Re Robin David Horner v Axel William Harald Nielsen [1980] FCA 109 (29 September 1980)

FEDERAL COURT OF AUSTRALIA

Re: ROBIN DAVID HORNER
And: AXEL WILLIAM HARALD NIELSEN
No. F.C.33 of 1979
Damages

COURT

IN THE FEDERAL COURT OF AUSTRALIA
CANBERRA DISTRICT REGISTRY
GENERAL DIVISION
Franki, J.
St. John, J.
Sheppard, J.

CATCHWORDS

Damages - appeal on quantum - loss of earning capacity to trial - loss of future earning capacity - non-economic loss.

HEARING

SYDNEY
29:9:1980

ORDER

1. Appeal allowed.

2. Order of the Supreme Court of the Australian Capital Territory varied by the substitution of the sum of $112,477.66 for the sum of $174,977.66 mentioned therein.

3. The respondent pay the appellant's costs of this appeal.

DECISION

The appellant, Robin David Horner, was the defendant in an action brought by the respondent, Axel William Harald Nielsen, in the Supreme Court of the Australian Capital Territory. The appeal is limited to the damages awarded.

The learned trial Judge awarded a sum of $174,977.66, made up as follows:

"Agreed special damages $3,153.66

Loss of earning capacity to trial 23,124.00

Loss of future earning capacity 112,500.00

Future expenses 1,200.00

Non-economic loss 35,000.00"

The injuries to the respondent resulted from a motor car accident on 8 April

1975, when the respondent was almost 42 years of age and was employed by a company, Dalgetys Ltd.,("Dalgetys") as a sales representative in the liquor sales activities of the company in the Canberra and southern district area of New South Wales. Dalgetys did not terminate his employment until March 1977. The respondent is married with 4 children, the eldest of whom was 20 at the time of the accident. The learned trial Judge made the following findings:

"Immediately after the accident the plaintiff spent six days in hospital. His less serious injuries were considerable bruising, and cracked ribs. His more serious injury, which has been the foundation of all the pain and loss which he has suffered as a result of the accident, was damage to the cervical vertebrae. He found that his neck was at first immovable and very painful, and the pain extended down into his arms. In hospital he was immobilized and put under sedation. After leaving hospital he was in bed at home for ten days, during which there was some lessening of pain and increase in his mobility. A surgical collar was placed round his neck while he was in hospital and he wore it more or less continuously

afterwards; indeed he was wearing it for most of the hearing.

The principal effect of the injury was severe and prolonged pain. During the months after the accident the pain included severe headache and backache with referred pain in the groin. He was more or less constantly under medication to relieve this pain. In addition, he has had a great deal of physiotherapy; indeed from the time of the accident to the time of trial the longest period that he was not undergoing physiotherapy was three months; for most of the time, he was having physiotherapy three times a week. This was helpful in reducing the pain."

The respondent's treatment included traction, which he said was "desperately painful", manipulation under anaesthetic, a myelogram, cortisone injections and rhysolysis.

The hearing of the case commenced on 24 October 1978 and judgment was

delivered on 24 August 1979. Between the accident and March 1977, the respondent did some very limited work for Dalgetys. For this period he was paid an amount of $7,836.80 in respect of workmen's compensation and his salary was made up by Dalgetys. The learned trial Judge reached a figure for loss of earnings between the termination of employment and the time of the trial, based upon a period of 84 weeks, of $15,288.

His Honour's judgment was given before the judgment of the High Court in Cullen v. Trappell [1980] HCA 10; (1980) 29 A.L.R. 1. In assessing damages the learned trial Judge used a figure of gross earnings for the calculation of loss of earning capacity up to the date of the trial and of loss of earning capacity thereafter, and so it is clear that his Honour proceeded upon a basis now known to be incorrect. The majority judgments of the High Court in Cullen v. Trappell (supra) on this aspect only clarified the existing law so that no question whether it is appropriate to apply any change in the law to this appeal arises. The trial Judge also, in relation to future damages, made the following finding:

"For the future, I accept the figure of $400 per week as the amount the plaintiff would have been earning at the time of the trial if he had continued his employment with Dalgetys Ltd."

