Civil Liability Act Recent Decisions Non-Economic and Economic Loss Introduction - September 2004
Approximately twelve months ago, I presented a paper with examples of awards from arbitrators and judges. The trend at that time was that most injuries, no matter how minor, were exceeding the 15% most extreme case threshold for non-economic loss. It was common for minor injuries to clear the 20% MEC.
I also stated that there was a tendency to still award buffers for economic loss where section 13 states that the claimant must establish most likely future circumstances.
Three examples of the Court's generosity at the time were:
- 69 years old male. Soft tissue injury to neck and shoulder. He had neck pain before the accident. The pain was slightly worse since the accident. He suffered pain once or twice a week. 25% of a most extreme case ($23,500 at that time) was awarded by Herron DCJ.
- 22 years old female suffered an electric shock when switching on an appliance. She had no treatment other than two visits to a GP immediately after the accident. She claimed ongoing shaking of the right arm, but with no medical support. 23% of a most extreme case ($19,000) was awarded by Delaney J.
- 54 years old female fell off a horse after a dog attack and sustained a comminuted fracture to the lower end of the radius in her left arm. She also fractured the ulna bone at the left elbow. She had a continuing deformity of the left wrist. 30% of a most extreme case ($88,500) was awarded by McLoughlin DCJ.
AWARDS SINCE DECEMBER 2003
21 June 2004, Court of Appeal: Penrith City Council -v- Parks  NSWCA 201
The plaintiff, a lady employed in clerical work aged approximately 51 years at the date of injury 28 January 2002, slipped and fell on a concrete footpath. She suffered a fracture of the little finger on her right hand. She underwent surgery and was off work for 14 weeks. She had significant disability in the finger by the trial. She could not make a fist. She had a reduced grip and could not lift heavy weights. Although she was left handed, any task requiring two hands was difficult. She could not use a computer effectively.
Delaney DCJ awarded non-economic loss damages at 28% of a most extreme case. However, the Court of Appeal (Justices Giles, Cripps and McClellan) considered this manifestly excessive. McClellan AJA wrote the lead judgment. He referred to the cases, analysing a "most extreme case" under the Motor Accidents Act 1998, from which section 16 of the Civil Liability Act was reproduced. He noted the serious nature of her injuries, but that she had returned to her pre-injury employment, that she was left hand dominant, and that the medicine indicated only a small impact on her life. He recalculated non-economic loss at 15% of a most extreme case ($3,500).
24 June 2004, Court of Appeal : Woolworths Ltd & Anor -v-Lawlor  NSWCA 209
The Plaintiff, a 56 years old lady, fell due to the malfunction of a moving walkway in a shopping complex owned and operated by the defendants. She aggravated pre-existing degenerative conditions in her neck and lower back. The trial judge awarded 30% of a most extreme case which was confirmed by the Court of Appeal (Justices Beazley, Hodgson and Tobias).
20 May 2004, Court of Appeal: Macarthur Districts Motor Cycle Sportsmen Inc -v- Ardizzone  NSWCA 145
The plaintiff, a 12 years old boy, fell off his motorcycle in a motocross race and was struck by a following rider. He sustained a leg injury, with a continuing and worsening limp. The knee continued to lock from time to time, leaving him lying on the floor in great pain trying to unlock it. The trial judge awarded 35% of a most extreme case ($128,000), which was confirmed by the Court of Appeal.
George -v- Lifese Steel Erections Pty Ltd  NSWSC 1146. Decision of Studdert J in Supreme Court 8 December 2003
The plaintiff was 18 years old when he fell through a gap, 7 metres to a lower level. He sustained a comminuted fracture of the left radial head (left forearm) with pieces of bone displaced. He also fractured a bone in his left wrist. He had ongoing pain in his buttock, right knee, left arm. An award of 25% of a most extreme case was made ($25,000).
Leslie Casey -v- Amanda Robinson & Anor  NSWSC 115. Acting Justice of Appeal Cripps on 9 December 2003
The plaintiff sustained a burst fracture of the L1. The accident also exacerbated the consequence of a previous laminectomy at L4/5. 55% of a most extreme case was awarded ($211,500).
