs in progress, and no land acquired, although I accept that he was in the process of selecting land, and had renewed his building licence. Even had the accident not occurred, he would not have been in a position to obtain any income for some period, as he would have needed to acquire a block and bring a job on to the point of sale.

20. It seems to me that the trading year to 30 June 1996 is the best guide to the plaintiff's pre accident economic capacity. The accounts for J&M Essential homes, the business conducted as a partnership with his son and his wife, shows a distribution to partners of $18,252 to John, and $9,126 to each of the plaintiff and his wife. In accordance with the decision of Husher v Husher I am satisfied on the evidence that it is appropriate to look here at the plaintiff as the sole generator of wealth to the exclusion of his wife, and that the sum of about $18,000 can be attributed here to his earning capacity from the partnership. I note the evidence that in this year he also did some contract work, and I am prepared to take that into account in taking the sum of $22,000 as a starting point for the calculation of his loss. I note this is a gross figure, and he received investment income which would be relevant in calculation of his relevant net income. A sum of $17,000 seems to me to be appropriate, noting that the Taxation Commissioner accepted a final assessment for that year, taking into account all relevant deductions, of a taxable income of $11,120.

21. A loss in the order of $17,000 net for the period from the accident to now would amount to an award in the order of $51,000. I must, however, take into account that the plaintiff would have had a reduced income in the year 1997 regardless of the accident because of his delayed three month holiday. Taking all of this into account, I award the sum of $45,000 in respect of past economic loss, which generates interest of $6,780, making a total award of $51,780.

22. In respect of the future, I accept that the plaintiff would have sought to continue working as long as he could, but that it is unrealistic to expect him to have been continuing in heavy activities in speculative residential home construction for an indefinite period. He is now 70, and although he has good reports from his doctors in relation to his heart condition, I must take into account two hospital admissions which had previously flowed from this. His kidney condition is well controlled, but is also a factor. But for the plaintiff's record of hard work, and the honest evidence of himself and his family as to his future intentions, I would have been easily persuaded that the time has come when it is more likely than not that he would have retired. On all of the evidence, however, I am satisfied that he would have persisted but for the accident, and continued, no doubt on a gradually reducing basis, for a couple more years. I would make an award for future economic loss, in the sum of $25,000, to reflect this ongoing involvement, albeit on a steadily declining basis, which I am satisfied he would have been able to undertake but for this accident.

23. This amounts to a total award of $147,526 which I consider to be appropriate in all of the circumstances and award, with costs.

I certify that this and the ten (10) preceding pages are a true copy of the Reasons for Judgment herein of the Master, Mr T Connolly.

Associate:

Date: 11 February 2000

Counsel for the Plaintiff: Mr R Mildren

Instructing Solicitors: Meyer Clapham

Counsel for the Defendants: Mr Royle

Instructing Solicitors: Hunt & Hunt

Dates of hearing: 30 November and 1 December 1999

Date of judgment: 11 February 2000