Future Economic Loss – two erroneous positions

Rodger v Johnson [2013] QSC 117

 

Jackson J:

 

[7] Two of the most substantial differences in amounts between the parties lie in the claims for damages for future earnings and future superannuation. As might be expected, the different assumptions which each side makes as to the plaintiff’s future employment drive the differences.

[8] The plaintiff’s case adopts a multiplicand for the calculation of future loss of earning capacity of $425 net per week. It applies that weekly loss for a period of 37 years discounted on the five percent table (multiple 895) and then further discounts the amount arrived at by 12 percent for “contingencies”. The result is $335,000.

[9] The plaintiff also claims an additional amount of $100,000 “for the impairment to her general earning capacity”. The factual basis for that contention is that her current employment is more favourable than it would be on the open labour market, where it is contended she would have a restricted potential for promotions and her employment opportunities have been narrowed. It is also contended that her present depressive illness may result in long term work disability. Further, it is submitted that her young age means she will carry this impediment to her earning capacity for some 36 years, that she may be forced into premature retirement, and that it is likely she will be required to absent herself from her employment in the future. No discount for contingencies is made to the claim for an additional amount of $100,000. The total of $335,000 and $100,000 is $435,000 for future loss of earning capacity.

[10] The plaintiff claims $49,155 for loss of future superannuation based on the amount of $435,000 multiplied at the agreed rate of 11.3 percent.

[11] The defendants’ contentions as to future economic loss are based on a multiplicand of future loss of earning capacity of $350 net per week. The defendants submit that the plaintiff will improve to the point that she is capable of full-time work over two years, which using the five percent table results in $34,650.

[12] The defendants then submit that there is a possibility on the evidence that the plaintiff’s condition will not improve or that if she improves she may not retain her pre-accident earning capacity and that a global award of $70,000 should be allowed for that possibility. The total of $34,650 and $70,000 is $104,650.

[13] The defendants also apply the rate of 11.3 percent to future superannuation. Future superannuation is therefore calculated as $104,650 multiplied by 11.3 percent which equals $11,825.45.

[14] Except in a case where a “global”[1] amount is arrived at or an award is made by way of a “buffer” for future economic loss as described in the New South Wales cases[2], I am unable to accept the defendants’ methodology. No doubt unintentionally, the first part of it reflects the approach which was rejected by the High Court in Malec v GC Hutton Pty Ltd[3]. In that case, the Full Court of the Supreme Court of Queensland had accepted a conclusion that by a particular future date the plaintiff would have suffered from a condition which was accelerated by his injuries in any event, with the consequence that no damages for loss of earning capacity were payable after that date. The High Court held that it was an error to conclude, on the balance of probabilities, whether the future event would happen by the relevant date with the consequence that loss of earning capacity for the period after that date did not occur. Rather, the future hypothetical event was to be approached according to the possibilities with the plaintiff entitled to the relevant proportionate amount of the prospect that loss of earning capacity would continue after the relevant date into the future and until the end of the plaintiff’s expected working life.

[15] In any event, on the evidence in the present case, there is no sound basis for a conclusion that the plaintiff will have returned to full-time work in two years. The plaintiff could not say so. The expert evidence was optimistic but guarded both as to the extent of the plaintiff’s improvement and as to any time period over which it might occur.

[16] However, the defendants’ error in approach was no greater, in my view, than the plaintiff’s error of a similar kind. As stated, the plaintiff started from a multiplicand of $425 net per week and applied it over the whole of the balance of the plaintiff’s expected remaining working life of 36 years. In doing so, the assumption was made that the plaintiff’s condition would not improve and she would not return to full-time employment at any stage. The only contingencies for which allowance was then made were the “usual” contingencies[4]. And then an additional amount was claimed for the alleged further “global” species of economic loss.

[17] This approach was inconsistent with the evidence that the plaintiff’s current disabilities include an adjustment disorder, which is a likely factor preventing her from being able to return to greater employment than she currently has. The medical evidence was guarded but supports an expectation that the plaintiff will be able to increase her hours at work and may be able to return to full-time employment following treatment over a couple of years.

 

 

David Cormack – Brisbane Barrister.

 

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