CLA: loss of earning capacity when none is immediately apparent

Nucifora & Another v AAI Limited [2013] QSC 338

His Honour McMeekin undertook an analysis of the principles of loss of earning capacity under Section 55 of the Civil Liability Act 2003 (CLA) where the plaintiff had suffered no past loss of earnings and had in the preceding two years increased his earnings. His Honour noted there were a number of competing scenarios which needed to be considered over a period of 24 years for a plaintiff who had a high earning capacity. In the end, his Honour concluded:

“[47] Doing the best I can, and confessing to an “experienced guess”, I assess the loss at $250,000.”

McMeekin J:

[3] In the subject accident Mr Nucifora suffered the following injuries:

(i) compression fracture of the thoracic spine of T10;

(ii) fractured sternum;

(iii) fractured ribs eight and nine;

(iv) soft tissue damage to the right-hand;

(v) soft tissue damage to the cervical spine;

(vi) soft tissue injury to the coccyx;

[4] It is agreed that as a result of the injuries Mr Nucifora has an adjustment disorder with anxiety.

[5] The parties have reached agreement on a number of matters:

(i) the assessment of damages is governed by the provisions of the Civil Liability Act 2003 and regulations made pursuant to that Act;

(ii) the appropriate ISV is 15 and the appropriate measure of general damages is $21,850;[1]

(iii) the percentage of any assessment of future economic loss to be ascribed to loss of superannuation entitlements is 11.33%;

(iv) the appropriate interest-rate to apply to any claim for special damages is 1.91%;

(v) the appropriate rate to apply to any claim for future care is $30 per hour.

[6] The plaintiff concedes he cannot make a claim for past economic loss. He did lose 15 days away from employment after the subject accident but was compensated by taking sick leave owing to him and can not demonstrate any loss.[2]

Future Economic Loss

Principles

[27] It is agreed that the assessment can only be on a global basis as there is no “defined weekly loss”.

[28] Section 55 of the Civil Liability Act 2003 (CLA) is therefore applicable. It states:

(1) This section applies if a court is considering making an award of damages for loss of earnings that are unable to be precisely calculated by reference to a defined weekly loss.

(2) The court may only award damages if it is satisfied that the person has suffered or will suffer loss having regard to the person’s age, work history, actual loss of earnings, any permanent impairment and any other relevant matters.

(3) if the Court awards damages, the court must state the assumptions on which the award is based and the methodology it used to arrive at the award.

[29] It may be doubted that the provision has affected any change to the position at common law. The effect of the section has been considered in Ballesteros v Chidlow[5], Reardon-Smith v Allianz Australia Insurance Ltd[6] and Allianz Australia Insurance Ltd v McCarthy.[7] The usual principles continue to apply.

[30] At least since Graham v Baker[8] it has been well established that a plaintiff must demonstrate that his or her earning capacity has been diminished by the accident-caused injury and that that diminution “is or may be productive of financial loss”. Those requirements plainly continue: McCarthy.[9] In determining the “may be” issue relevant in this case the principles explained in Malec v JC Hutton Pty Ltd[10] apply.[11] There is the “double exercise in the art of prophesying” involved – what the future would have been if the injury had not occurred and what it is now likely to be.[12] As usual the fact finder must state the factual findings underpinning the award and display the reasoning behind the award sufficiently at least for the parties, and the Court of Appeal if called on, to comprehend the result, although the methodology need not include an explicit statement of a formula: Reardon-Smith[13]. An “experienced guess” has been held to be a sufficient response to the facts presented: Ballesteros.[14]

Discussion

[36] The distinction between the submissions is that the plaintiff tended to look at the longer term possibilities and the defendant to stress the shorter term certainties. There is merit in both submissions.

[37] I agree that in the shorter term it seems highly unlikely that Mr Nucifora’s employment or income is at risk. He is obviously highly regarded by his present employer. He has had a long period of employment there. He has enjoyed rapid promotion. He has now been given substantial responsibility and so rewarded with a significantly increased income. This has occurred through the acute phase of his injury. He has demonstrated a capacity to adapt. Dr McPhee spoke of this:[18] “Either you can accept it and get on with life and you live within any restrictions that the pain provides or, in fact, it becomes the centre of life and therefore you start to get a lot of psychological adaptation which tends to amplify everything for them.”[19]

[38] In my judgment Mr Nucifora falls into a category of person who is unlikely – very unlikely – to be overwhelmed by his symptoms. That seemed to me to be self evident but if proof be needed, and as the defendant pointed out, Mr Nucifora has demonstrated a capacity to cope with physical problems in the past. He has experienced problems with his neck, lower back and knee[20] yet persisted with manual work apparently with little time off and eventually advanced to management level.

[39] Mr Nucifora is stoical, as I have mentioned, and intelligent, determined and ambitious. He has a demonstrated capacity to manage his present symptoms well. His position as general manager is demanding but so it was at Gregory Crinum mine and he found a way to cope.[21] And the demanding hours, nominally capped at 12.5 per day,[22] are likely to be only temporary. They proved so previously.

[40] If there is a problem then it is in the longer term that there is the possibility of any risk materialising.

[41] Section 55(2) requires that I have “regard to the person’s age, work history, actual loss of earnings, any permanent impairment and any other relevant matters”. I take into account that Mr Nucifora is aged a relatively youthful 41 years, has an excellent work history indicative of a man very likely to have worked at least to age 65, a period of 24 years, has no actual loss of earnings to date but to the contrary, and a significant degree of impairment – approaching a 10% impairment of the whole person. “Other relevant matters” follow.

[42] What seems to be common ground is that Mr Nucifora is as he always will be. Constant pain will be his companion. He will suffer aggravations depending on his activities. In my view there is a chance, significantly greater than the 1% level that can be ignored, for Mr Nucifora to find that the constant need to perform at a high level becomes more than he can reasonably and conscientiously bear. There are various possibilities. He may retire a little earlier. He may, in the distant future, cut back on his hours while maintaining his employment. These are imponderables not capable of calculation. But the risk is real enough.

[43] What is also common ground is that Mr Nucifora has a very high earning capacity. Mr Whitten performed calculations which suggested a net weekly pay in the order of $8,332 in 2013 and $8,523 for 2014.[23] These calculations include bonuses and other benefits. Their continued receipt is more speculative than the base salary,[24] but that base is not inconsiderable – in the order of $4,890 net per week.

[44] I have considered some hypothetical situations. Let us say Mr Nucifora decides because of constant pain to retire one year early. Let us assume that his pay at that time includes the present level of bonuses and benefits. Retirement at age 64 instead of age 65, to pluck years at random, would result in a loss of about $145,000.[25] Retirement at age 60 instead of age 65 would result in a loss of about $784,000.[26] Assuming the base salary, and so no bonuses or benefits, but with an accelerated retirement of five years as before, still results in a loss of about $450,000.[27]

[45] I acknowledge that the present very high income may not be in place in 20 years time because of a variety of circumstances. But against that Mr Nucifora is more likely than most to be promoted to higher levels of responsibility and income than he has already achieved.

[46] And of course Mr Nucifora may not retire early or seek to reduce his hours or take some other step in life that impacts adversely on his income because of the accident-caused injuries. It is virtually impossible to judge the risk that the eventuality will occur. But it is a commonplace that age wearies most of us. And Mr Nucifora has been made weaker by time and fate than he would have been had this accident not occurred. My assessment is that the chance of him taking some such step is in the order of about 50%.

[47] Doing the best I can, and confessing to an “experienced guess”, I assess the loss at $250,000.

Brisbane Barrister – David Cormack

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