The Nominal Defendant v Aychahawchar [2015] NSWCA 58

Court of Appeal Supreme Court New South Wales Medium Neutral Citation: The Nominal Defendant v Aychahawchar [2015] NSWCA 58 Hearing dates: 27 February 2015 Decision date: 19 March 2015 Before: Basten JA at [1]; Gleeson JA at [11]; Adamson J at [12] Decision: (1)Appeal allowed.

(2)Set aside the judgment ordered by the District Court on 15 May 2014.

(3)In lieu of the judgment of the District Court, order judgment for the respondent in the sum of $303,850, such judgment to take effect from 15 May 2014.

(4)Unless an application is made in writing to the Presiding Judge's Associate within seven days for a different order, order the respondent to pay 90% of the appellant's costs of the appeal. Catchwords: DAMAGES – challenge to awards for non-economic loss and past and future economic loss – alleged failure to mitigate loss - whether failure reflected in award –effect of s 136 of Motor Accidents Compensation Act 1999 (NSW) on award of damages – relationship between ss 126 and 136

STATUTORY INTERPRETATION - Motor Accidents Compensation Act 1999 (NSW), 136 – burden of proving failure to mitigate loss – evidence required to discharge burden - whether burden of proving failure to mitigate loss requires proof of what earnings would have been if loss had been mitigated Legislation Cited: Civil Liability Act 2002 (NSW) Motor Accidents Act 1988 (NSW), ss 39(2), 39(1A) Motor Accidents Compensation Act 1999 (NSW), ss 126, 131, 134,136 Cases Cited: Adams v Ascot Iron Foundry Pty Ltd (1968) 72 SR (NSW) 120 Graham v Baker [1961] HCA 48; 106 CLR 340 Husher v Husher [1999] HCA 47; 197 CLR 138 Linsell v Robson [1976] 1 NSWLR 249 Malec v JC Hutton Pty Ltd [1990] HCA 20; 169 CLR 638 Moran v McMahon (1985) 3 NSWLR 700 Texts Cited: H Luntz, Assessment of Damages for Personal Injury and Death (4th ed, 2002, LexisNexis) Category: Principal judgment Parties: The Nominal Defendant (Appellant) Khaled Aychahawchar (Respondent) Representation: Counsel: P Deakin QC / S Torrington (Appellant) B Dooley SC / R Di Michiel (Respondent)

Solicitors: Sparke Helmore Lawyers (Appellant) Drexler & Partners Lawyers (Respondent) File Number(s): 2014/174037 Decision under appeal Court or tribunal: District Court of NSW Date of Decision: 15 May 2014 Before: Norton DCJ File Number(s): 2011/69346