Mathieson -v- Babic : Judith Gibson DCJ District Court 4 May 2004
A 60 years old female slipped and fell off a concrete pathway in the insured's back yard. She sustained a left wrist Colles fracture and an un-displaced fracture to the right wrist. She had a right carpal tunnel release 10 months after the fall, and episodes of major depression since the fall. There was the possibility of osteoarthritis developing.
Judith Gibson DCJ on 4 May 2004 awarded 25% of a most extreme case ($25,000).
Vance -v- State Rail Authority  FMCA 240: Federal Magistrates Court 3 May 2004:
A 59 years old woman with impaired vision was being helped to board a train by her carer. The guard allowed her insufficient time to board and closed the doors without warning. This action caused the carer to pull her back from the train door. This caused shock which led to a psychological impairment. However, the Federal Magistrate concluded that her condition would not achieve the 15% threshold.
Dunbar -v- Brown  NSWCA 103: New South Wales Court of Appeal 2 April 2004 (Mason P, Beazley and Young JJ)
The plaintiff was pinned between her motor vehicle and the wall of a car port while assisting a tow truck operator to move the car. The plaintiff sustained fractures to the right hip and lower back. She was hospitalised for 11 days. She was awarded 33% of a most extreme case.
Owners - Strata Plan 156 -v- Gray  NSWCA 304: New South Wales Court of Appeal, 3 September 2004 (Sheller JA, and Gzell J)
The plaintiff was a 24 years old female Casino dealer, aged 21 at the date of accident. She fell on stairs and sustained an acute ligament strain (medial) to the left ankle. At the time of trial, she continued to have instability in the ankle. She went over on the ankle once every couple of months. She had swelling in the ankle on prolonged walking. A specialist had assessed a 16% loss of use of the left leg below the knee. She was permanently unfit for work as a dealer, which required constant standing. The medical evidence was that she may need surgery for ligament repair.
The trial judge, Graham DCJ awarded 33% of a most extreme case. On appeal, this was reduced by Sheller JA (Gzell J agreeing) to 20%. Justice Sheller referred to the Motor Accidents Act case of Kurrie -v- Azouri in 1998, saying that the trial judge must compare the injuries sustained with a most extreme case as described in Kurrie : quadriplegic, some paraplegic cases, serious brain damage and perhaps extremely serious scarring. Trial judges should not look at the second column of the Table under Section 16 before assessing the severity as required by the first column. The defendant in Gray had submitted 15-20% of a most extreme case.
With the downturn in litigation in NSW, fewer matters are being heard by arbitrators. Published awards come from the Supreme Court, Court of Appeal or Federal Courts. Parks and Gray are examples of generous assessments being reduced and there are a number of appeals pending before the Court. We believe it safe to assume that District Court arbitrators and judges will continue to be generous, as was the initial trend reported 12 months ago. It will be some years before we have enough cases to indicate that the Court of Appeal is reversing the trend.
FUTURE ECONOMIC LOSS
Two recent decisions of the Court of Appeal are to the effect that buffers can still be awarded for the possibility of future economic loss, even where the plaintiff has no economic loss at the date of trial.
Section 13 of the Act states as follows:
- A court cannot make an award of damages for future economic loss unless the claimant first satisfies the court that the assumptions about future earning capacity or other events on which the award is to be based accord with the claimant's most likely future circumstances but for the injury.
- When a court determines the amount of any such award of damages for future economic loss it is required to adjust the amount of damages for future economic loss that would have been sustained on those assumptions by reference to the percentage possibility that the events might have occurred but for the injury.
- If the court makes an award for future economic loss, it is required to state the assumptions on which the award was based and the relevant percentage by which damages were adjusted.
As buffers are based on the possibility of a future occurrence and s.13(1) refers to most likely future circumstances but for the injury, the argument was that buffers should not be allowed. The two cases demonstrate that buffers will be allowed.
Macarthur Districts Motor Cycle Sportsmen Inc & Ors -v- Ardizzone  NSWCA 145
The plaintiff was a 12 years old boy when he sustained his injuries at the motocross event on 6 April 1997. At the time of trial on 15 August 2003 before Delaney DCJ, he was aged 18 years.
He had serious injuries and ongoing problems with his knee by the time of the trial. He had a permanent restriction in the ability to perform heavy manual work and osteoarthritic changes in the knee were likely.
