MVA: complex damages assessment based on domicile factors

Yamaguchi v Phipps & Anor [2016] QSC 151

The plaintiff was a 23 year old Japanese national on holiday in Cairns when she was struck by a bus on a pedestrian crossing and sustained brain damage, orthopaedic injuries and major depression. There was no contest as to liability.

The assessment of damages was complicated by the necessity to consider the items of damage peculiar to Japan, extensive care and the appropriate exchange rate.

General Damages

In determining the multiple injuries, his Honour Applegarth applied the reasoning of McMeekin J in Allwood v Wilson[2] as follows:

“… it is necessary to determine the dominant injury as it is defined[3], have regard to the range of ISVs applicable to that injury, determine where in the range of ISVs provided for that injury it should fall, and determine whether the maximum ISV in that range (“the maximum dominant ISV”) adequately reflects the adverse impact of all the injuries.[4] If the maximum dominant ISV is not sufficient then the ISV may be higher but not more than 100 and only rarely more than 25% above the maximum dominant ISV selected.[5] In arriving at an appropriate ISV the court needs to bear in mind that the effects of multiple injuries commonly overlap.[6]

His Honour concluded:

[107] In arriving at an appropriate ISV I bear in mind that the effects of some of the multiple injuries overlap. For example, both her brain injury and her serious mental disorder affect her ability to live an independent life. Some of her injuries, for example, her anosmia, present distinct and different impairments. She experiences pain when undertaking normal activities. She experiences persistent headaches.

[108] The cumulative effect of the plaintiff’s injuries is to render her incapable of living an independent life and practically eliminates her capacity for employment. The plaintiff has an insight into what she has lost and she has lost many of the amenities of life. The simple addition of separate ISVs would yield a figure in excess of 80, but this is inappropriate because certain effects of her various injuries overlap. However, the number of injuries, their compounding effect, and the distinct aspects of her major injuries warrant an ISV in excess of 50. I consider that the ISV for the plaintiff’s multiple injuries should be 55.

[109] Based on this ISV, general damages are calculated in accordance with s 62 of the Act at $130,600.

[110] Whichever major injury had been chosen as the dominant injury, the end result of the assessment would be similar. This is because the other major injury itself attracts a substantial ISV. The brain injury has no prospect of improvement. The major depression shows little hope of improvement. If it had been chosen as the “dominant injury” then the maximum ISV in the range for Serious Mental Disorders (40) would not adequately reflect “the level of impact”[15] of all the injuries. An increase of more than 25 per cent of the maximum dominant ISV would have been appropriate because of the extent of her cognitive impairments, and the separate effect of her other injuries.

[111] If the significant cognitive impairments which the neuropsychologists assessed and which the plaintiff’s co-workers, supervisors, friends and family have observed on a daily basis are due to her depression, and not her brain injury, they remain significant impairments. The psychiatrists regarded those impairments as cognitive impairments, to be separately assessed by others. If, however, they are assessed as part of her psychiatric illness, then its ISV would be much more than 25. Therefore, if I had acted on Dr Cameron’s suspicion that the plaintiff’s impairments with memory and processing information are attributable to the plaintiff’s psychiatric condition, then the final ISV would be practically the same.

Lost Earning Capacity

The challenge facing his Honour was determining the interaction of the Japanese social security system, employer funded pensions and income tax, together with the usual assessment of loss of income and contingencies, subject to promotions and wage increases. His Honour accepted and was assisted by the expert evidence of Mr Lee of Vincents Chartered Accountants and by reference to varying scenarios and uncontested evidence as to the pension and tax system.

Superannuation / Pension

The nature of the Japanese employer funded pension scheme raised s 56 of the Civil Liability Act 2003 (Qld) for consideration. His Honour held:

[148] He notes that his calculation of the plaintiff’s future loss of pension benefits at the rate of 9.15 per cent might appear to exceed the amount stated in s 56. However, leaving aside issues of concessional tax rates on contributions, notional superannuation contributions are based on a contribution rate of up to 9.15 per cent of the plaintiff’s gross earnings. Mr Lee noted in this regard the decision in Najdovski v Crnojlovic.[22]

[149] The defendants submit that loss of superannuation benefits should be allowed at the rate of 9.25 per cent in respect of past benefits and 11 per cent in respect of future benefits.

