FA5 Damages and economic loss in personal injury claims ‐ a practical guide Dimitra Dubrow
Principal ‐ Medical Negligence Department
Maurice Blackburn
David Heath
Director
Cumpston Sarjeant Pty Limited
What is a personal injury claim?
•
A common law claim for compensation for injury, loss and damage flowing from injury to the
person as a result
l off negligence
li
and/or
d/ breach
b
h off contract and/or
d/ breach
b
h off statutory duty
d
•
The negligence, breach of contract or statutory duty may be an act or an omission
•
Most personal injury claims are based on negligence
•
To establish negligence, need to prove:
o That there was a duty to take reasonable care;
o The duty of care was breached; and
o The breach of the duty has caused or materially contributed to an injury.
2
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1
Compensatory Principle
• Fundamental p
principle
p applied
pp
byy the Courts in awarding
g damages
g for p
personal
injury is the compensatory principle
• Damages should be awarded to restore the Plaintiff to “the same position as he
would have been in if he had not sustained the wrong for which he is now getting
his compensation”
Livingstone
g
v Raywards
y
Coal Company
p y (1880)
(
) 5 App
pp Cas 25
5 ((HL))
• The cases refer to this being done “so far as money can do so” with the focus on fair
but not perfect compensation.
3
Limitations on compensatory
principle
• The common law clearlyy cannot restore the Plaintiff to the same p
position had
negligence not occurred:
o no amount of money can put injured person back to where they would
have been had it not been for the negligence and injury.
o difficult exercise of hypothesising as to what would have happened had
the person not been injured involving assessing possibilities and
probabilities.
probabilities
o statutory incursion in the form of thresholds and caps in all Australian
States limiting the recovery of damages.
4
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2
Once and for all rule
• Once lump
p sum damages
g received,, cannot come back and re-litigate
g
the
matter.
• Can result in great unfairness, for example, where the plaintiff’s condition
worsens considerably after compensation received.
• Balanced by need for certainty and finality in damages claims.
• It is therefore vital for a plaintiff lawyer to:
o ensure that
h a claim
l i iis properly
l and
d comprehensively
h
i l prepared;
d and
d
o all possible heads of damage have been considered and evidence
obtained in relation to them.
5
Once and for all rule
• There are exceptions
p
to the “once and for all” rule,, for example,
p , where
legislation allows for annuities to be paid or where there are benefits under a
statutory scheme.
• For example, a plaintiff might require further back surgery as a result of a
work injury. Even if they have been compensated for their injury, a statutory
authority such as the Victorian Workcover Authority,
authority,
Authority will fund the further
surgery related to work injury.
6
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3
Damages
• Damages
g are awarded for:
o non-economic loss (general damages); and
o economic loss (special damages).
• Non-economic loss damages are to compensate the plaintiff for:
o Pain and suffering;
o Loss of amenities of life;
o Loss of enjoyment of life;
o Loss of expectation of life;
o Disfigurement.
7
Work-related injuries – statutory
schemes and common law
•
A person’s entitlement to compensation will depend on how they came to be injured
•
Every Australian state has a no-fault workers compensation scheme, i.e. injured workers able to access benefits without having to resort to
negligence claim
•
Common law rights for work place injuries vary amongst the states
•
ACT and Tasmania retain unfettered common law rights
•
Common law rights but only where:
–
Victoria – a worker establishes that they have a “serious injury” – narrative test or 30% whole person impairment (Accident
Compensation Act 1986
–
Commonwealth employee - where have a whole person impairment of more than 10% (Safety Rehabilitation and
Compensation Act 1988 (Cth)
–
NSW - elect between compensation for permanent loss on Table of Disabilities and common law damages for which 15%
threshold of “most extreme case” applies (Workers Compensation Act 1987)
–
Queensland – For injuries pre- 15 Oct 2014 no restrictions on common law but for injuries post 15 Oct 2014, must have an
impairment of 6% or more to pursue a common law claim (Workers’ Compensation and Rehabilitation Act 2003)
–
Western Australia - more than 25% whole person impaired or limited common law where more than 15% whole person impaired
(Workers’ Compensation and Injury Management Act 1981)
South Australia - no common law rights (Workers Rehabilitation and Compensation Act 1986)
Northern Territory - no common law rights (Work Health Act 1986)
•
•
8
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4
Transport Accidents– statutory
schemes and common law
•
•
•
•
Statutory no-fault compensation schemes in Victoria, Tasmania, Northern Territory and limited
scheme entitlements for seriously injured drivers at fault in Queensland.
