Commonwealth v Chessell

30 FCR 154
101 ALR 182; FED No. 360; No. G433 of 1990

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(Judgment by: Einfeld J)

Re: Commonwealth of Australia
And: Keith William Chessell

Court:

Judges: Sheppard J
Wilcox J

Einfeld J

Subject References:
Damages

Judgment date: 28 June 1991

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Judgment by:
Einfeld J

This appeal concerns whether an award of damages for personal injury pronounced by Burchett J was excessive. The factual findings of the learned trial Judge are not in dispute. In summary the relevant facts were:

1.

The respondent was born in Wagga on 15 January 1955.

2.

He left school in 1972 at the age of 17.

3.

He worked in varied employments before enlisting in the Australian Army in October 1979. In April 1980 he joined a field engineer regiment.

4.

He was in good health and fit until 3 months later when, on or about 17 July 1980, his back was injured on an Army exercise at Shoalwater Bay Queensland after he unexpectedly had to take a heavy weight. It is more than distressing that this case is still not resolved almost 11 years later. I do not know how or who caused this position but justice cannot be done and injured people are not assisted to rehabilitation by such gross delays.

5.

With his back in pain, he rested for a time and was then given light duties for 2 days before being taken to a field hospital for 24 hours and thence to Brisbane. He was prescribed 2 weeks bedrest at home after which he returned to light duties.

6.

In October 1980 he attended and passed eminently a driving course in Sydney despite the pain in his back.

7.

In November 1981 the respondent passed a battle efficiency test requiring a forced march of 15 kms and a 5 km run.

8.

In June 1982 he suffered a recurrence of pain following a lengthy drive while on duty in North Queensland.

9.

In May/June 1983 he served on exchange with the US Army in Hawaii performing significant physical activity with pain and discomfort. The appellant argues that this particular activity demonstrates that Mr Chessell had significantly less disability in physical and economic terms than found by the trial Judge. The evidence suggests that it is more a demonstration of his willingness to pursue his life under difficulty and not rely on his right to damages awarded by a court.

10.

In October 1983 his pain was so bad that he was returned to hospital. Ultimately in February and May 1984, he was given an adverse medical assessment after efforts to rehabilitate his back. This led to his being discharged from the Army as medically unfit in March 1985 despite the range of employment of a lighter character which the evidence shows the Army could have offered. He thus lost his chosen employment after only 5 years to which it is conceded that he had applied himself with vigour, enthusiasm and commitment. It is also admitted that he lost a likelihood of promotion.

11.

He thereafter involved himself in lapidary work, stained glass window construction, a colour and design course, and work as a concierge/security officer at a large city apartment block in Sydney. All this work eventually ceased in October 1987 for reasons unconnected with his back. He did not earn as much in any of this work as he had done with the Army, although when his Army service concluded, he was apparently earning only of the order of $20,000, perhaps even less.

12.

Thereafter he has received a veteran's pension and a defence force retirement benefit but has not seriously worked, although he has undertaken light clerical work for the Church of Scientology. For this he has been paid small amounts of money from time to time, of the order of $40 per week. He is now contemplating entering the ministry of the Church.

Mr Chessell's evidence at trial which was not contested was that he has not engaged in fully remunerative work to his optimum capacity since leaving the Army because of pain in and apprehension about his back, the possibility of surgical intervention, some depression about his disabilities, and the sense of calm and feelings of comfort which working within the Church has given him. He is a single man and agreed that his disabilities would have allowed him to work longer hours and a longer period of time in the security job. He said that he desired to work and would have worked in a full-time job provided that the work was within his capacity and that he had what he described as a "compassionate" employer. He might even have been able to do a job of that kind in addition to the security job. There was no evidence of his having sought such work or of its availability one way or the other. The required qualities of the employer included a tolerance or acceptance of the position that he sometimes needed days off work and sometimes had what he described as "crippling" pain. This level of disability was not disputed.

There were five areas in which the trial Judge's findings were challenged.

