WCRA: loss of earnings/capacity & 8.11% vicissitudes discount

Qantas Airways Limited v Fisher [2014] QCA 329

Refer to the earlier posting.

Henry J delivered the judgment with Mullins J and Muir JA concurring.

The Decision Below

[11] The learned trial judge favoured the preponderance of expert opinion as to the nature of the injury occasioned to the respondent in the incident. He found the incident aggravated a previously asymptomatic degenerative spondylosis of the respondent’s cervical spine.[9]

[12] His Honour found that if the respondent had continued as a baggage handler with the appellant his degenerative spondylosis would have become symptomatic within five years in any event.[10]

[14] After dealing with interest on past economic loss and past loss of superannuation benefits his Honour dealt with future economic loss, arriving at an award of $150,000. His Honour said:

Future economic loss

[36] Applying the plaintiff’s net weekly income when he ceased employment with the defendant of $1,063.00, deducting the $202.00 net per week he currently earns as a bus driver results in a loss of $861.00 net per week. I will allow a period of five years from when the plaintiff ceased employment with the defendant on 28 May 2013 before his symptomatology was such as to preclude him from further employment with the defendant in any event. He was stoic enough to persevere in his employment with the defendant for two years following the incident and this is reflected in the approach I have adopted. This results in a calculation of $861.00 per week over four years as a starting point for future economic loss. Applying the 5% table of multipliers this results in an amount of $163,245.00. I will discount this sum for contingencies given the fragile state of the plaintiff’s spine which exhibits extensive degenerative changes. In my view an appropriate discounting of damages for future economic loss results in an award of $150,000.00.”

[18] It is convenient to deal with the arguments advanced in the appeal by reference to those seven alleged errors because that is how the appellant argued the appeal. The process of doing so will have the practical effect of addressing the grounds of appeal as the appellant argued them.

(1) Failure to properly assess earning capacity

[19] The appellant complains the learned trial judge’s assessment of economic loss was infected by an error of principle. It is said his Honour assessed loss of earnings whereas he should have assessed loss of earning capacity. This alleged error is an over-arching one, around which alleged errors 2 to 5 inclusive were largely framed.

[20] It is well established that where a plaintiff’s capacity to work is impaired as a result of negligently inflicted injury, the loss to be assessed is the loss or diminution of earning capacity. In Arthur Robinson (Grafton) Pty Ltd v Carter[11] Barwick CJ explained:

“The respondent is not to be compensated for loss of earnings but for loss of earning capacity. However much the valuation of the loss of earning capacity involves the consideration of what moneys could have been produced by the exercise of the respondent’s former earning capacity, it is the loss of that capacity, and not the failure to receive wages for the future, which is to be the subject of fair compensation.”

[21] Implicit in those remarks was an acknowledgment that consideration of loss of likely earnings may inform the valuation of lost or diminished earning capacity. As much was expressly acknowledged when Barwick CJ went on to observe:

“Of course, the rate of wages being earned and the rate of wage likely to be earned in the future afford a basis for assessing compensation for the loss of earning capacity.”[12]

[22] In practice, consideration of loss of likely earnings is a common incident of the process of assessing loss of earning capacity. That may reflect the practical reality that it is a topic about which relevant evidence can ordinarily be adduced. However, it also reflects the requirement reiterated in Medlin v State Government Insurance Commission[13] that a plaintiff in a case of this kind must not only establish a diminution of earning capacity but also that the diminution is or may be productive of financial loss. The relevance of evidence of loss or likely loss of earnings to both requirements is self evident.

[23] The reliability of evidence of loss or likely loss of earnings as an aid to assessing the financial loss produced by diminution of earning capacity is inevitably likely to be greater the shorter the period of forecast loss is. For example, in Medlin v State Government Insurance Commission[14] the plurality considered that if the plaintiff’s retirement, four and a-half years prematurely from his position as a university professor, was caused by his accident-related loss of earning capacity, then:

“[t]he plaintiff would be prima facie entitled to recover, as damages for loss of earning capacity, the difference between what he would have earned during those four and one half years in his University appointment and any amount which, notwithstanding his reduced earning capacity, he had earned or could reasonably be held capable of earning during that period.”

[24] In the present case, the period of forecast loss after cessation of employment with the appellant was only five years. It is therefore unremarkable that the evidence of loss or likely loss of earnings was apparently regarded by the learned trial judge as affording a reliable basis for assessing compensation for the diminution of earning capacity.