Queensland
Common law rights retained in ACT, Queensland and Tasmania
Statutory restriction on recovery of common law damages:
– Victoria – need to establish “serious injury” – narrative test or 30% whole person
impairment (Transport Accident Act 1986)
– South Australia - needs to have been a significant impairment of normal life for at least 7
days or medical expenses of the prescribed minimum. Then general damages are assessed
according to a scale from 0 to 60 (Civil Liability Act 1936)
– NSW – non-economic loss limited to cases of more than 10 per cent whole person
i
impairment
i
t (Motor
(M t Accidents
A id t C
Compensation
ti A
Actt ((1999))
– Western Australia - deductible threshold of $19,500 which gradually decreases. All damages
assessed as a percentage of a hypothetical most extreme case which is allocated a maximum
- the max is indexed annually and is currently $390,000.00 (Motor Vehicle (Third Party
Insurance ) Act)
Northern Territory – no common law rights (Motor Accidents (Compensation) Act 1979)
9
Non-economic loss/general damages
• Award of non-economic loss damages
g cannot be calculated with anyy type
yp of
specificity. It has been said that they are “of their very nature, incapable of
mathematical calculation…”
Paff v Speed (1961) 105 CLR 549 at 558-9
• Pain and suffering damages are based on the subjective feelings and insight of
the plaintiff.
plaintiff Therefore plaintiff who has been catastrophically injured and
rendered unconscious likely to be awarded modest compensation for pain and
suffering.
10
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5
Statutory limitations on noneconomic loss damages
•
Victoria
Vi
t i - damages
d
f non-economic
for
i loss
l
are only
l recoverable
bl if the
th iinjury
j
iis assessed
d as a
“significant injury’. Defined as:
o
o
o
o
•
a whole person impairment under the American Medical Association Guides 4th Edition of
more than 5% for a physical and more than 10% for a psychiatric injury;
Loss of a breast;
Loss of a foetus:
Psychological or psychiatric injury arising from the loss of a child due to injury to the
mother or foetus or child before, during or immediately after the birth.
Sections 28LE and 28LF, Wrongs Act 1958
Cap for general damages now around $497,000.00.
Sections 28G and 28H, Wrongs Act 1958
11
Statutory limitations on noneconomic loss damages
•
New South Wales - person needs to be 15% of the most extreme case and then sliding
scale.
l
Section 16, Civil Liability Act 2002
•
Western Australia - threshold amount needs to be reached which is then deducted from
the award of damages. Amounts are assessed from a scale as the amount increases.
Sections 9-10, Civil Liability Act 2002
•
South Australia - needs to have been a significant impairment of normal life for at least 7
days or medical expenses of the prescribed minimum. Then general damages are
assessed according to a scale from 0 to 60.
Section 52, Civil Liability Act 1935
12
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Economic loss claims
•
Economic loss claims include the following heads of damage:o Loss of earning capacity including earnings, superannuation, bonuses and other
benefits and allowances;
o Cost of needs created by the injury including:
 Costs of medical and hospital treatment and pharmaceutical expenses
 Costs of allied health therapy and equipment (for example, speech pathology)
 Past gratuitous care (Griffiths v Kerkemeyer damages)
 Attendant care
 Domestic assistance and community access
 Accommodation
 Transport (for example, vehicle modification)
• Statutory compensation schemes also provide some benefits for loss of earnings and costs
created by injury.
13
Cost of needs created by injury
• To calculate the future costs arising
g from the injury,
j y, it is necessaryy to have
evidence in the form of reports from appropriate experts in relation to:
• the plaintiff’s current and future therapy and equipment needs
• the medical treatment and/or surgery likely to be required and when
• the current cost of the medical treatment/surgery, therapy and
equipment; and
• the
h time
i
period
i d ffor which
hi h the
h therapy
h
and
d equipment
i
iis required
i d
together with replacement periods.
14
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Cost of needs created by injury
• In calculating
g future losses,, it is necessaryy to apply
pp y a multiplier
p
dictated byy the
discount rate as prescribed in the various State legislation.
• This has brought about the development of life tables which incorporate
deferred multipliers and fixed term multipliers.
• Lawyers will make reference to available tables and online calculators or seek
specific multipliers from actuaries.
15
Cost of needs created by injury
• Necessaryy for briefing
g solicitor to advise the actuaryy of the following
g relevant
information:
– The discount rate applicable;
– The date of birth of the Plaintiff;
– The date the loss is to be calculated from;
– The date the loss will end i.e. death or retirement or another date;
– Whether it is for a fixed period;
– Whether it is a loss which will occur at some point in the future and the
date of the loss;
– The payment frequency for example weekly, fortnightly, monthly, one
yearly, two yearly, five yearly.
16
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8
Loss of earning capacity principles
• It is for the plaintiff to prove loss of earning capacity and the extent to which
that loss produces, or might produce, financial loss
Todorovic v Waller (1981) CLR 402, 412
• An injured person’s economic loss is to be assessed “by reference to the actual
l
loss
off wages which
hi h occurs up to the
h time
i
off trial
i l and
d which
hi h can b
be more or
less precisely ascertained and then, having regard to the plaintiff’s proved
condition at the time of trial, to attempt some assessment of his future loss”.
Graham v Baker (1961) 106 CLR 340 at [346] to [347]
17
Loss of earning capacity principles
• Generallyy assessed as the difference between the p
plaintiff’s “pre-injury”
p
j y and
“post-injury” earning capacity
• If there has been a loss of earning capacity, then, taking into account the facts
of the past and the probabilities of the future, it is necessary to determine the
damage that will flow from the loss of that capacity
• The court is to look at whether the plaintiff has capacity for work beyond their
pre-injury
pre
injury employment
Medlin v The State Government Insurance Commission (1995) 182 CLR
1 at [6], [17] and [19]
18
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Loss of earning capacity principles
• When the law takes into account future or hypothetical
yp
events in assessing
g
damages, it can only do so in terms of the degree of probability of those events
occurring.