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

Judgment 1. BASTEN JA: I agree with the orders proposed by Adamson J and, subject to what follows, with her reasons. 2. No consideration was given at trial (or on appeal) to the question whether an amount awarded for future pain and suffering should be the amount appropriate for a person living in this country, or whether allowance should be made for the fact that the claimant will be living in another country. As the issue was not addressed, it need not be further considered. 3. The calculation of loss of future earnings is to be undertaken in accordance with relevant statutory provisions. The principal requirements of the Motor Accidents Compensation Act 1999 (NSW) are as follows: 126 Future economic loss—claimant's prospects and adjustments (1) 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. (2) When a court determines the amount of any such award of damages 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 concerned might have occurred but for the injury. (3) 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. 1. Although s 126 does not in terms apply to past loss, a similar exercise must be undertaken under general law principles, which must be read with s 136, relating to mitigation of loss. 136 Mitigation of damages (1) An injured person is under a duty to mitigate his or her damages. (2) Accordingly, in assessing damages in respect of a claim, the court is to give consideration to the steps taken by the injured person to mitigate those damages and to the reasonable steps that could have been or could be taken by the injured person to mitigate those damages. (3) Those steps include the following: (a) undergoing medical treatment, (b) undertaking rehabilitation (including the formulation and undertaking of an appropriate rehabilitation program), (c) pursuing alternative employment opportunities, (d) giving the earliest practicable notice of the claim in order to enable the assessment and implementation of the above matters. (4) In proceedings before the court, the onus of proving that an injured person has not mitigated his or her damages as required by this section lies with the person who makes that allegation. (5) In proceedings before the court, a written report by a person who provided medical or rehabilitation services to the injured person is admissible as evidence of any such steps taken by that person. (6) If any dispute arises over an alleged failure by the injured person to mitigate his or her damages, the court is to give consideration to and take into account any evidence that an insurer failed to assist in mitigating damages. 1. The issue raised by this provision, concerning burdens of proof, is potentially confusing. The conventional approach as to the primary burden of proof involves a distinction between loss of earning capacity and loss of earnings. [1] Although it may be said that the plaintiff is compensated for a diminution in earning capacity, so long as that diminution is productive of financial loss, [2] and not for loss of earnings as such, the distinction is somewhat blurred. Loss of earning capacity may be demonstrated by reference to the nature of the plaintiff's injuries, combined with a professional assessment of the kinds of employment which might yet be available to the plaintiff. It may also be proved by demonstrating jobs which the plaintiff was in fact able or unable to do in the period between the injury and the trial. How one approaches the question is, however, important once there is a dispute as to whether the plaintiff took all reasonable steps to "mitigate" his or her loss. That is because the burden of proof with respect to mitigation lies on the defendant. 2. The question was fraught under the general law, as explained by Professor Luntz, [3] a situation not entirely alleviated by subsequent statutory provisions in this jurisdiction. Curiously, the respondent relied upon Linsell v Robson, [4] a case in which both Hutley JA and Glass JA emphasised that the plaintiff bore the burden of establishing not merely what he could earn prior to his injury, but what he was capable of earning since his injury. [5] Both members of the Court concluded that where there was a challenge to the loss of earning capacity the defendant will usually bear an evidentiary burden to show that occupations may be available even if such opportunities have not been availed of. [6] Neither suggested that the defendant bore a legal burden to demonstrate a particular level of residual earning capacity. Both, however, emphasised the experience and resources of the GIO, being then the sole insurer in such matters. Such observations reflected a pragmatic approach to resolution of the question. 