[25] The problem, if there is one, is the exercise carried out by his Honour is susceptible to the impression that it was not an assessment of loss of earning capacity because his Honour did not articulate the legal principles applicable to the exercise he undertook. However that impression fades on analysis for three reasons.

[26] Firstly, it is not the law that the reasons of trial judges must recite a well established matter of principle whenever it is being applied. Ultimately the purpose of reasons for judgment is not to provide a legal treatise on the area of law involved. It is to explain how and why the decision has been arrived at in sufficient detail to allow the parties to be able to test the decision on appeal.[15] While an express statement of relevant legal principle may assuage concerns as to whether the correct principle has been applied, its absence does not mean the correct principle has not been applied.

[27] Secondly, there was reference in his Honour’s reasons to what the respondent would have earned, had he remained employed with the appellant, as representing “his earning capacity but for the consequences of the incident”.[16] This bespeaks an awareness that the exercise in which his Honour was engaged was an assessment of loss of earning capacity and the financial loss thereby occasioned.

[28] Thirdly, as already discussed, assessment by reference to loss of earnings was in the circumstances of this case an appropriate method of assessing loss of earning capacity. Reference to loss of earnings does not mean there was a failure to assess loss of earning capacity. To the contrary, it was to be expected in a case like the present and is consistent with the trial judge engaging in an assessment of the loss occasioned by the diminution in the respondent’s earning capacity.

[29] The complaint that the trial judge failed to properly assess loss of earning capacity has not been made out in isolation merely by reason that his Honour did not more clearly announce that was the exercise being undertaken or by reason that he had regard to loss of earnings in making that assessment. In the present context for the appellant to demonstrate a failure to properly assess loss of earning capacity it must do so by reference to the assumptions and methodology actually applied in the assessment process.[17]

[30] This the appellant sought to do in respect of alleged errors 2 to 5 inclusive. As will be seen, beneath the veneer of alleged error 1, the real premise of those four alleged errors is that the trial judge did not consider or give proper weight to particular features of the evidence.

(7) Inadequate discount for contingencies of only 8.11%

[72] In assessing future economic loss the trial judge discounted the notional award of $163,245 by 8.11 per cent down to $150,000 “for contingencies given the fragile state of the plaintiff’s spine which exhibits extensive degenerative changes”.[50]

[73] The appellant submitted his Honour erred in arriving at such a low discount given the finding that the respondent’s spine was fragile. This finding, it was said, warranted a greater, not lesser discount than what was asserted to be the conventional discount of 15 per cent.[51]

[74] Implicit in that submission is an assumption that but for the fragile state of the respondent’s spine the trial judge should have adopted a discount of 15 per cent because it is conventional to do so. That assumption is incorrect. A discount for contingencies of 15 per cent is often adopted at first instance but not uniformly so.[52] Further the factual significance of adverse and favourable vicissitudes will inevitably vary from case to case. The inevitably of that variation between cases and the court’s obligation to determine each case on its own facts militates against the adoption of a pre-determined figure as a starting point for deciding the extent of contingency discounting in every case.

[75] The appellant’s submission attaches particular emphasis to the significance of the fragility of the respondent’s spine. That emphasis is misplaced.

[76] It will be recalled the pre-existing degenerative changes to the respondent’s spine had already caused the trial judge to significantly confine the period of future economic loss under consideration. The conclusion of the trial judge was the respondent’s pre-existing degenerative changes would have become symptomatic in any event within only five years of the incident, despite the professional opinion of at least one expert suggesting that the period could range as high as 10 years. Even after allowances for the proved stoicism of the respondent the practical effect of his Honour’s approach was the respondent was only granted an award for future economic loss for a period of four years beyond the trial. The uncertainty associated with the respondent’s condition remained a relevant consideration when the trial judge in turn allowed for contingencies during that period, as his Honour’s reasons show. However, its significance was tempered by the associated role it had already played in confining the period of future economic loss under consideration.

[77] Moreover, the fragile state of the respondent’s spine was not the only relevant consideration. It is significant that the period of future economic loss under consideration was a relatively short period of time in the life of a human being. The degree of discounting warranted by the notable adverse contingencies – death, sickness, accident, unemployment and industrial dispute[53] – was not as great as it would be were a longer period of future economic loss under assessment. Further, there were relevant positive vicissitudes beyond the respondent’s stoic nature. That included his long-term employment history with the appellant, his high level of pre-incident fitness and activity and the prospect of increased earning over time.

[78] Given all of those circumstances the contingency discount figure adopted by the trial judge was unremarkable and no error has been shown. Appeal ground (b)(viii) must fail.

David Cormack – Brisbane Barrister & Mediator


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