• The court takes account of the degree of probability that an event would have
occurred or might occur and adjusts the award of damages to reflect the
degree of probability.
Malec v JC Hutton Pty Ltd (1990) 169 CLR 638
19
Loss of earning capacity principles
• No denial of damages
g or award of onlyy nominal damages
g because p
plaintiff
failed to call evidence about likely future earnings if there is a clear loss of
earning capacity
• However, where evidence should have been available and plaintiff does not
call this evidence, they cannot complain about a low award
State of New South Wales v Moss (2000) 54 NSWLR 536, 552 and 554
• Plaintiff has the onus to prove economic loss and the information concerning
economic
i loss
l
and
dd
documents relevant
l
to iit are within
i hi the
h k
knowledge
l d and
d
possession of the Plaintiff, so the lack of clarity on these matters is primarily
the responsibility of the Plaintiff.
AMP General Insurance Limited v Kull [2005] NSW CA 442
20
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10
Legislative caps on economic loss
• Legislative
g
caps
p on amount to be awarded for economic loss:
– Disregard amount by which pre-injury earnings exceed three times gross
average weekly earnings
Section 28F Wrongs Act 1958 (Vic)
Section 12 Civil Liability Act 2002 (NSW)
Civil Liability Act 2002 (WA)
Personal Injuries Proceedings Act 2002 (Qld)
– Disregard net weekly earnings exceeding $2,500 (indexed amount now
about $4,300)
Section 125 Motor Accidents Compensation Act (NSW)
21
Is it all about the tax returns?
• In p
preparing
p
g a claim,, it is necessaryy to establish what the p
pre-injury
j y earning
g
capacity of the plaintiff was.
• Usually rely on the plaintiff’s previous earnings as set out in tax
documentation, group certificates or payslips to calculate the net earnings lost.
• Dangerous predicament for a plaintiff where tax returns do not reflect the true
earning position. It would be inadvisable to go beyond the tax returns given
the negative view taken to undeclared income and exposure to tax evasion
prosecution.
prosecution
• Court will scrutinise the evidence with special care and non-compliance will
reflect on plaintiff’s credit and may lead to evidence being rejected
Giorginis v Kasterati (1998) 49 SASR 371
22
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11
Is it all about the tax returns?
Morvatjou
j
v Moradkhani [2013] NSWCA 157
• Plaintiff injured while working as a painter for the defendant
• Claimed damages for his economic loss on the basis of earnings of $600 net per
week, based on the relevant industry award
• Tax returns identified that plaintiff had earned $149 net per week in the year
immediately prior to his injury
• Awarded past economic loss damages based on $149.00
• Awarded
A
d d ffor future
f t
economic
i lloss b
based
d on th
the amountt off $
$480
8 nett per week
k
• Plaintiff appealed
23
Is it all about the tax returns?
• Appeal
pp
court found:
o Should not rely solely on the plaintiff’s income tax returns to quantify
past loss of earning capacity
o plaintiff does not have to admit to tax evasion before a court can
quantify the plaintiff’s lost earning capacity
o tax treatment of a plaintiff’s income is not conclusive
o court must determine what the p
plaintiff could have done in the work
force and what sum of money the plaintiff would have had at his or her
disposal.
• Was it relevant that it was the defendant employer who paid plaintiff cash in
hand?
24
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12
Earnings of a partnership
•
Claim generally made on the basis of the plaintiff’s personal income loss.
•
But need to look beyond this where plaintiff was in a partnership, company or trust.
Husher v Husher (1999) 197 CLR 138 at [20]
•
•
•
•
Plaintiff was a self-employed block layer working in a partnership with his wife
Plaintiff performed the labour, wife took messages and did the bookkeeping
Injured in car accident while wife driving
High Court said plaintiff was entitled to recover the total profits of the partnership in respect of loss
of earning capacity as:
the whole of the income of the partnership came from the efforts of [the plaintiff] and the
exploitation of his earning capacity, and that what [the plaintiff] would have had under his
control and at his disposal but for the accident was, therefore, the whole of the fruits of his skill
and labour. And it is, then, the whole of those fruits that he has lost.
25
Business income post injury
Fkiaris v Fkiaris (2010) NSWCA 116
• Plaintiff suffered severe brain damage in motor vehicle accident in 2004
• Plaintiff was a successful businessman who together with his wife ran businesses including a
fast food outlet and owned property including a shopping arcade
• Plaintiff “did the thinking” and was responsible for the business operations
• Following injury, plaintiff unable to work and make business decisions
• However, apart from year after injury, plaintiff’s income exceeded the cap of $3,584 provided
for at s 125 of the Motor Accidents Compensation Act
• Post injury
i j
income
i
derived
d i d ffrom di
distributions
ib i
ffrom the
h entities
i i which
hi h fformed
d part off the
h
business operations and the accumulation of capital from plaintiff’s work and business
acumen over many years
• Issue was whether the cap resulted in the plaintiff being unable to recover damages for
economic loss except for that one year post injury when his income was below cap?
26
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13
Business income post injury
• Court found that “earnings”
g for p
purpose
p
of the section means earnings
g from
personal exertion or the exercise of the injured person’s earning capacity.