1. PAST ECONOMIC LOSS

Burchett J took as his starting point a figure of $63,604 which was apparently agreed at trial and is still agreed, although the evidence below and submissions on appeal have been quite unable to explain it accurately. The trial Judge then deducted the sum of $10,000 from this amount for what his Honour described as follows:

I think he has shown a continuing loss of earnings was suffered by him as compared with what he would have earned if uninjured; but I think the extent of that loss has been exaggerated by his choice to work for quite substantial periods of time for the extremely low remuneration paid by the Church of Scientology. He could, in my opinion, at least have earned the sums which he earned in the employ of the security firm. However, as against that, I think it was reasonable for a man in his condition to seek such comfort and support as might seem to him to be available through the Church of Scientology and, for that purpose, in all the circumstances, to take some time off from work for a period.

The Commonwealth challenges this $10,000 deduction and says that at least double that amount should have been deducted. In the first place, the Commonwealth says that the deduction actually made is an error of principle because the matters justifying it are not relevant to past economic loss but to general damages. In the second place, it says that the trial Judge was not correct to take as his base or starting point that, in the period to trial, the respondent could only have earned an amount equivalent to his earnings in the security job. The Commonwealth says that his Honour should have fixed the respondent's earning capacity at a significantly higher level because he was not maximising his earnings to the reasonable limits of his physical capacity even then.

If the first argument were accepted and the second argument rejected, it would have the effect of increasing the respondent's damages under this heading, although it might have a countervailing effect on the amount awarded for general damages. However, I do not accept either argument. In my view, there was no error of principle in the deduction because it is properly a matter of past economic loss. The trial Judge would in my opinion have been entitled to make no deduction at all on the grounds that while the injured man was in truth not maximising his earning capacity, his action in so limiting his activity was perfectly understandable and reasonable and on the medical evidence may even have assisted his ultimate rehabilitation. Burchett J's view that some deduction was appropriate is not capable of challenge.

On the other hand, it is open to a trial Judge in a particular case to make an assessment of what an injured person has a capacity to earn within the bounds of what a reasonable person in his position should have done to mitigate his loss, and to balance against that, factors in favour of the person's not having earned an amount up to that capacity. Among the factors to be considered in this connection are such matters as the constrictions on regular employment of the person's disability, the availability of work in a territorial or geographical area reasonably available to the person, and the reasonableness of not having maximised earning capacity as assessed, including the need to have time off work due to the injuries. In this case, his Honour could also have taken into account that the employer made the choice of dismissing Mr Chessell rather than to offer him light work despite evidence that a significant amount of such work was available, thus demonstrating that a large employer of lighter duty labour has difficulty in placing in employment even its own current employees injured by its negligence.

2. RESIDUAL EARNING CAPACITY

The appellant also challenged the finding at trial that the respondent has a residual earning capacity of $200 per week. There is no substance in this submission. It has been said that resolving this type of issue involves onus of proof. Lombardo v Henne (NSW Court of Appeal, unreported 2 December 1977 ) was a case where a plaintiff primarily claimed a permanent loss of earning capacity and the defendant alleged partial incapacity at most. Glass J.A. of the NSW Court of Appeal said, in dealing with the question of reduced earning capacity:

Reference was made to the absence of any evidence of what the plaintiff could in the future earn in the exercise of such earning capacity as he retained. There was discussion as to whether this constituted an omission in the plaintiff's case or in the defendant's case. In the present trial I am of opinion that it represented a gap in the defendant's proofs on one of two alternative bases. The plaintiff made a case that he was, by reason of physical injuries and the neurotic increment to them, unable to do any work at all and would probably remain in this condition after the trial. In these circumstances, there devolved an evidentiary burden upon the defendant to establish that the plaintiff did retain some earning capacity and what he could earn by exercising it. Alternatively there was a true onus on the defendant to make out a case that the plaintiff had not mitigated his damage, namely, that he had unreasonably declined the opportunity to rehabilitate himself and could, if rehabilitated, earn up to a certain level. But whether it be that the plaintiff's or the defendant's proofs which are deficient in this respect, I do not think the failure has the usual consequence that the party in default loses on the issue. If, for example, it is the plaintiff who is in default, the judge cannot rule against him and decline to assess his damages at all. If it is the defendant's default, the judge cannot disregard the possibility that the plaintiff may in the future earn more than he was earing at the time of the trial. In each case he is obliged to make the best assessment he can on the materials which have been placed before him. The consequence, however, for a plaintiff in default is that he runs the risk that the trial judge may set his retained earning capacity at a higher level than may be established by evidence. The consequence for the defendant in default is that the judge may set it at a lower level than he can by evidence establish.