After a careful examination of the evidence we do not regard this conclusion as being open to the learned trial Judge. For the purpose of assessing loss of earning capacity to the date of the trial, his Honour treated the relevant date as being March 1977 and found that a gross salary of $182.00 per week was the appropriate figure. The respondent was, in fact, employed by Dalgetys until March 1977 and said that his intention was to remain with Dalgetys and that he hoped to be promoted from his position of sales representative to that of manager of all of Dalgetys' operations in Canberra. There was little evidence about the size of Dalgetys but it does appear that, at the time of the hearing, it employed 7 sales representatives in New South Wales. There was evidence that the gross salary of the respondent at the award rate, had he remained with Dalgetys until the date of the hearing, would have been $9,157.00 per annum, together with a further payment of $1,500.00, making a total amount of $10,657 per annum. He would also have had the use of a car which the company provided and maintained and for which it supplied petrol. The trial Judge took the view that, because there was no evidence of the value of the car to the respondent, the provision of the car should be disregarded.

The appeal was pursued in relation to the assessment of damages under three heads, namely:

A. Loss of earning capacity to trial.

B. Loss of future earning capacity.

C. Non-economic loss.

In our opinion, bearing in mind that the approach of the Judge to loss of future earning capacity was not in accordance with that set out in Cullen v. Trappell (supra) and the absence of evidence which would justify the conclusion that the respondent would have been earning $400 per week at the time of the trial if he had continued his employment with Dalgetys, it is necessary to re-examine the assessment of damages made by the trial Judge, and to vary the figure at which he arrived, if upon a re-assessment by this court it seems appropriate so to do.

A. Loss of earning capacity to trial.

The period for which the trial Judge assessed this aspect of damages terminated at the date of hearing and so no allowance was made for the period from the date judgment was reserved until it was delivered. It was common ground that the net figure of $153.90 per week resulted when the appropriate income tax, taking into account dependants, of $28.10, was deducted from the gross earnings of $182.00 which the respondent would have earned at the date of the termination of his employment by Dalgetys. It was also common ground that the figure of $10.657.00 per year was equivalent to an income of $205.00 per week gross and that if the appropriate income tax, taking into account dependants, of $35.60 was deducted, the net figure of $169.40 resulted. The figure of $205.00 gross was the figure which the respondent would have been earning at the date of the trial had he remained in the position which he held with Dalgetys at the date of the accident.

A figure of $153.90 per week for 84 weeks is $12,927.60 and $169.40 per week

for 84 weeks is $14,229.60. In our opinion, although the figure his Honour arrived at is somewhat higher than either of these figures, some value should be attributed to the use of the car. Bearing this consideration in mind we do not regard the assessment of $15,288 as excessive. To this figure must be added the sum of $7836.80 which had been paid for workmen's compensation prior to the termination of the respondent's employment with Dalgetys. We would not disturb the assessment of $23,124.00 for loss of earning capacity prior to the trial.
B. Loss of future earning capacity.

It was agreed between the parties that insofar as it was appropriate to use actuarial tables which show the present value of a sum of money to be received over a period of time in the future, those based on 5 per cent should be used. This avoided the court having to consider the appropriate tables to use in the light of the judgment in Cullen v. Trappell (supra).

The learned trial Judge used tables based on 7 per cent and found that the present value of $400 for 20 years was $220,272. He reduced this figure by about 20 percent to make allowance for the contingency of the plaintiff's death before the age of 65 and reached a figure of $180,000. He also said:

"My assessment of all the evidence, including that of the plaintiff himself, is that the plaintiff has not totally lost his earning capacity. In my opinion, a proper way, in this case, to assess the damages for loss of earning capacity for the future is to reduce by three eights the damages which I would assess if the plaintiff's loss of earning capacity were total."

The trial Judge then reduced the figure of $180,000 by three eighths, and this resulted in the figure of $112,500. His Honour's reasoning produced the result that, in relation to earning capacity for the period after the date of the hearing, the respondent was treated as having three eighths of the earning capacity which he otherwise would have had.