3. Statute has since intervened. The Motor Accidents Act 1988 (NSW) expressly imposed a burden on the plaintiff "of proving that all reasonable steps to mitigate damages have been taken". [7] The duty to mitigate included taking "reasonable steps" by way of undergoing medical treatment, undertaking rehabilitation and pursuing alternative employment opportunities. [8] That exposition was not comprehensive: it left open a question as to whether proof of steps which were not taken which might be deemed reasonable in the circumstances involved at least an evidentiary onus on the defendant. 4. The Motor Accidents Compensation Act also imposes (on the plaintiff) a duty to mitigate damages. [9] Section 136(4) imposes the onus of proving that an injured person "has not mitigated his or her damages" upon the person making the allegation. The trial judge noted that failure to mitigate had not been pleaded, implying that a legal burden of establishing failure rested on the defendant, [10] although she also accepted that reasonable steps to obtain alternative employment had not been taken. [11] 5. The language of s 136 does not resolve the tension between the requirement that the plaintiff prove his or her loss (in this case diminution of earning capacity) and that the defendant has the onus of proving the failure to take reasonable steps in mitigation of that loss, that is, presumably, a failure to utilise the residual capacity. A possible resolution of the tension which was present before statutory intervention was noted by Walsh JA in Adams v Ascot Iron Foundry Pty Ltd, [12] suggesting that the plaintiff bore the onus of proving unfitness to undertake a particular position, whereas if fitness were established, the defendant bore the (somewhat exceptional) onus of showing that the refusal to take the position was unreasonable. However, the question of utilising earning capacity strictly only arises in a practical sense where lost earning capacity is sought to be proved by reference to job searches. Adopting a pragmatic approach, it would be inappropriate to treat the defendant as bearing a significant burden where the plaintiff is resident in another country. The plaintiff did not prove a particular level of lost earning capacity by giving evidence that there were no jobs available, absent evidence that he had attempted to find work within his apparent capacities, bearing in mind his established disabilities. 6. Without resolving this issue, the trial judge held that there should be "no reduction of past economic loss on the basis that the plaintiff has failed to mitigate his loss." [13] But it did not follow that the plaintiff had established a total absence of earning capacity in the past. For the future, the court had to undertake the exercise required by s 126. Questions of mitigation did not arise. 7. GLEESON JA: I agree with Adamson J. 8. ADAMSON J: The respondent alleged that on 1 July 2009 he was hit by a motor cycle on a pedestrian crossing on Railway Parade, Merrylands. As he was unable to identify the motor cycle or its rider, he commenced proceedings for damages against the Nominal Defendant in the District Court on 3 March 2011. Various provisions in Chapter 5 of the Motor Accidents Compensation Act 1999 (NSW) applied. Although provisions of the Civil Liability Act 2002 (NSW) are applicable to motor accidents (see s 3B(2)), none is presently relevant. 9. The respondent claimed damages for non-economic loss; past and future out-of-pocket expenses; and past and future economic loss. He initially particularised his loss of earning capacity and future economic loss as follows: "The plaintiff claims a significant diminution of his work capacity as a plasterer and being disadvantaged in the open labour market, particulars of which will be provided prior to the hearing." 1. On 27 February 2014 the respondent filed an amended statement of particulars in which he alleged: "By reason of the injuries and disabilities the plaintiff is totally incapacitated for his previous work or indeed any manual work within the construction industry." 1. The respondent's was the only oral evidence at the trial, which otherwise proceeded by the tender of documents, including expert reports and statements. By judgment delivered on 15 May 2014 Norton DCJ found that the respondent had established that the unidentified motorcyclist was negligent and that the negligence was a cause of the respondent's injuries. Her Honour assessed the respondent's contributory negligence at 10%. Norton DCJ quantified damages as follows: Head of damages Award Non-economic loss $175,000 Past economic loss $100,000 Future economic loss $325,000 Past out of pocket expenses $11,400 Future out of pocket expenses $15,000 Contributory negligence 10% Total $561,260