Samuels J.A. said:

I agree with what my brother Glass has said upon the question of the evidence to which he referred. The case of Allan v Loadsman (1975) 2 NSWLR 789, is cited from time to time as authority in support of the proposition that the plaintiff carries the burden of leading evidence to establish the diminution of his earning capacity in a case where that is the nature of the claim which he makes. That is perfectly true; but it is necessary to emphasise that that was a case in which the plaintiff's claim was that he had been totally deprived of earning capacity by the injuries and their consequences. In a case such as this it cannot, I think, be expected that a plaintiff should present two cases. Firstly, the main case, in which a total loss of earning capacity is asserted; and secondly, an alternative case, in which some diminished earning capacity is put forward and supported by evidence of the nature of the job which the plaintiff can still carry out, and the rate which he could earn by doing so. If the plaintiff fails to make good his claim that he has been totally incapacitated, as happened here, and if the defendant, although disputing the initial claim, offers no evidence in support of the lesser disability for which he is contending, the judge may very well be left in the position of having to make an assessment upon inadequate material. In that event, as my brother Glass has pointed out, one party or the other may conceivably have a result less favourable than if the proper evidence were in. I appreciate that it is often the view of defendants that they are required to do little more than to dispute the case which the plaintiff makes. I cannot understand, however, why, if the defendant's case is that the plaintiff is better able to work than he says he is, an attempt is not made to offer evidence of the kind of work he can do and the money which he can earn.

The difficulties and complexities of this area of the law and the differences of judicial approach to them may be seen in my review of various cases in Barker v Australian Telecommunications Commission (1990) 95 ALR 72 . See on appeal Australian Telecommunications Commission v Barker (Davies, Gummow and Hill JJ unreported 7 December 1990 ) where this issue was not discussed. In my opinion, the evidence here permitted the trial Judge a very large range of findings available under this heading. The one he chose was by no means the least he could have selected.

3. LOSS OF FUTURE EARNING CAPACITY

The Commonwealth argued that the sum of $25,000 awarded for loss of earning capacity after the Army's compulsory retirement age of 55 years was excessive. In my opinion this proposition is unsustainable. Once again the evidence establishes that a much larger figure could have been chosen without complaint.

4. GENERAL DAMAGES

The appellant also alleges that the general damages award of $110,000 was excessive. It suggested that a range of between $55,000 and $85,000 was appropriate. In my view both propositions should be rejected. The respondent has suffered an injury and significant continuing disability leading to what, according to his unchallenged evidence supported by medical opinions, is sometimes very severe pain. He has bouts of quite serious depression. He faces a back operation in the near future of uncertain result which at best will probably leave his back permanently stiff and disabled although with less pain. It takes little imagination to recognise the demoralised state in which such effects of his injury must have left him.

10. His sacking by the Army deprived him of a secure employment base for the best part of 30 years in work in which he appears to have revelled and in which he was successful. This major interference with his enjoyment of life was no doubt not assisted by the Commonwealth's evidence at the hearing, led as I said previously to establish a much greater capacity to earn than the trial Judge found, that it has and has always had available since his injury a considerable range of light duty jobs within his capacity. According to the evidence, not one of these positions was ever offered to him; in fact they were apparently deliberately withheld from him when the Army chose to end his employment on the grounds of his unfitness to perform duty. No doubt the availability of these positions was or became known to him. The fact that the Army chose to dismiss him rather than offer him one of these positions would have been devastating to him especially having regard to the enthusiasm, loyalty and commitment he had always displayed to the Army, and the efforts he had made under great stress to carry on with his work after his injury. All this justified a substantial sum for general damages, and would in my opinion have supported an amount even higher than that awarded.