• Section is concerned with awarding past and future economic loss due to
deprivation of personal earning capacity from injury. In this case, the plaintiff’s
earning capacity after injury was nil.
• Court rejected insurer’s argument that post injury earnings resulted from preinjury earning capacity of the plaintiff and so there was a causal link between that
capacity and the post-injury earnings.
• Court allowed trial judge’s calculation of loss based on cost of engaging another
person to do the work the plaintiff would have done had he not been injured.
• Cap fixed by section 125 therefore irrelevant
27
Future economic loss
• For future economic loss claim,, need evidence to establish the p
probable and
likely future earnings path the Plaintiff would have enjoyed “but for” the
injury.
• This evidence will need to come from:
– The Plaintiff’s employer and co-workers about their performance at work
and their likely progress and career path;
– The earnings of a comparable worker;
– Where the Plaintiff asserts that they would have followed a certain career
with advancements and promotions, evidence of the likelihood of this
occurring based on their performance to date and corroborating evidence
from other sources.
28
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14
Loss of dependency claim
• Where negligence
g g
has resulted in death,, a claim can be brought
g byy the
dependants of the deceased for:
o Loss of past and future financial loss and support; and
o Loss of past and future services.
• There is one lump sum representing the loss of all dependants and is to be
apportioned among them.
• Loss
L
off fi
financial
i l support iis b
based
d on:
– The earnings of the deceased and the likely future earnings;
– Deduction of amounts that would have been spent on the deceased;
– The period of dependency i.e. children up to 18 or 21 years of age?
29
Expert Evidence
•
•
•
•
•
The role of expert witnesses, including accountants, is to provide expert opinion based on specialised
knowledge and the assumptions of fact put forward by the briefing solicitor
solicitor.
It is for the parties and their legal team to obtain the evidence to support the assumptions asserted in
the claim.
An expert is someone with specialised knowledge based on their training, study or experience.
Order 44 Supreme Court General Civil Procedure Rules 2005 (Vic)
Section 79 Evidence Act 2008 (Vic) and Evidence Act 1995 (Cth)
The Rules of Court in most Australian jurisdictions provide for Expert Witness Codes of Conduct.
Schedule 7, Uniform Civil Procedure Rules 2005 (NSW)
Uniform Civil Procedure Rules (QLD)
In Victorian rules, the Code provides that an expert is to set out:
– Their qualifications to prepare the report;
– The facts, matters and assumptions on which each opinion is expressed; and
– Reasons for and any literature or materials utilised in support of their opinion.
30
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Expert Evidence
• The expert
p is to declare that theyy have made all enquiries
q
that theyy believe are
desirable and appropriate and that there are no matters of significance which
the Expert regards as relevant that are being withheld from the Court.
• The Code also provides that an expert witness is to confer with any other
expert witness and provide the Court with a joint report if directed by the
Court to do so.
Order 44 Supreme Court General Civil Procedure Rules 2005 (Vic)
31
Calculation of economic loss
Actuarial perspective
• Acting
g as expert
p witness
• Meeting definition of expert via training, education, qualifications, experience
• Take obligations very seriously
• Paramount duty to the Court, not acting as advocate
• Obligation to narrow the issues in dispute (s.23, Civil Procedure Act)
• Obligation to ensure costs are reasonable and proportionate (s.24)
• Acting under instructions
• “Bit players” in the process?
• “Sophisticated calculators” (how much “opinion” evidence?)
32
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16
Calculation of economic loss
Actuarial perspective
Tax
Loss
Net
Tax
Net
'But for' injury
•
•
•
'Despite' injury
Difference in net earnings
Past vs. Future
Earnings and superannuation
33
Calculation of earnings loss
• Past losses usually from date of accident to date of calculation (say date of trial,
mediation). There are exceptions e.g. Victorian transport accidents – loss
commences 18 months post accident
• Future losses typically from date of calculation to date of retirement (55, 60, 65, 67,
70?)
• Future losses require a discount rate
• Discount rate is meant to take the following into account
• Future inflation (wage inflation)
• Future investment returns (“conservative” investments?)
• Taxation on investment returns
• So multipliers reflecting discount rates should (in theory) lead to a lump sum for
the plaintiff that if invested should provide regular drawdowns equivalent to the
after-tax earnings until retirement age
34
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17
Discount rates
•
In Todorovic v Waller, the High Court established a 3% real discount rate
Replication of Todorovic v Waller reasoning
Long term government bond rate
plus bond premium
Long term "market" bond rate
less allowance for taxation
After‐tax investment rate
less long‐term inflation rate
Net of inflation, after‐tax investment rate
•
•
•
1981
13.0%
3.0%
16.0%
23%
12.32%
‐10%
2.32%
2014
4.0%
2.0%
6.0%
21%
4.74%
‐3%
1.74%
Following (my understanding of) the reasoning of this landmark case would indicate an
appropriate real (after inflation) discount rate should be in the order of 1.5% - 2.5% per annum
Statutory discount rates often 5%, 6%. For comparison, weekly multiplier for 25 years at 6%
p.a. is 686.9. Same multiplier at 3% p.a. is 922.2.