Delaney DCJ stated his opinion that this was a case for a cushion or buffer. He assessed $100 per week for 46 years to age 65 on the 5% tables and deducted 20% for vicissitudes, leaving an award of $75,000 for reduced earning capacity.
His Honour made scant reference to section 13 in making this award, the type of which was common before the Civil Liability Act .
However, Bryson JA in the Court of Appeal believed that Delaney DCJ had stated what section 13 required to be stated, being the restrictions on the plaintiff's working ability and employment. He considered the assessment proper and the reduction of 20% for vicissitudes to be within the requirement of section 13(2). Bryson JA did not accept that if the assumptions in section 13(1) could not be established in a clear and concrete manner, there could not be an award for future economic loss.
Hodgson JA accepted that the "assumptions" referred to in section 13(1) and (3) referred to the plaintiff's future economic situation but for the injury, which the Court had to compare with the future economic situation resulting from the injury. He stated that normally these views were expressed in terms of a capacity to earn a certain amount net per week. He also accepted that the word "percentage" in section 13(2) and (3) referred to the deduction for "vicissitudes", for which 15% was adopted in most cases.
Hodgson JA did accept however that the wording of section 13 did not appear consistent with the principle of Malec -v- J C Hutton Pty Ltd  169 CLR 638, where the Court would assess hypothetical future events and adjust an award to reflect a degree of probability, which could be less than 50%. Hodgson JA agreed that the words "most likely future circumstances" were not consistent with this approach. He accepted that the wording of section 13(2) was not entirely apt to the purpose of requiring an appropriate adjustment for vicissitudes or contingencies.
He held that the words "most likely" meant "more likely that any other possible scenario". He concluded that, despite the problems with the wording of section 13(2), it was consistent with a deduction for vicissitudes in accordance with the Common Law. However he did feel that the wording of section 13(2) was not conducive for the rare case where the application of vicissitudes could increase the award.
Hodgson JA stated that the wording of section 13 was not necessarily consistent with buffer awards being made, and stated that Delaney's award was not strictly a buffer award. However, in the circumstances of Ardizzone , it was not necessary to decide if section 13 did preclude buffers.
The buffer issue was decided in Penrith City Council -v- Parks .
The plaintiff was in permanent employment at the time of trial, and on the evidence, more likely than not would remain so through to her retirement.
McClellan AJA stated that the following steps were necessary in determining the appropriate award for future economic loss:
- Determine most likely future circumstances but for injury. This requires assessing matters such as prospects of gaining or remaining in employment and earning rates. These are the "assumptions' referred to in section 13(1).
- The court must adjust the award by reference to the percentage possibility that the events might have occurred but for the injury.
- The assumption and percentage must be stated.
His Honour agreed that section 13 was consistent with the Common Law deduction for vicissitudes. For example if the vicissitudes discount was 15% the court would assess the percentage possibility that the events (assumptions) might have occurred but for the injury as 85%.
McClellan AJA agreed that the wording was not consistent with positive vicissitudes being awarded.
McClellan AJA did not consider that the section had any impact on buffer awards. Compliance with the section had no relevance to such an award. A modest award as compensation for the chance that a claimant may be disadvantaged in the future because of the injury is not precluded by the section. All the section is doing is identifying pre-injury circumstances upon which an award of future economic loss damages may be based. It did not dictate the outcome in the event that only part of a plaintiff's earning capacity had been affected by the injury.
The trial judge Delaney DCJ noted that the plaintiff's work was clerical although there was some lifting, bending and writing. He considered that she would have grave difficulty obtaining alternative work if she lost her present employment. She had a restricted earning capacity which he assessed as a buffer of $15,000. McClellan AJA and his brother judges Giles and Cripps accepted that this was appropriate. All three judges accepted that it was still open to assess damages by way of a "buffer". Giles JA stated that the occasion for a buffer is when the impact of the injury upon the economic benefit from exercising earning capacity after injury is difficult to determine. Giles JA considered that buffers were consistent with section 13, with a nil percentage adjustment in section 13(2).
It is hard to accept that buffers as awarded commonly in smaller cases before the Civil Liability Act , are not affected at all by section 13. Nevertheless, the Court of Appeal has ruled that buffers can still be awarded where there is no current economic loss.
22 September 2004