5. INTEREST

The final suggestion of error in the judgment attacks in its entirety the award of $21,535 for interest on past economic loss. The argument is based on the decision of the High Court in Hungerfords v Walker (1989) 63 ALJR 210 which, it is said, represents authority that in the absence of a statutory requirement of interest, interest is only to be allowed when there is evidence that the successful injured person would have invested the amount concerned at interest or applied it to the payment of debt which was attracting interest.

In this regard I have read with care the draft views of Sheppard J. As might be anticipated, they are, if I may say so, a most erudite and learned review and commentary on the common law concerning payments in the nature of interest on moneys which a tortfeasor has delayed paying to the victim of the tort. I agree with his Honour's statement of the issue in this case, his description of the problem at hand and his view that the full ramifications of Hungerfords present difficult problems of application to a case such as this. I regret that I am on reflection unable to agree with his Honour's conclusions on this matter.

As I see it, there will rarely be evidence or credible evidence, in the case of the majority of injured litigants, as to what they might have done some years earlier with money they did not have but are imputed at the hearing as having. Hence trial Judges operating without the benefit of statutory interest are required, if Hungerfords permits, to make an estimate of whether there has been a loss by the injured person of interest or something akin to interest on past economic loss, such as compensation for the losses caused by the delay in receiving money legally due.

If a relatively low wage earner such as Mr Chessell is deprived of his wages, whether due to incapacity as a result of injury negligently caused by his employer or any other normal cause, it seems to me clear that he will suffer loss over and above the actual money. The average person or family has regular financial commitments on which a salary is spent. If the salary is taken away, the commitments and the wage earner's capacity to meet them are adversely affected. This is surely foreseeable by the employer.

If a particular loss is foreseeable, that means that it is able to be assumed before and whether it actually occurs. The employer assumed to foresee the loss does not have any evidence at that stage and may never have any. It is not uncommon that every aspect of foreseeable damage is not covered by evidence. The cases exemplified by Lombardo v Henne and those mentioned in Barker, to which I have referred earlier, are typical of this situation. See also M.B.P. (S.A.) Pty Ltd v Gogic (1991) 98 ALR 193 . As I read it, Hungerfords is not authority for the proposition that actual particularised evidence is a necessary pre-requisite to a successful claim for the loss of the use of money. Read as a whole and in context, it seems to me that at most, "proof" is limited to the type of "evidential onus" situation referred to in Lombardo v Henne.

In my experience, there will only be rare cases where ordinary wage earners will have borrowed money to cover salary not received. With less, not the same, money coming into the house, it is rather less than more likely that a lender would advance money to the household to cover the lack of salary. Indeed, the opposite may actually occur. Some home mortgages or mortgage insurance contracts are so structured (at the mortgagor's expense) that if the mortgagor is off work for a period for certain causes, including injury, payments under the mortgage may be temporarily suspended. So are some other types of borrowing contracts. On the other hand, injured people may have to borrow the rent or mortgage payments from their spouses or other family members. Such loans will often be without interest but any loss sustained by the spouses or relatives as a result would present difficulties if claimed in the cases of the injured persons. That situation surely cannot inure to the benefit of the tortfeasors who brought it about. Nor would it be easily quantifiable in evidence in such situations because the premiums or instalments are not divisible under the normal heads of damage.

Likewise, damages cases would become somewhat unreal if it was necessary to lead evidence, often years after the period in question, that the injured worker would (or even might) have used the salary that should have been received years earlier on paying off indebtedness attracting interest.

Since preparing my own draft judgment, I have also read the proposed judgment of Wilcox J. It is correct, as Sheppard and Wilcox JJ have pointed out, that no actual evidence was produced in this case on any specific adverse financial effects to Mr Chessell of the deprivation of his earnings. As I read it, however, Hungerfords does not limit the authorisation to provide for compensation under this heading to cases where there is oral or documentary evidence quantifying a particular loss. If such compensation was so restricted, it would mean that Mr Chessell fails on a question on which he would carry an onus merely because he led no evidence of the actual loss sustained from the withholding of his salary, even though other evidence permitted the trial Judge to infer quite readily the loss that was probably sustained. In the context of its expansion, or at least its desire to avoid contraction or "ossification" of the common law, the High Court could not have meant such an unfair result. It was in my opinion open to the trial Judge to imply and infer a loss of the kind involved.