1. The appellant initially appealed in respect of liability (ground 1), the assessment of contributory negligence (ground 2) and the assessment of damages for non-economic and economic loss (past and future) (ground 3). The challenges with respect to liability and contributory negligence were resolved prior to the hearing of the appeal on the basis that the appellant abandoned its challenge to the finding of liability, but it was agreed that the discount for contributory negligence ought be increased from 10% to 41%.

Issues on appeal 1. Ground 3, the only ground that needs to be determined, challenged the assessment of damages on the following bases: The award of non-economic loss was excessive. The assessment of past economic loss was excessive. Her Honour failed adequately to take into account the respondent's lack of attempts to find work, and utilize his alternate work skills. Her Honour failed to find that the respondent had failed to mitigate his loss when he had failed to pursue alternative employment opportunities and rehabilitation programs. 1. Although the grounds do not appear to challenge future economic loss, the parties in their written and oral submissions addressed the assessment of future economic loss. Indeed, neither the legal principles nor the findings of fact allow assessments of past and future economic loss to be made entirely independently of each other. First, both calculations involve the assessment of hypothetical circumstances to be assessed by reference to possibilities and not on the balance of probabilities. [14] Secondly, the actual circumstances of the respondent, as revealed on the evidence at trial, will both condition the assessment of past economic loss and provide the basis for the calculation of future economic loss. Thirdly, the principle of coherence requires that where the assessment of the plaintiff's "most likely future circumstances but for the injury" is to be carried out pursuant to the statutory regime as to the future, the same approach should be adopted with respect to the past. The principal difference between the assessment of past and future economic loss results from evidence of the actual condition of the plaintiff between the date of injury and the date of trial, resulting in part of the exercise as to the past being hypothetical, whereas in relation to the future, both elements of the exercise are hypothetical. The burden would lie on the plaintiff to satisfy the court as to the assumptions about earning capacity, but for the injury.

The facts

Background 1. The respondent was born in Lebanon in 1990. When he was 15 he left school. He continued to live with his parents in Syr, a village near Tripoli. He is right-hand dominant. His first job was with a firm called Al Alam Deco in Tripoli. He had no formal training and learned on the job. Initially he worked from 8am until 2pm six days a week. After a year or so he began working in a second job, for Zod, another firm based in Tripoli. From about 2007 he worked every day apart from Sundays from 8am to 3pm at Zod brothers and from 3pm until 7pm for Al Alam Deco. His total weekly remuneration for the 66 hours was $191. 2. In 2009 he obtained a three-month visa to come to Australia where his uncle, two sisters and a brother lived. He came to Australia in May 2009 with hopes of marrying an Australian with a view to obtaining permanent residence or becoming a citizen. By July 2009 he had been in Australia for almost two months and was staying with an uncle who lived in Granville.