There is no doubt that the learned trial Judge, who had the advantage of seeing the plaintiff and observing him in the witness box, formed a very favourable view of the plaintiff's pre-injury capacity and clearly accepted the truth of his evidence. His Honour said:

"I have no difficulty in finding, on the evidence, that before the accident the plaintiff was an intelligent and industrious man, who had learned and was capable of applying a number of skills, and in particular was a highly successful salesman and sales organizer, having the characteristics of drive, energy and an engaging personality, which that

work demands."

He also said:

"The evidence showed clearly that the plaintiff was a highly successful sales representative, and a report on his ability and success, made by a responsible officer of the company, was put in evidence; it was in strikingly glowing terms."

The respondent's evidence, provided a firm foundation for the findings

concerning his ability. The trial Judge said:

"The plaintiff was born in England in 1933. He left school at the age of 15, was employed as an apprentice waiter at Claridges Hotel in London for twelve months, and he was then a student at a hotel school in Switzerland for two years; at this school he was very successful. He was then, at the age of 18, head waiter at the Mayfair Hotel in London for nine months, after which he joined the Royal Air Force. After failing to be commissioned as a pilot, because of colour blindness, he was offered a commission as catering officer, but chose instead the engineering side. He served in non-commissioned ranks in the engineering side of the Royal Air Force until the age of 22. Thereafter he was a hotel manager in London for eighteen months and then became a flight steward in the employ of British European Airways, and later of British European Airways, and later of British Overseas Airways Corporation, for a total of nine years. The plaintiff had married in 1955, at about the time that he joined British European Airways. After leaving British Overseas Airways Corporation, he became a field representative for a company which marketed animal foods. After two years in this position, in May 1966 he came to Australia with his wife and family, and for seven months was a motel manager working at various places in New South Wales and this Territory. He was then employed as office manager and senior purchasing officer of a construction company which had a contract in connection with the Canberra water supply. He had this job for two years, and when the company's contracts in Australia were completed he declined an offer of employment by the same company in the United States, preferring to stay in Australia. He then undertook the ownership and operation of the Cotter Tavern Restaurant, a business which he built up from a very small size to a much larger size and more prosperous condition. The business was operated by the plaintiff, his wife, his eldest son, and one woman employee; they operated this business

for eighteen months."

His Honour also said:

"When the business ceased because his sub-tenancy came to an end, he took a job at the Australian National University as assistant manager to the catering manager. The plaintiff worked hard and effectively and was promoted to function manager and manager in charge of the commercial aspects of the Union's activities, including the bar. There was an enormous and successful increase in the business of the Union in this respect, and there was evidence that this successful increase was to a considerable extent due to the energy and efficiency of the plaintiff. The work involved long hours, considerable physical energy, and a high degree of initiative and inventiveness. After two years, the plaintiff left the University Union and became secretary/manager of the Western District Rugby Union Club in Canberra. The reason for his leaving the Union was that there seemed no prospect for advancement and the job with the Rugby Union Club was less demanding and better rewarded. However, after six months he left the Rugby Union Club after a disagreement with some members of the board of control, and thereupon entered on the employment in which he was engaged at the time of the accident . . .".

As a result of the accident, the trial Judge found that he had:

". . . no difficulty in finding that his ability to continue the work that he was doing was significantly impaired by the injury; he could not tolerate long periods at the wheel of a car; he walked with some difficulty and pain; he found concentration, even on desk work, difficult; and he was generally unable to give the physical and mental energy to his work which he had given to it before the accident."

Dr. Roebuck, an orthopaedic surgeon, was the respondent's principal medical

witness, and the learned trial Judge cited and accepted the following passage from his evidence:

"I don't think he could travel much. That would make his neck worse. He could travel a bit. I think he would have difficulty putting in a full days work, even sitting or standing, at the moment. I think he could probably do half a days work if there wasn't too much travelling and I think, as I say, in a year or two perhaps he'd get to the stage where he could do a full days work without much travelling. I doubt if he'll ever be able to travel long distances in a car."