A tension arises. The requirement to use a statutory discount rate appears to be incompatible
with attempts to indemnify a plaintiff for loss of earnings as a result of injury
35
Calculation of earnings loss
- Superannuation
• Subject of my presentation to this conference in Melbourne in 2012
• No strict method accepted in any jurisdiction.
jurisdiction Some legislated,
legislated other methods
“accepted”.
• Must be aware of the jurisdiction in which the case shall proceed, and the relevant
legislation
• If in doubt, seek instructions
• For Defined Contribution funds (consistent with Superannuation Guarantee), some
jurisdictions adopt a percentage method. Others allow methodology which
considers
id
ttax on contributions,
t ib ti
ffund
d expenses and
d iinvestment
t
t returns.
t
• Allowing for Defined Benefit schemes more complicated
• What if an employee has been salary sacrificing? Assumed continuation?
36
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18
Calculation of earnings loss
- Other issues
• Consistent with statutory discount rates, prohibition against allowance of future
wage increases. However, while allowance for “general” wage inflation prohibited,
we are often
f
i
instructed
d to assume a promotionall path.
h
• Often in cases where plaintiff is a police officer, military officer, teacher, nurse or
other occupation where promotions clearly defined.
• For example, police constable injured. Letter of instruction may assume would
have attained Senior Constable in 2016, Sergeant in 2021, Senior Sergeant in 2028
etc. Typically beyond my expertise to know career path.
• What if no earnings history? For example an injured child. May receive
instructions to assume Average Weekly Earnings.
Earnings Alternatively,
Alternatively have received
instructions such as: Both parents have postgraduate degrees and high earning
professionals, older sibling had excellent school results and now enrolled at
university, so higher income expected.
• Comparable employees sometimes used
37
Calculation of earnings loss
- Other issues
• Courts typically apply deductions for vicissitudes, often in the order of 15%
• My understanding being that Court is recognising and allowing for the possibility
that even if not injured the plaintiff would have been subject to uncertainties such
as possible death, disablement, no earnings due to industrial disputes, illness,
economic downturn etc.
• Unless requested, we do not typically include any deduction for vicissitudes
• We understand Courts should assess the circumstances of each individual case to
arrive at an appropriate deduction
• Difficult to justify a 15% deduction
deduction, on average
average, in comparison to statistics for
death, disablement, industrial dispute etc.
• Previously, we adopted multipliers that included allowance for average mortality.
Unless requested, we do not allow for mortality in multipliers to retirement age:
1. Could lead to “double counting” if deduction for vicissitudes
2. Population mortality rates relatively low until mid-60s or later
38
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19
Calculation of Dependency loss
• The earnings
g of the deceased were (and would have continued to be) spent
p
p
partlyy
on themselves, and partly contributed to the household (spouse and dependent
children)
• Loss of earnings of deceased is a loss to the household
• Ideally would base loss estimate of actual past expenditure, however appropriate
data difficult to access (this may change?)
• Using ABS Household expenditure survey, can look at “average” expenditure
pattern Data presented in income quintiles
pattern.
quintiles.
• Resulting dependency percentages take into account income/earnings of each
parent (one or two incomes), number of dependent children
• Publications by Cumpston Sarjeant (my firm) and Vincents (Lee & Bossert) both
have shortcomings. My colleagues are in the process of revising our dependency
calculations.
39
Other actuarial involvement
• Costs of care – for jurisdictions where medical, treatment, long term care are
awarded as lump sum, may be requested to calculate such a lump sum
• Typically rely on other experts e.g. doctors, occupational therapists, architects
• Application of multipliers reflecting statutory discount rate, but can get
complicated e.g. wheelchair to be replaced every seven years, but serviced every
two years in-between. So servicing costs at year 2, 4, 6, 9, 11, 13, 16, 18, 20, 23, 25,
….
• Taxation calculations on past loss (so called Fox v Wood benefit for Victorian
workers’ compensation – plaintiff has received statutory income benefits net of
taxation but upon receipt of any lump sum must repay gross of taxation)
taxation,
• Comparison of statutory benefits vs Common Law benefits
• e.g. Is the plaintiff better off pursuing Common Law economic loss, or
alternatively remaining on statutory income replacement benefits?
• May need to consider interaction of social security benefits, particularly
disability pension
40
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20
Main messages
• Always remember your role as an expert
• Be
B sure nott tto actt outside
t id your area off expertise
ti
• Be sure not to act as an advocate for either party (inherent tension as
unless single expert, typically being commissioned by either the
plaintiff’s or defendant’s solicitors)
• If in doubt, disclose what you have assumed or the methodology you’ve
adopted
• If you’ve relied on other experts, disclose it
• Know the relevant legislation/jurisdiction in which you are operating
• Act on instructions, but don’t blindly accept them
41
Joint reports and concurrent
evidence
In Victoria, Courts now have g
greater discretionaryy p
power under the Civil Procedure
Act 2010, in relation to expert evidence in civil litigation.
The Court may:
– direct expert witnesses to hold a conference and prepare a joint expert’s report
(expert conclave), at Section 65I.
– direct that evidence be given concurrently, including that witnesses be
permitted to ask questions of any other expert witness giving evidence
concurrently (concurrent evidence) at Section 65 K.
K
– at any time order that an expert be engaged jointly by the parties (single joint
expert) at Section 65L.