I agree with Sheppard and Wilcox JJ that Hungerfords allows statutory interest as well as a possible common law supplement but the provision of statutory interest only legalised or codified, at least partly, a fiction that when money due is not paid, there is in many cases a loss of the interest or something akin to interest. It may have been technically wrong to describe the award in this case as being for interest, but the common law predecessor of or accretion to statutory interest was, according to Hungerfords, no more or less fictional and no more or less subject to direct evidence.

I also agree with the majority that Hungerfords would not justify an award under this heading in every case and that such an award will only arise in a case where financial loss as a result of the withholding of the money was reasonably foreseeable. The majority adds the need for direct evidence of actually quantifiable loss. Assuming that this was a part of the decision in Hungerfords, which I cannot see, it must be read in the light of the facts of the case itself. These have been set out in the judgment of Sheppard J and there is no need to repeat them. They are in my opinion not susceptible of establishing the principle which the majority have gleaned. I do not think that the views of the High Court can or were intended to be extended so as to limit an appropriate award in personal injury cases only to those situations where there is an express evidentiary quantification of the loss in question. If it is so amplified, relatively wealthy or comfortable people will receive compensation for the loss of or delay in receiving money because they can specifically identify investments to have suffered because of the delay, while relatively poorer people, unable to identify such specific consequences, are deprived of the same compensation, despite the often far more personally disruptive or devastating deprivation with financial overtones they have suffered. This concept does not sit comfortably with me as being the likely substance and intention of the common law. Indeed, the powerful dismissal by Brennan and Deane JJ in Hungerfords of the thesis that compensation may not be awarded for earnings wrongly or unjustly withheld seems to me to establish precisely the contrary.

In my opinion, the evidence here permitted findings on the balance of probabilities that:

1.

Mr Chessell was wrongfully deprived of his salary which was his only or principal source of income.

2.

His salary level and revealed personal circumstances made it likely that this deprivation had to be made up from other sources if he was to continue to live in the condition to which he had been accustomed.

3.

The "salary substitution" may have been achieved either by positive or negative means.

4.

The positive means may have been by borrowing with or without interest, but if without interest, then with a sense of financial or similar obligation to be discharged at some future time when his financial situation was restored.

5.

The negative means may have been by postponing debt or other obligations or intentions with financial connotations of the kind undertaken by most individuals and families in similar circumstances. I see no reason in principle why, for example, if an injured person has to ask a spouse, relative or friend to forgo a holiday they would otherwise have taken together at or after the time of the injury, this would not be compensable under this heading. The holiday will only be able to be taken when the salary is paid, i.e. in this case when the damages are awarded and paid. If the loss of earnings component is limited to the rate of pay applicable 10 years before, the person will not be able to afford the holiday 10 years later because its cost will have escalated so much. Meanwhile the employer has used the money for selfish purposes, in another case perhaps personal holidays.

Other examples of this kind of loss, which would be common to many people, would be the costs involved in having to postpone the purchase of a house, a car, clothing, household requisites, even getting married and having children. Trials could not honestly and sensibly be conducted if evidence was always required to these effects. It would necessarily be speculative reconstruction of an artificial if not perjurous kind, which would open issues of credit irrelevant to the matters of substance being litigated and have other undesirable consequences. The law has never demanded such an approach.

All of this was reasonably foreseeable by an employer especially this one (if that is important) who would not only have known the salary and lifestyle of Mr Chessell but probably some details of his personal circumstances.

The fact that the Commonwealth wrongfully retained the money for many years means that it has had the benefit of the money and all that it could earn. If this is not given to a negligently injured employee, it follows that the tortfeasor has made a profit from the tort itself, from the refusal to pay the salary when it should have been paid, and from the delay in paying compensation. This cannot be the effect of Hungerfords.

This is not strictly interest but a compensation for the loss of the use of money. Unlike statutory interest, it calls for an approximation or intuitive assessment. There is nothing in Burchett J's assessment that demonstrates an error of principle or quantification in this regard.

I would dismiss the appeal with costs.