The accident on 1 July 2009 1. On 1 July 2009, on his way back to his uncle's house from the shops at Guildford, the respondent started crossing a pedestrian crossing on Railway Terrace when he was struck by an unidentified motor cyclist. He put up his hands in shock. The motor cycle struck his right hand and he fell to the ground. The motor cycle rode away. The respondent was aware only of a red and black blur. While he was lying on the roadway he noticed that his right hand was bleeding. He picked himself up off the road and started walking towards the footpath. A man whom he did not know stopped and drove him to Auburn Hospital. 2. The facts as outlined above reflect the trial judge's acceptance of the respondent's evidence as to how he had sustained the injuries.

The aftermath of the accident and the consequences of the injury 1. The respondent was admitted to Auburn Hospital. Surgery was performed on his right hand on 2 July 2009 and 4 July 2009. The tip of his injured finger was amputated. He was discharged on 6 July 2009. He was seen by Ms Wang, a physiotherapist, four weeks after the surgery, by which time the wounds had healed and he was performing exercises. He was still wearing a splint at that stage but was advised to wean himself off the splint but to continue with exercises. 2. The respondent returned to Lebanon in August 2009 and continued to live with his parents. He consulted Dr Kamal Eddine, a general practitioner, who arranged physiotherapy, prescribed pain-killing medication and treated him for emotional problems consequent upon the injury. Dr Eddine gave him counselling and advice as to how to think positively. 3. On 17 August 2009 the respondent consulted Dr Samad, an orthopaedic surgeon, in Tripoli and complained of severe cervical pains extending into the right shoulder and pins and needles in the fingers of the right hand, lower back pain and acute muscle spasms, including in the neck region. Dr Samad recommended total rest at home and long term treatment and supervision. The primary judge accepted the respondent's oral evidence that he had suffered injuries not only to his right hand but also to his right shoulder, right elbow, and neck and back as a result of the accident. Her Honour did not regard the lack of recorded complaint about areas apart from the right hand until the respondent returned to Lebanon as a reason for not accepting the respondent's evidence since he complained as soon as he returned to what her Honour described as "his home environment". However, the primary judge accepted the evidence of Dr Ganora, a rehabilitation specialist who examined the respondent once on 13 February 2014 for the purposes of the proceedings, and found as follows: "He [Dr Ganora] found that the respondent had suffered soft tissue strains to his cervico-thoracic and thoracico-lumbar spine with resultant persistence of neck and back pain but that this pain would not interfere with normal physical activity." 1. On 20 August 2009 Dr Samad opined that the respondent was suffering from rupture of the flexor tendons of his right forefinger and recommended reconstructive surgery to repair the tendons. The respondent's evidence was that his hand got worse between August and November 2009. Dr Samad performed reconstructive surgery on 23 November 2009 to reconnect the tendon in the respondent's right forefinger. Dr Samad also recorded that the respondent was suffering from severe pains in the spinal cord and muscular spasm. He regarded the respondent as being incapable of walking for long periods of time and incapable of lifting weights. He prescribed rest and treatment. The respondent had further surgery on his right index finger in early 2010. 2. In about July 2010, the respondent attempted to work as a plasterer and also performed what he described as "different other little jobs". He said that he would not attempt other jobs because they were less remunerative than plastering and that he would rather "do nothing". The primary judge noted the concession made by the respondent's counsel that his attitude that he would not do courier work because it did not pay as much as plastering was not reasonable. Although the respondent's counsel at trial sought to explain the respondent's attitude by reference to "psychiatric grounds", this explanation does not appear to have been accepted by the primary judge. 3. The primary judge noted that the respondent became visibly upset when asked to identify photographs of his right hand which were taken on the day of the accident. Her Honour observed that, while he was giving evidence, the respondent tried to hide his hand because he was distressed by its appearance. The primary judge accepted the opinion of Dr Ali, a psychiatrist whom the respondent consulted once on 12 February 2014 for the purposes of the proceedings. Dr Ali said that the respondent had "chronic post-traumatic disorder symptoms" and recommended twelve sessions of counselling over the course of a year. An allowance for these sessions was included in the award of damages for future out-of-pocket expenses, which are not the subject of challenge. 4. The respondent gave evidence that he has pain in his hand at all times and that the pain is substantially increased by activity. He no longer takes medication as it does not relieve the pain. The respondent gave evidence that he would be unable to do clerical work as he has no training, that he is embarrassed about the appearance of his hand and that he did not expect to find a marriage partner because of his deformity. 5. The primary judge largely accepted the respondent's evidence. Her Honour noted that it had not been put to him that he had exaggerated either his physical or psychological injuries. Her Honour recorded that the only substantial challenge to the respondent's evidence was that he had acted unreasonably in not undertaking work that produced a lesser income than he would have obtained had he been able to work as a plasterer. 6. Her Honour found that although there had been some improvement in these injuries, the respondent still suffered pain from time to time. Her Honour accepted that the respondent has a significant disability in his right hand which would prevent him from undertaking any work that involved manual labour that required dexterity or strength in that hand. However, the primary judge did not accept that his enquiries as to employment were sufficiently extensive for him to be able to say that there was no light work in Lebanon or that no employer would be willing to take him on. Her Honour also found: "There is no evidence that he has made any attempt to obtain any further qualifications or retrain. I find he has made no such attempts." 1. Her Honour accepted Dr Ganora's opinion that the respondent was permanently unfit for work that requires the use of the right hand in manual employment. Her Honour found that the respondent continued to have pain and weakness in his right hand, was unable to hold objects, had difficulty with fine motor functions and suffered from a psychiatric reaction which had become chronic. The primary judge accepted that the respondent had continuing pain in his right elbow, right shoulder and spine.