– appoint an expert to assist the Court and enquire in to as well as report on any
issue in the proceedings (Court appointed experts) at Section 65M.
42
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2014. All rights reserved.
21
43
Joint reports and concurrent
evidence
No question that joint reports, experts conclaves and concurrent evidence feature prominently and
are now an established part of Australian litigation landscape
• Gives rise to the need for court direction and oversight
• In Victorian Bushfires class action, a number of rulings were made in relation to expert conclaves.
Matthews v SPI Electricity Pty Ltd (Ruling 10) [2012] VSC 379
• Court decided composition of conclaves should be by reference to specific issues rather than broad
topics.
• Approach would:
– result in more conclaves – 14 in total
– Less likelihood expertise of expert challenged
– Avoid imbalance of numbers of experts
– more likely to assist court to refine issues and identify issues in dispute if joint report on
specific issues
• Joint report based on specific issues model would not determine the composition of the concurrent
evidence at trial
•
44
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2014. All rights reserved.
22
Example – heads of damage
Mules v Ferguson
g
and Anor [[2014]
4] Q
QSC 51
5
• Plaintiff unsuccessful in Queensland Supreme Court in claim against her GP
for allegedly failing to refer her to a specialist for further investigations after
she presented with a sore neck, headache and dizziness.
• The plaintiff was ultimately diagnosed with cryptococcal meningitis, however
by the time that the diagnosis was made the plaintiff had already been
rendered both deaf and blind.
blind
• Plaintiff failed to establish negligence management by GP.
• Plaintiff has appealed decision.
• Judge made findings in relation to quantum.
45
Mules v Ferguson and Anor
[2014] QSC 51
•
General Damages – statutory maximum
•
Past economic loss
– plaintiff had been employed as an operations manager in a full time capacity at a hotel in Cairns, where she
earned $65,000 per annum, inclusive of superannuation (or $842.22 per week after super, taxes and medicare
levy).
– plaintiff awarded 278 weeks of lost income at $842.22 per week, plus lost super.
$263,471.68
Future economic loss
•
–
–
•
$250,000.00
plaintiff’s wage would have remained at $842.22 per week for next 18 years until retirement at 67 years of age
Using
i the
h 5%
% discount
di
rate ((multiplier
l i li 625),
6 ) totall off $526,387.50,
$ 6 8
with
i h a 12%
% di
discount ffor the
h vicissitudes
i i i d off
life, giving total of $463,221.
Future superannuation calculated at 11%, $50,954.31.
$514,175.31
46
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2014. All rights reserved.
23
Mules v Ferguson and Anor
[2014] QSC 51
•
•
•
•
•
•
•
•
•
•
•
•
Past Gratuitous Care and Services - allowed 200 weeks of 12 hours per week of care and services provided by
plaintiff’ss mother
plaintiff
$639 479 40
$639,479.40
Future care - 12 hours of active care and 8 hours of inactive or sleep-over care allowed until death based on
plaintiff’s life expectancy of 39 years and applying multiplier 910 and discounting 12% for contingencies
$4,333,785.46
Case management
$55,124.08
Future domestic and home maintenance needs
$58,048.00
Future aids and equipment
$52,775.94
Case management
$55,124.08
Future domestic and home maintenance needs
$58,048.00
Future aids and equipment
$52 775 94
$52,775.94
Future medical expenses
$9,179.27
Future paramedical expenses
$65,056.45.
Future pharmaceutical expenses
$3,579.58.
Future accommodation costs
$85,982.50.
47
Mules v Ferguson and Anor
[2014] QSC 51
Additional vehicle costs – only additional insurance allowed
F t
Future
t h l
technology
needs
d
Holiday/leisure costs including additional carer’s costs
Special damages and out of pocket expenses
– $7,497.38 for pharmaceutical expenses;
– $33,657.43 for travel;
– $3,016.90 for medical expenses;
– $3,789.20 for paramedical expenses;
– $38,237.24 for therapeutic aids, and
– $4,620 for expenses.
$768.77
$165,712.43.
$
6
$116,572.46.
•
Interest on special damages and out of pocket expenses
$8,522.38.
•
Total claim for damages:
$6,727,776.04
•
•
•
•
$90,818.15.
48
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2014. All rights reserved.
24
The Past Dictates the Future
Aircraft
f Technicians off Australia Pty
y Ltd v Archie Stephen
p
St Clair; St
Clair v Timtalla Pty Ltd [2011] QCA 188
• Plaintiff was injured on 21 June 1994 while mustering cattle by helicopter in the
Northern Territory.
• Plaintiff performed contract mustering work through a company commenced a
year earlier.
• Hired three Robinson R22 helicopters to do the work, leasing them on an hourly
rate.
rate
• Plaintiff and his wife suffered injury when the engine failed, causing it to crash.
• Plaintiff suffered significant physical injuries, including spinal fractures, lower limb
paralysis causing difficulty walking and requiring a knee brace and bladder and
renal problems.
49
Aircraft Technicians of Australia Pty
Ltd v Archie Stephen St Clair [2011]
QCA 188
• Helicopter
p lost p
power because of failure of upper
pp actuator bearing.
g
• Part was replaced with a non-manufacturer approved bearing.
