The Facts

The primary issue in this appeal was whether a quarry manager, who only had a week off working following surgery and a small number of days subsequent to that but otherwise had remained in his pre-accident employment, was entitled to a global award of damages for future economic loss in the sum of $120,000.00 after he sustained an injury to the peroneal nerve in his right leg.

The Defendant submitted that while some small sum for future economic loss was warranted, the amount was manifestly excessive given the Plaintiff had produced no evidence of past economic loss, had remained in full time employment since the accident, had produced no medical evidence that he suffered interference with his earning capacity as a result of the injury, and no evidence the injury was in fact productive of financial loss.

The Findings

The Plaintiff had adduced a warning letter signed by his supervisor which suggested that since the injury the claimant had “regularly taken time off work and left work early for private health issue concerning [his] right leg” the letter continued “your continued employment as quarry production manager is dependant upon you improving your attendance records and being fit for regular duties”.

The Plaintiff further gave evidence that he always planned to advance to an operations manager level, which would involve overseeing various different quarries. The Plaintiff confirmed in cross examination that he had always wanted to progress to operations and that he could do that work, but said that role would involve more driving.

The Plaintiff’s supervisor gave evidence at the trial and said that he had no problems with the Plaintiff’s work ability or knowledge and said in the cross examination that he would like to say that the Plaintiff was a “long term prospect for the company” but that if the injury meant he was unable to perform to his fullest then that was questionable. He reiterated that they paid the Plaintiff a very good salary and as such they expected him to perform the required hours.

On the basis of that supervisor’s evidence, the trial judge accepted that there was a realistic possibility that the claimant’s current employment may be at risk in the not too distant future.

The trial judge’s award for future economic loss was upheld on appeal and the Court of Appeal’s analysis of future economic loss awards is instructive.

The Court quoted from the High Court case of Medlin v State Government Insurance Commission [1995] HCA 5 and said:

In Australia, a plaintiff is compensated for loss of earning capacity, not loss of earnings (See Luntz, Assessment of Damages for Personal Injury and Death, 3rd ed (1990) at 224 esp. fn 3.). In practice, there is usually little difference in result irrespective of whether the damages are assessed by reference to loss of earning capacity or by reference to loss of earnings. That is because “an injured plaintiff recovers not merely because his earning capacity has been diminished but because the diminution of his earning capacity is or may be productive of financial loss” (Graham v Baker (1961) 106 CLR at 347). Nevertheless, there is a difference between the two approaches, and the loss of earning capacity principle more accurately compensates a plaintiff for the effect of an accident on the plaintiff’s ability to earn income. Earning capacity is an intangible asset.

Its value depends on what it is capable of producing. Earnings are evidence of the value of earning capacity but they are not synonymous with its value.

When loss of earnings rather than loss of capacity to earn is the criterion, the natural tendency is to compare the plaintiff’s pre-accident and post-accident earnings. This sometimes means that no attention is paid to that part of the plaintiff’s capacity to earn that was not exploited before the accident. Further, there is a tendency to assume that if pre-accident and postaccident incomes are comparable, no loss has occurred.”

The court further endorsed the approach taken in McCracken v Melbourne Storm that the onus remains on the Plaintiff “to prove what, if anything, he was now not capable of earning

The Court also reiterated that nothing in the Civil Liability Act precluded an award for future economic loss by way of a buffer endorsing the New South Wales Court of Appeal previous approach in Penrith City Council v Parks [2004] NSWCA 2001.

Despite the fact that no express claim for loss expressed on the basis the Plaintiff would advance to the position of operations manager was made in the Statement of Claim, in particulars at the opening of the trial or the closing address, the New South Wales Court of Appeal said that nevertheless the Plaintiff gave evidence of his ambitions in this regard without objection, nor was there any cross examination challenging the Plaintiff on the basis that he did not have such an ambition.