The trial judge's assessment of damages

Non-economic loss 1. As the respondent had been certified as exceeding the threshold of 10% permanent impairment he was entitled to damages for non-economic loss: s 131 of the Motor Accidents Compensation Act. As at the date of hearing the maximum amount that could be awarded under s 134 of the Motor Accidents Compensation Act was $477,000. 2. Her Honour gave the following reasons for the award of $175,000 for non-economic loss: 177. The plaintiff's injuries and disabilities have had a severe impact on his ability to lead a normal life. Prior to this accident he worked at two jobs and appears to have had an optimistic outlook on life. He enjoyed boxing and basketball. As a result of this accident he is unable to return to his chosen occupation, can no longer participate in boxing or basketball and has developed a very pessimistic outlook on life. 178. I accept that he continues to have pain not only in his hand but from time to time in his right arm and his spine. The plaintiff was only 19 years of age at the date of the accident and the prognosis is that there will be very little, if any, further improvement in his physical condition. 179. As stated above I find that it is probable that there will be some improvement in his mental condition. One of the reasons given by the plaintiff for his pessimism about finding a life partner is that he is at present not capable of earning an income and supporting a wife and family. The damages he receives as a result of this litigation may go some way to restoring his confidence in this area.

Economic loss: general considerations 1. The primary judge found that economic loss, both for the past and the future, ought be calculated on the basis of earnings in Lebanon. This finding involved a rejection of the respondent's alternative case that he would have been able to migrate to Australia and achieve the right to remain here. 2. The primary judge found that, although the respondent had made some attempts to find work as a plasterer from the date of the accident to the date of the hearing, he had not made any attempt to retrain and had shown an unwillingness to embark on any employment that was less remunerative than that of a plasterer. 3. Her Honour set out s 136 of the Motor Accidents Compensation Act which relevantly provided: 136 Mitigation of damages (1) An injured person is under a duty to mitigate his or her damages. (2) Accordingly, in assessing damages in respect of a claim, the court is to give consideration to the steps taken by the injured person to mitigate those damages and to the reasonable steps that could have been or could be taken by the injured person to mitigate those damages. (3) Those steps include the following: (a) undergoing medical treatment, (b) undertaking rehabilitation (including the formulation and undertaking of an appropriate rehabilitation program), (c) pursuing alternative employment opportunities, (d) giving the earliest practicable notice of the claim in order to enable the assessment and implementation of the above matters. (4) In proceedings before the court, the onus of proving that an injured person has not mitigated his or her damages as required by this section lies with the person who makes that allegation. … 1. Although the appellant had not pleaded that the respondent had failed to mitigate his loss, it was accepted by the respondent's counsel at trial that it was a live issue and her Honour made findings accordingly.

Award for past economic loss 1. The primary judge accepted the respondent's evidence that, although he had only earned $191 per week, for 66 hours work, before coming to Australia, his income would have increased substantially between May 2009, when he stopped work to come to Australia, and the date of judgment (15 May 2014) had he not been injured. Her Honour accepted the respondent's calculations of an average figure of $410 net per week (by reference to the gross figure of $191 for the starting point and the gross figure of $674 for the end point, giving rise to an average gross weekly figure of $432.50 and applying the tax rate applicable in Lebanon) from the date of the accident to the date of the judgment (246 weeks) and awarded a round figure of $100,000. Her Honour did not apply any discount for vicissitudes to that figure. Nor was any deduction made for an alleged failure to mitigate, or for any amounts that the respondent had actually earned during that period.