• Plaintiff sued Timtalla, the owner of the helicopter, and Aircraft Technicians of
Australia, the company engaged to undertake maintenance of the helicopter.
• Awarded $150,000.00 for pain and suffering.
• Awarded additional sum for hospital and other medical expenses.
• Past work history was closely scrutinised in assessing the past and future
economic loss.
• Plaintiff left school at age 14 and working in a number of different jobs,
including as a butcher, stockman, oil rig worker and then commercial
helicopter pilot.
50
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2014. All rights reserved.
25
Aircraft Technicians of Australia Pty
Ltd v Archie Stephen St Clair [2011]
QCA 188
• Started mustering business the year before the accident.
• After the accident, the Plaintiff went to great efforts to obtain alternative
employment.
• Worked as an ostrich farmer, food vendor and sculptor. Interestingly, he found
success as a sculptor of public sculptures in Texas in 2002 earning more income
than he earned as a helicopter pilot in 1994.
• Court of Appeal commented on this as ‘little short of extraordinary’.
• At trial, Plaintiff relied on a report from a forensic chartered accountant, Mr
Calabro claiming a past economic loss of $1,126,970.00.
Calabro,
$1 126 970 00
• Report based on instructions that, had he not suffered injury, the plaintiff would
have leased a second helicopter and employed another pilot by 1995.
• Trial judge had difficulty accepting that the plaintiff’s life would have been as
planned given the plaintiff’s work history of changing occupations.
51
Aircraft Technicians of Australia Pty
Ltd v Archie Stephen St Clair [2011]
QCA 188
• Judge
g accepted
p
the evidence of accountant,, Mr Green,, engaged
g g byy the
defendant, who averaged the plaintiff’s pre-injury net income for the four
years before the accident to arrive at a calculation of the plaintiff’s loss.
• Mr Calabro had relied on the earnings from the financial year before the
accident. Judge did not think this provided a fair representation of the past
income.
• Judge noted that the Plaintiff failed to keep accurate records and conducted
his business quite haphazardly.
52
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2014. All rights reserved.
26
Aircraft Technicians of Australia Pty
Ltd v Archie Stephen St Clair [2011]
QCA 188
• Mr Calabro and Mr Green p
prepared
p
a jjoint report
p
and g
gave evidence
concurrently. Judge asked questions individually and jointly zeroing in on the
assumptions that had to be accepted before either report was followed.
• The Judge determined that the Plaintiff’s work history after the accident
would have been similar to the past; that is, changing occupations.
• Adopted the approach of Mr Green and awarded past loss of earnings in the
sum of $130
$130,000.00
000 00 with an additional amount for interest
interest.
53
Aircraft Technicians of Australia Pty
Ltd v Archie Stephen St Clair [2011]
QCA 188
• In determining
g future economic loss,, assessed the work and earnings
g of the
plaintiff since the accident and employability as a sculptor.
• Plaintiff was earning more as a sculptor than he ever had before but the
uncertainty of future work and the limitations of his injury was taken into
account to arrive at an annual loss of $50,000.00.
• The Plaintiff succeeded in his claim against Aircraft Technicians of Australia
but failed against Timtalla.
Timtalla
• Total damages awarded were $1,729,566.00.
54
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2014. All rights reserved.
27
Aircraft Technicians of Australia Pty
Ltd v Archie Stephen St Clair [2011]
QCA 188
•
ATA appealed, as did the plaintiff, on the basis that the damages awarded were
inadequate, and also against the dismissal of the claim against Timtalla.
•
Appeal Court found that:
o the plaintiff had chequered past employment but was a young man at the time
interested in travel and adventure.
o In the year before the accident, he had found an occupation he enjoyed with
significantly better financial return.
o This suggested a reasonable likelihood that he would continue to do this work
and there was evidence that the work was available.
55
Aircraft Technicians of Australia Pty
Ltd v Archie Stephen St Clair [2011]
QCA 188
o The Plaintiff had p
persevered in his studies to be a p
pilot and despite
p his disabilityy
had ‘…attempted many ventures, culminating in his realisation of a talent for
sculpture. This suggested in weighing the various contingencies about how the
Plaintiff might have exploited his pre-injury capacity for remunerative
employment, His Honour failed to put in the balance the positive indicators. In
focusing only upon the less favourable, the Plaintiff was deprived of the more
appropriate assessment of his past loss of earning capacity.’
o Had the positive contingencies been appropriately taken into account, balanced
by the past employment history, the past loss represented by $25,000.00 per
annum would better represent the Plaintiff’s past earning capacity. The amount
awarded for past loss of earnings was increased to $400,000.00.
56
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2014. All rights reserved.
28
Company losses - actio per quod
claim
Chaina v Presbyterian
y
Church Property
p
y Trust ((No 25)
5) [[2014]
4] NSWSC
518
• Old doctrine of action per quod servitium amisit was relied upon by companies
run by the two injured plaintiffs.
• Case involved tragic death of a 15 year old pupil of Scot’s College NSW while
on a school hiking trip in the Moreton National Park in 1999.
• The deceased,
deceased Nathan,
Nathan was trying to get across a log crossing but was swept
away by a wave of flood water.