The Cross examiner did obtain a concession from the Plaintiff that he could perform the work of a quarry manager and that answer was relied upon in submissions in the appeal as evidence that the Plaintiff would not suffer any loss as there was no impairment to his capacity to perform that work.

Importantly at paragraph 44 the Court said:

Whilst a party responding to a claim is entitled to require that the party asserting the claim be bound by the case particularised, it frequently occurs that a case is expanded at trial beyond that which has been particularised. If that occurs without objection, the trial judge is entitled to act upon the evidence given. That is what occurred in this case.

In circumstances where the respondent was accepted as a witness of credit, as a hard-working person and as a person whose work history had demonstrated he had been prepared to work his way up into more senior positions, it was open to his Honour to assess the respondent as a person who would at some stage have achieved his ambition. In my opinion, therefore, there was no error in his Honour finding that the respondent would, sooner or later, have advanced to the position of an Operations Manager at a higher salary than he was presently earning, notwithstanding the absence of particularisation of any such claim in the statement of claim or particulars of injury provided at trial.”

The Court found that there was sufficient evidence for the judge to find that he lost a capacity to earn as well an inability to progress further in his career.

The Plaintiff’s evidence that there was more driving involved in the role as a operations manager than his present position was evidence to support the trial judge’s finding that the Plaintiff suffered interference with his earning capacity notwithstanding he had actually suffered a loss of income up to that point.

The Defendant also argued that there needed to be medical evidence to support a claim that a party had suffered an impairment to future earning capacity, and there was no such expressed statement by any of the doctors at trial.

New South Wales Court of Appeal said the appellant did not refer the court to any such authority and the Court did not know of any. The Court said “there must, of course, be evidence to support such a claim. In this case, that evidence to be found, in the first place, in the evidence of the” Plaintiff and his supervisor. The Court noted that as far as the medical evidence was concerned, there was evidence the Plaintiff had recurred pain, particularly once he was back to full work activities.

Basten JA would wrote a separate judgement stating simply:

To call evidence from his current manager, with whom he had a good relationship and who valued his work highly, as to the risk of termination may have carried a suspicion of collusion. … the evidence of his manager, Mr Bugg, was not challenged on that basis, but rather on the basis that the warning he had received related to a period when he was recovering from surgery …. That challenge was largely unsuccessful and it was therefore unsurprising that the trial judge accepted that there was a significant risk because of his need to shorten working hours from time to time to accommodate the variable pain levels.

The other implicit assumption may have been that the amount awarded was too high for a true buffer. In other words, if such an amount were appropriate, it should have been properly calculated by reference to a proportionate diminution in earning capacity and been subjected to the concomitant allowance for vicissitudes.

As Beazley JA has explained, the fact that a diminution in earning capacity had resulted from the injury was reasonably clear: the extent to which it was likely to result in financial loss and at what time in the future that might occur was far less certain. That degree of uncertainty rendered artificial a calculation based on the current value of future loss. Accepting that a level of future loss was probable, the appropriateness of the allowance would not be improved, or better justified, by adopting a precise form of calculation. No doubt there is a point at which the size of the buffer will demonstrate a disproportion with any plausible calculation based on a percentage diminution in earning capacity, current rates of pay, life expectancy and vicissitudes. The figure arrived at in the present case was not so high as to justify such concerns.

Implications

The above matter highlights a number of issues for Defendants, mainly:

  1. to ensure proper objection is taken if the claimant starts giving evidence that strays outside their pleaded case;
  2. to make sure that cross examination goes far enough to support submissions that you wish in your closing address.
  3. the difficulty in overturning finds of facts and global awards at the appellate level; and
  4. That even if the court feels that an assessment may have been generous, this will not be enough on its own to warrant interference with an award.

In the end, the takeaway point is that it would seem that very little is required to justify a significant award for future economic loss being made once the Plaintiff’s evidence is accepted as to difficulties at work is accepted. Obviously, the fact the Plaintiff called on his supervisor to give evidence to his complaint, greatly benefited the Plaintiff’s case in this matter.