Award for future economic loss 1. Her Honour accepted the respondent's figure of $624 net per week (derived from the $674 gross figure), which reflected documents sent by his previous employers, as the amount that he would have been able to earn per week as a plasterer in Lebanon, working 66 hours a week, at the date of trial. The primary judge made separate awards for the three years following the trial and the years thereafter on the basis that, "… by that time [3 years from the date of judgment] with the demands of family and home life he would have been unable to continually work 2 full time jobs." 2. For the three years following the trial the primary judge assessed damages at a rate of $624 per week on the basis of total incapacity for work which was then discounted for 15% for vicissitudes. The net present value of that figure at the date of judgment was $77,226. 3. For the balance of the future (from three years after the date of trial until the respondent reached the age of 67), her Honour allowed a weekly rate of $416 (being two thirds of $624) on the basis that the respondent would, by that time, have regained a third of his pre-accident earning capacity. Her Honour discounted the figure for the second period by 25% and awarded a figure of $247,328. The discount of 25% comprised 15% for usual vicissitudes and an additional 10% to take account of the expected reduction in working hours as a consequence of increased family responsibilities. The sum of the awards for the two future periods was, accordingly, $325,000.

The appeal

Assessment of non-economic loss excessive 1. Before an award of damages for non-economic loss can be disturbed on appeal, it is necessary for this Court to be satisfied that it falls outside the bounds of sound discretionary judgment: Moran v McMahon (1985) 3 NSWLR 700 at 723. Mr Deakin QC, who appeared with Mr Torrington on behalf of the appellant, submitted that there was an element of double-dipping in the award that was evident from its size. He contended that it must have included an amount for loss of earning capacity in the respondent's chosen field of plastering, but submitted that the respondent did not appear to have any particular work ethic as judged by his post-accident conduct. It appears from the primary judge's reasons for the award, which are extracted above, that her Honour took a favourable view of the importance to the respondent of being able to work, as opposed to the importance to him of the remuneration to be derived from working. 2. Loss of earning capacity is relevant to non-economic loss where it produces not only economic loss (which is compensable as such) but also pain and suffering. Her Honour's reasons ought be taken to reflect a finding that the loss of the respondent's chosen occupation caused him more than merely a financial loss. Although the award might be regarded as at the upper end of sound discretionary judgment, I am not satisfied that it is beyond the bounds. Accordingly I am not persuaded that there is a basis to disturb the primary judge's award of damages for non-economic loss.

Assessment of economic loss excessive 1. Mr Deakin submitted that, although the respondent could no longer work as a plasterer, he had a residual capacity for work which was not reflected at all in the award for past economic loss and insufficiently reflected in the award for future economic loss. He relied on the evidence of Dr Ganora referred to above, which her Honour accepted, that the soft tissue injuries to the respondent's neck and back were not such as to interfere with normal physical activity. He also referred to the evidence of Dr Ali to the effect that the respondent's psychiatric condition did not add to his incapacity for work, which was the result of his physical impairment. 2. Mr Deakin contended that her Honour did not correctly apply s 136 of the Motor Accidents Compensation Act, having regard to the following matters, which were either findings; admissions by, or concessions on behalf of, the respondent; or uncontroverted facts: 1. The respondent would not have returned to work in Tripoli until at least August 2009 since he had a visa that permitted him to remain in Australia for three months. 2. The respondent was able to drive within a period of six months after the accident, although not for long periods. 3. The respondent had done some work in July 2010 for a period of two weeks for which he had been paid $US250 (at the rate of $US500 per month). 4. The respondent's refusal to work as a driver, on the basis that it did not pay as much as working as a plasterer and he would prefer to stay home and do nothing, was unreasonable. 5. The respondent had neither applied for jobs in Tripoli nor made any attempt to obtain further qualifications or retrain. 6. As at the date of trial, the respondent was fit for part-time lighter work. 7. The respondent's post-traumatic stress symptoms did not further reduce his capacity for work beyond the reduction caused by his physical symptoms. 1. Notwithstanding these findings the award for past economic loss reflected an undiscounted total loss of earning capacity. Such a calculation is both conventional and apposite in cases where the claimant has suffered a total loss of earning capacity for a fixed period and the claimant would, but for the compensable event, have worked continuously for a certain wage during the relevant period. Neither factor was made out in the instant case. 2. Mr Dooley SC, who appeared with Mr Di Michiel on behalf of the respondent, sought to defend her Honour's award by reference to authorities, including Linsell v Robson [1976] 1 NSWLR 249 at 254-255 per Glass JA, and submitted that s 136 of the Motor Accidents Compensation Act ought be read as requiring that the appellant prove the amount the respondent would have earned had he not failed to mitigate his loss before it could be taken into account in reduction of his damages. On this basis he contended that her Honour was correct not to discount the respondent's damages for economic loss by reference to s 136. 3. As to future economic loss, the judge divided the assessment into two periods: first, the three years immediately post-judgment and, secondly, the balance of his working life to the age of 67. 4. Her Honour did not make any deduction pursuant to s 136 on the basis of a failure to mitigate. The only adjustments the primary judge made to an award which would otherwise have been based on total loss of earning capacity, apart from the conventional reduction of 15% for vicissitudes, was to reduce the future income by 10% to allow for the prospect that the respondent would not continue to work two jobs when he had his own family and to allow for a retention of a third of his pre-accident earning capacity. None of these matters gave effect to s 136.