[150] The plaintiff submits that in the absence of evidence of a statutory requirement upon an employer to pay “employer’s superannuation contributions”, s 56 is not engaged. In his evidence, Mr Lee was unsure whether the entitlement to Employees’ Pension Insurance was a matter provided for by a Japanese statute or was, in effect, a contractual entitlement. However, I infer from the material that the obligation on a relevant employer to contribute equally under the Employees’ Pension Insurance is a matter of compulsion under Japanese law. Although styled an earnings-related pension, in the absence of argument to the contrary, I am inclined to treat it as being in the nature of a scheme which provides for “employer superannuation contributions” within the meaning of s 56(1).

[151] The plaintiff relies upon Najdovski v Crnojlovic in which Basten JA (with whom Allsop P agreed) concluded that account must be taken of the fact that damages payable for deprivation for impairment of earning capacity are based on net earnings whereas the then minimum percentage required by law to be paid as employer’s superannuation benefits of nine per cent was of an employee’s “ordinary time earnings”. As a result, the calculation of the maximum amount of damages to be awarded under s 15C of the Civil Liability Act 2002 (NSW) was assessed on the basis of 11 per cent of earnings net of tax.[23] The defendants’ submissions do not question the correctness of that approach and I respectfully follow it. In this case, the employer contribution in the past has always been less than nine per cent. The figure of 9.15 per cent that will apply in 2017 and later years, is calculated on the basis of gross earnings. Having regard to the adjustment required by the decision in Najdovski v Crnojlovic, the plaintiff’s future loss of pension benefits as a result of the loss of prospective employer superannuation contributions does not exceed the amount allowed under s 56 of the Civil Liability Act 2003 (Qld).

[152] The loss will be calculated in accordance with Mr Lee’s approach. I have calculated the percentage which his figure for past loss of pension entitlements bears to his figure for past economic loss under Scenarios 1, 2 and 3. Subject to adjustments earlier noted arising from Exhibit 4, the percentage is approximately 18.5 per cent. I apply that percentage to past economic loss of ¥8,292,835 to arrive at a figure for past loss of pension entitlements of ¥1,534,174. As for the future, the figures calculated by Mr Lee in respect of future loss of pension entitlements compared to future economic loss under different scenarios are approximately 21.5 per cent. I apply that percentage to the figure which I assess for impaired earning capacity of ¥55,250,000 to arrive at a figure for future loss of pension entitlements of ¥11,878,750. The total for lost pension entitlements is ¥13,412,924.

Past and Future Care

Past care and future care represented a significant component of the damages. His Honour noted appropriate approach is to objectively assess the need which is necessary:

[169] The principles governing a claim of the present kind are well-established by authorities such as Clement v Backo[25] and Shaw v Menzies[26] which, in turn, refer to leading authorities such as CSR Ltd v Eddy.[27] The basis for the claim is the need of the plaintiff for the services that are provided to her. These are services which the plaintiff reasonably needs or which, in terms of s 59(1)(a) are “necessary”. The proper approach is to determine objectively what is needed.

His Honour preferred the occupation therapist evidence of Ms Hague, to Mr Fraser. This was influenced heavily by the cognitive assessment reports of Ms Anderson and Dr Douglas, Neuropsychologists.

His Honour concluded the need for care would continue throughout her life and despite devoted parents, they may not live forever, suffer illness or injury or even separate. Accordingly, Applegarth allowed care at the commercial rate including the agency fee:

[192] Regard should be had to the commercial rate.[29] However, regard may also be had to the cost of sourcing the required services directly, and not through an agency, if there is such evidence and it is reasonable to engage carers directly.[30] Ultimately, the rate must be assessed according to a plaintiff’s need for services in a particular case.[31] Continuity of care and ensuring an appropriate standard of care justify the use of a commercial agency to provide the services, especially because the plaintiff’s parents could not be expected to source directly the individual carers and to assess their suitability for decades to come.

However, his Honour did discount the allowance by 15%.

Exchange Rate

The exchange rate raised arguments as to whether the award should be in Japanese Yen or Australian Dollars and at current or historic exchange rates. Applegarth J resolved that save general damages and some limited past special damages, that damages should be assessed in Yen at the historical average using the commercial rates as opposed to the RBA rate. General damages would be assessed at the time of judgment using current exchange rates because most of the loss was for the future.

David Cormack – Brisbane Barrister & Mediator





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