• The school admitted breach of duty of care
57
Chaina v Presbyterian Church
Property Trust (No 25) [2014]
NSWSC 518
• Claims for p
psychiatric
y
injury
j y were p
pursued byy the p
parents of Nathan and his
two brothers.
• Brothers’ claims were resolved.
• Trial dealt with claims brought by Nathan’s parents and the two companies of
which Nathan’s parents were sole directors for loss of profits because of
injuries to two directors.
• Judgment was handed down in May 2014,
2014 15 years after Nathan died.
died
• Litigation had a remarkably long and tortured history.
58
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2014. All rights reserved.
29
Chaina v Presbyterian Church
Property Trust (No 25) [2014]
NSWSC 518
• The first company,
p y, Proton was a supplier
pp
of chemicals to the industrial
laundry, food processing, food service, healthcare, hospitality and general
industry sectors. The second company, Deluxe, developed property and
provided finance to Proton and other companies owned by the parents.
• Claim was that as a result of their injuries, the parents, were unable to
relaunch products and launch new products to the market as planned in 1999
p
lost profits.
p
and that as a result,, the companies
• The losses were calculated by chartered accountants.
• Work experience, titles and qualifications Mr Chaina asserted to hold, came
out in evidence as being untrue damaging Mr Chaina’s credit.
59
Chaina v Presbyterian Church
Property Trust (No 25) [2014]
NSWSC 518
• Damages for psychiatric injury limited to a period of two years following the
d h E
death.
Each
h plaintiff
l i iff assessed
d as suffering
ff i injury
i j
assessed
d as 28%
8% off the
h most
extreme case and that entitled to each of them to $77,000.00.
• Also awarded compensation for economic loss.
• Accountant calculated past and future economic loss on the basis of salaries small
business proprietors such as Mr Chaina and an office manager such as Mrs Chaina
would be likely to earn based on salary survey information published by AIM,
rather than actual earnings.
• Assumption that a small business proprietor would expect to earn a premium over
and above the average earnings to compensate them for their dual roles of owner
and manager, the risks of being self employed and for the long hours worked.
• On this basis, Mr Chaina’s earning capacity was put at $180,000.00 gross and Mrs
Chaina’s at $100,000.00 gross.
60
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2014. All rights reserved.
30
Chaina v Presbyterian Church
Property Trust (No 25) [2014]
NSWSC 518
• Judge
g rejected
j
approach
pp
finding
g that income as declared in the tax returns
should form the basis of the calculations.
• past loss of wages for two years after the death of Nathan were awarded based
on the figures declared in Mr and Mrs Chaina’s tax returns being:
o $104,591.00 and lost superannuation entitlements of $7,852.00 for Mr
Chaina.
o $48,927.00
$48 927 00 and superannuation entitlement losses of $3,998.00
$3 998 00 for
Mrs Chaina.
61
Chaina v Presbyterian Church
Property Trust (No 25) [2014]
NSWSC 518
• Court scrutinised accounts of the companies
p
and found that the material was
“not consistent with a business that came to a grinding halt because the two
moving figures, Mr and Mrs Chaina, were not able to work….”.
• Figures showed that the business never had sales exceeding $1.75 million and
never made a net profit of more than $375,000.00 and in the immediate
period after Nathan’s death, sales increased.
• claim for loss of commercial opportunity was rejected on basis that evidence
did not support that the companies had a formula to manufacture products at
the time, the finance to undertake the exercise and the capability to
manufacture the product.
62
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2014. All rights reserved.
31
Chaina v Presbyterian Church
Property Trust (No 25) [2014]
NSWSC 518
•
•
•
•
•
•
Judgement addressed measure of damages in a per quod claim discussed in High Court
decision
d
i i off Barclay
l v Penberthy
b h [2012]
[
] 246 CLR 258.
If employer employs numerous staff to take up the duties of the injured employee, then
measure of the employer’s loss may be in extra payments by way of overtime to secure the
performance of these additional duties.
Like any plaintiff, the employer would have to try to mitigate their loss as a result of the
injured employee.
Exception to this would be where the company was a “one man company” controlled by the
injured party.
Even in such a case, the measure of damages would not include loss of profits unless the loss
was attributable to the loss of services and no other likely cause had been identified.
“One man company” exception did not apply in this case as it could not be said that Mr Chaina
was the key scientific and entrepreneurial mind behind the corporate plaintiff.
63
Chaina v Presbyterian Church
Property Trust (No 25) [2014]
NSWSC 518
• One of the Plaintiffs' expert witnesses gave evidence about the likely sales revenue
off the
h P
Proton company, the
h market
k share
h
represented
db
by the
h sales
l estimates
i
and
d
the likely loss sales revenue.
• Judge found this expert to be “an advocate for the Plaintiffs” and that “….despite
his adoption of the Expert Witness Code, he did not in fact see that his paramount
duty was to the Court….”.
• Determined that in this case it would not be appropriate to request a joint report
because the plaintiffs did not have legal representation.
• Plaintiff
Plaintiff’ss expert not happy with this approach which became evident throughout
the examination.
• Judge determined that the witness was attempting to hijack the process.
• At one point, expert asked if he could cross examine another witness in the
conclave on behalf of the plaintiffs!
64
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2014. All rights reserved.
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2014. All rights reserved.
33