The principal medical witness for the defendant was Dr. Andrews and the learned trial Judge said of his evidence:

"Dr. Andrews, the neurologist, called by the defendant, was a little more optimistic about the plaintiff's employment capability, while agreeing essentially with Dr. Roebuck. He suggested a period of a year or two after which the plaintiff should be able to 'get by quite well' but not so as to be able to do any lifting or heavy work, or drive a motor vehicle for long distances; and he was also mindful of the possibility of episodes of acute pain which would require physiotherapy and medication. He believed that the functional element in the plaintiff's present condition would probably disappear in time."

We accept the findings of the learned trial Judge in relation to the medical evidence. There is no doubt that the respondent's capacity for work was severely curtailed, although the appellant argued that a significant amount of the respondent's trouble was caused by functional overlay.

If one seeks to assess damages under this head by following the approach of the learned trial Judge we consider that a figure considerably less than $400 should be chosen. Bearing in mind the employment record of the respondent, and allowing something for the use of the car which he had and the likelihood of something similar continuing, we consider that a figure of $325 gross per week, or approximately $16,900 gross per annum, is a reasonable figure to adopt. It is interesting to note that the appellant suggested that a figure of the order of $300 gross per week was appropriate. If one assumes income tax of $4,400 on $16,900, a net earning per annum of $12,500 results, equivalent to about $240 per week. The learned trial Judge, having taken the figure of $400 as the appropriate starting point, decided that the respondent was capable of earning three eights of this amount, ie, $150 per week. But both these figures were gross figures. The figure of $150 per week gross is equivalent to a net figure of the order of $125 per week when taxation is taken into account. We consider that this is an appropriate figure to use. The difference between the net figure of $240 per week and $125 per week is $115 per week. On the figures provided by the respondent, which appear to be common ground, $115 per week for 20 years results in a figure of approximately $66,500.

The learned trial Judge made an allowance for the contingency of the plaintiff's death before 65 of 20 percent. In our opinion, a reduction for contingencies of something less than this is appropriate because of the favourable view which the trial Judge took of the respondent's capacity, because of the probability that in the period of two or three years following the hearing the respondent's earning capacity would be less than $125 per week net and to allow for the period of 10 months between trial and judgment. Doing the best we can with the evidence available we consider a reduction for contingencies of about 10 percent is appropriate. We would reduce the assessment for loss of future earning capacity from $112,500 to $60,000.

C. Non-economic loss.

The learned trial Judge made the following findings:

"The plaintiff takes a large quantity of analgesic tablets to relieve pain and to help him to sleep. There is substantial evidence to show that his personality is substantially changed since the accident; he was formerly physically strong, happy, healthy and very energetic and equable in temperament. Since the accident he has become a somewhat irritable, worried, and depressed man who has bursts of deep depression and has difficulty in concentrating on even purely mental work. He is limited in the extent and amount of physical exertion which is possible for him, which contrasts markedly with his energy and fondness for physical activity which was a feature of his life before the accident."

In our opinion the figure of $35,000 for non-economic loss is excessive. We

consider that figure should be reduced to $25,000.
Conclusion.

It will be seen that we would reduce the figure for the total of the loss of future earning capacity and non-economic loss from $147,500 to $85,000.

It is, of course, important to bear in mind that the total sum should not have been arrived at in a manner which compensates the respondent twice in respect of the same factor.

It is also desirable to appreciate, certainly in relation to the use of mathematical tables and actuarial evidence, what was said by Gibbs J. in Cullen v. Trappell, (supra) at p.11:

"Even if actuarial material is available, the Court cannot attain complete mathematical accuracy, and is not bound to engage in complicated exercises in an attempt to do so."

Aickin J., although dissenting from the majority judgment, expressed a warning when he said, at p.23, in dealing with what he described as the process now used in assessing future loss of earning capacity from appropriate tables after making allowance for "the vicissitudes of life",:

"This exercise gives a figure which has, if I may say so, a spurious air of precision."

We consider that the figures we propose for loss of future earning capacity and non-economic loss produce a result fair to both parties. We would vary the assessment of damages in the following way:

Agreed special damages $3,153.66

Loss of earning capacity to the date of trial

23,124.00

Loss of future earning capacity 60,000.00

Future expenses 1,200.00

Non-economic loss 25,000.00

Making a total of $112,477.66

We were asked not to deal with the question of costs before we had delivered our judgments.