Assessment of past economic loss 1. A key element in the calculation of past economic loss was that the plaintiff was totally incapable of working for the whole of the period (almost five years) since the accident. However, the trial judge found that "he is currently only fit for part time lighter work," [15] that he had made no attempts to obtain any further qualifications or retrain [16] and accepted the concession that his refusal to do courier work was unreasonable. [17] Those facts are inconsistent with the key element on which the calculation was based. 2. The second key element in the assessment of past economic loss was that the respondent would have continued to work full-time in two jobs during the whole of the five years since the accident. That calculation involved working for 66 hours per week, 52 weeks of the year, without any breaks. The calculation made no allowance for the possibility of some diminution in that work capacity and willingness for work, nor for the possibility that he would not have progressed steadily up to the maximum wage for plasterers throughout the five years (which was the assumption on which the average net figure of $410 was based). 3. In my view, a discount of 15% for vicissitudes would not be sufficient to reflect the findings of primary fact; the figure awarded ought be discounted by 30%, giving an amount of $70,000.

Future economic loss 1. The assessment of future economic loss must conform to the requirements of s 126 of the Motor Accidents Compensation Act: 126 Future economic loss—claimant's prospects and adjustments (1) 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. (2) When a court determines the amount of any such award of damages 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 concerned might have occurred but for the injury. (3) 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. 1. Applying s 126 of the Motor Accidents Compensation Act, the trial judge concluded that, by 2017 (three years from the date of judgment), the respondent would no longer be continually working 66 hours per week. The basis for that finding was that family responsibilities (which the respondent was apparently eager to take on) would have the effect of reducing his working hours beyond that time. However, the trial judge allowed a discount of only 10% for the reduction in the respondent's hours occasioned by the need to accommodate family responsibilities. 2. The trial judge also found that by 2017 (three years from the date of judgment and almost eight years since the date of the accident) it was "probable that the plaintiff will have gained one-third of his earning capacity". I do not regard this finding as capable of being reconciled with the matters relied on by Mr Deakin which are listed above and, in particular, the primary judge's finding that he had "not made any attempt to retrain and has shown an unwillingness to embark on any employment that returns less than what he earned as a plasterer" [18] This finding implies an acceptance of the fact that he could have sought to retrain at any time over the previous five years. The judge may have discounted this factor on the basis of her further finding that there was "no evidence that the insurer has done anything to assist the plaintiff in mitigating his damages." [19] However, little weight could be given to the latter consideration in circumstances where the plaintiff was, throughout almost the whole of the relevant period, resident in Lebanon. 3. Nor could the finding that the respondent would have remained totally unfit for work for a further three years from the date of judgment [20] be supported by the trial judge's finding that "significant allowance must be made for the plaintiff's psychiatric condition which I have accepted is genuine" [21] . As noted above, the only proposed psychiatric treatment (recommended in 2009) was "continuing medication and counselling" on a monthly basis "for at least one year". [22] 4. Assessment of the respondent's capacity to re-enter the workforce, and at what level, is necessarily speculative. Nonetheless, it must bear a rational relationship to the evidence presented at trial. The failure of the trial judge to identify a rational basis for her Honour's expectation of eight years total incapacity from the date of the accident, combined with an inadequate allowance for the failure to mitigate the consequences of the injury, and the limited effect of the psychiatric evidence, require a recalculation of the award for future economic loss. 5. Although the factors for which allowance must be made pursuant to s 126(2) of the Motor Accidents Compensation Act appear to be limited to factors affecting the claimant's most likely circumstances, but for the injury, allowance must also be made for assumptions about future earning capacity consequent upon the injury. 6. The assessment for the first three years is excessive since the only discount allowed was 15% for vicissitudes. There is no reason to distinguish between the first three years and the past. The appropriate course is to discount the award for the first three years by 30%. This gives rise to a figure of $63,598 ($624 x 145.6 x 0.7). 7. Future loss, from 2017, is more difficult since allowance needs to be made both for the primary judge's finding that the respondent may not have continued to work at the rate at which he worked prior to the accident (66 hours a week in two jobs, without any allowance for holidays) as well as the finding that he retained a third of his pre-accident earning capacity. In my view, the assessment by the primary judge did not take adequate account of these two matters. 8. In my view it is appropriate to reduce the starting figure of $624 net per week to take account of the prospect that the respondent would have worked fewer hours to take account of family responsibilities (say 42 hours a week, rather than 66). This allowance gives rise to a base figure of $400 net per week. Accepting the primary judge's finding that the respondent retained one third of his earning capacity (a finding that the respondent did not challenge), his loss is, on this basis, $267 per week. The capitalised figure before allowance for vicissitudes is: $267 x 0.864 x 917.5 = $211,656. A further discount of 15% is, in my view, sufficient to incorporate the vicissitudes, which include: the possibility of his working more than 42 hours a week for some periods; the possibility of holidays; the possibility that, but for the accident, he would have retrained to perform lighter work in any event as he grew older; and the possibility that he would not have continued to work at that rate (42 hours a week) until the age of 67. An application of the 15% discount gives rise to a figure for the future from three years after trial until the respondent turns 67 of $180,000. The sum of these two figures for future economic loss is $243,600. 9. I consider the appropriate award to be as follows: Head of damages Award Non-economic loss $175,000 (unchanged) Past economic loss $70,000 Future economic loss $243,600 Past out of pocket expenses $11,400 (unchallenged) Future out of pocket expenses $15,000 (unchallenged) Contributory negligence 41% (agreed) Total $303,850

Costs 1. The appellant has been largely, but not wholly (having regard to its concession on liability) successful. In my view, subject to hearing from the parties as to why a different order is warranted, it is appropriate in these circumstances to order the respondent to pay 90% of the appellant's costs of the appeal. 2. I propose the following orders: 1. Appeal allowed. 2. Set aside the judgment ordered by the District Court on 15 May 2014. 3. In lieu of the judgment of the District Court, order judgment for the respondent in the sum of $303,850, such judgment to take effect from 15 May 2014. 4. Unless an application is made in writing to the Presiding Judge's Associate within seven days for a different order, order the respondent to pay 90% of the appellant's costs of the appeal.

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Endnotes 1. See. Husher v Husher [1999] HCA 47; 197 CLR 138 at [7] (Gleeson CJ, Gummow, Kirby and Hayne JJ) 2. Graham v Baker [1961] HCA 48; 106 CLR 340 at 347 (Dixon CJ, Kitto and Taylor JJ). 3. H Luntz, Assessment of Damages for Personal Injury and Death (4th ed, 2002, LexisNexis) at [1.9.19]ff. 4. [1976] 1 NSWLR 249. 5. Linsell at 251C (Hutley JA) and 254G (Glass JA). 6. Linsell at 251E (Hutley JA) and 254F-G (Glass JA). 7. Motor Accidents Act, s 39(2). 8. Section 39(1A). 9. See above at [4]. 10. Judgment at [162]. 11. Judgment at [188]. 12. (1968) 72 SR(NSW) 120 at 139. 13. Trial judgment at [195]. 14. Malec v JC Hutton Pty Ltd [1990] HCA 20; 169 CLR 638. 15. Judgment at [208]. 16. Judgment at [169]. 17. Judgment at [153]. 18. Judgment at [188]. 19. Judgment at [195]. 20. Judgment at [208]. 21. Ibid. 22. Judgment at [124]. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 19 March 2015