Australia: Evaluation of the relevant criteria when determining non-economic loss and a buffer for loss of earning capacity

Curwoods Case Note
Last Updated: 18 August 2012
Article by Iain Miller

Clifton & Ors v Lewis [2012] NSWCA 229

Judgment date: 30 July 2012

Jurisdiction: NSW Court of Appeal1

In Brief

  • An award of non-economic loss is an evaluative judgment, and there are only limited circumstances where an appellate court will alter a primary judge's award.
  • To be entitled to an award for future economic loss a plaintiff must establish not only a diminution in earning capacity, but that the diminution is or may be productive of financial loss. This is distinct from a comparison of a loss of pre- and post-accident income, though this may be indicative of a loss of earning capacity.
  • It is not necessary for medical evidence to expressly state that a plaintiff's earning capacity is impaired. Such a finding may be made following a review of all relevant evidence.


On 28 August 2005, the plaintiff was crowned the NSW Light Welterweight Amateur Boxing Champion. Following his successful bout the plaintiff celebrated at the Vandenberg Hotel (the hotel). At about 1.30 am the plaintiff was 'king hit' and assaulted in the urinal by Mr Shelker. Mr Shelker had been involved in an earlier fight in the hotel which had been broken up by the hotel staff, though he was allowed to remain in the hotel following this fight.

The defendants were the partnership and the licensee that ran and operated the hotel. The defendants admitted they owed the plaintiff a duty of care. They denied there was a breach of the duty. They also disputed the severity of the plaintiff's injuries and the quantum of the damages claimed.

The plaintiff's injuries were widespread, including, most significantly, damage to the peroneal nerve in his right leg. Ultimately, the plaintiff underwent a surgical release of the superficial branch of the peroneal nerve during which evidence of nerve injury over a segment of 2 cm was uncovered. Unfortunately the surgery was not successful and the plaintiff gave evidence that his leg was in worse condition than prior to the surgery.

In particular, the plaintiff complained of constant stabbing pain, numbness and tingling in his heel and ankle. He was also unable to continue with his pre-injury training regime.

Apart from his amateur boxing activities, the plaintiff was employed as a Quarry Manager and during the course of the initial hearing the plaintiff gave evidence that he had always planned to advance to an Operations Manager level.

Despite managing to continue in his pre-injury position following the assault, the plaintiff made a claim for, amongst other things, diminution of earning capacity arising from the abovementioned injuries. In this regard, the plaintiff's employer gave evidence of the plaintiff's inconsistent work history following the subject accident, noting that he often left early or arrived late as a result of attendances with treatment providers. This had resulted in the plaintiff being issued with a warning by his employer.

The matter was first heard before Elkaim DCJ in the District Court of NSW who found in favour of the plaintiff and awarded a total of $296,247.73. The defendants appealed the decision insofar as it related to the findings for non-economic loss and future economic loss.

District Court

Relevant to the appeal, Elkaim DCJ awarded $165,000 to the plaintiff for non-economic loss (equating to 33% of a most extreme case) and a buffer of $120,000 on account of the plaintiff's diminished earning capacity finding that he would be at a disadvantage on the open labour market and unlikely to advance beyond his current employment status.

Court of Appeal

The defendants' appeal was broadly based on the following grounds:

  1. The award of damages for non-economic loss of 33% of a most extreme case was excessive.
  2. There was no evidence to support an award for damages for future economic loss of $120,000 in circumstances where:
  1. the plaintiff adduced no evidence of past economic loss;
  2. the plaintiff had remained in full-time employment since the accident;
  3. there was no medical evidence that the plaintiff had suffered an interference with his earning capacity as a result of the injury; and
  4. there was no evidence that the plaintiff's injury was productive of financial loss.
  1. The primary judge erred in assessing future economic loss on the basis that the plaintiff would become an Operations Manager in circumstances where that claim was not pleaded, not particularised, not identified in counsel's opening to the trial judge, and not sought by the plaintiff in counsel's closing submissions to the primary judge.

Non-economic loss

The defendants submitted that the non-economic loss award ought to have been in the order of 25%, rather than the 33% awarded by Elkaim DCJ. However, it was not contended that the primary judge took into account irrelevant considerations or wrongly assessed the medical evidence.

In considering the defendants' submissions, Beazley JA confirmed that an award of non-economic loss was an evaluative judgment and as such, for an appellate court to interfere with a primary judge's assessment, it must be satisfied of some error. Basten JA further expanded on the role of appellate review with reference to the decision in Dell v Dalton 2 , noting that an assessment of non-economic loss is a matter of "opinion, impression, speculation and estimation".

Both Beazley and Basten JJA considered the award for non-economic loss to have been generous, however, neither considered that the award was outside the reasonable range, particularly, as Beazley JA noted, when considering the significant impact that the injury had on the plaintiff's recreational boxing activities. Basten JA added that accepting that the assessment of the primary judge was generous, it would only be necessary to conclude that an appropriate assessment might have been 30%, plus or minus 5%, in order to say that both figures were within the range and accordingly it would be inappropriate for the court to interfere.

Basten JA noted that while a small variation in assessment may have significant consequences for the amount of damages to be awarded in the present case according to the table in s 16 of the Civil Liability Act 2002 (CLA) he made it clear that to assess the proportion of a most extreme case by reference to the consequence in monetary terms would be to adopt a legally erroneous course.

As the defendants had failed to point to some specific error in Elkaim DJC's reasoning, the appeal in relation to the non-economic loss award failed.

Future Economic Loss

Beazley JA noted it is well-settled principle that to be entitled to an award of future economic loss a plaintiff must establish not only a diminution in earning capacity, but that the diminution is or may be productive of financial loss: Graham v Baker 3.

Beazley JA referred to the decision of McHugh J in Medlin v State Government Insurance Commission 4 where McHugh J explained the issue as follows:

"In Australia, a plaintiff is compensated for loss of earning capacity, not loss of earnings. In practice, there is usually little difference in result irrespective of whether the damages are assessed by reference to loss of earning capacity or by reference to loss of earnings. That is because an injured plaintiff recovers not merely because his earning capacity has been diminished but because the diminution of his earning capacity is or may be productive of financial loss: Graham v Baker. Nevertheless, there is a difference between the two approaches, and the loss of earning capacity principle more accurately compensates a plaintiff for the effect of an accident on the plaintiff's ability to earn income ..."

Beazley JA noted that the onus remains on the plaintiff "to prove what, if anything, he was now not capable of earning": McCracken v Melbourne Storm Rugby League Football Club Limited & Ors 5.

Having confirmed that Elkaim DCJ was correct in finding that the plaintiff suffered a diminution of his earning capacity (rather than, for example, a loss of earnings), Beazley JA next considered whether such a claim for future economic loss needed to be supported by express medical evidence to that effect.

In this regard Beazley JA noted that the plaintiff gave evidence during the hearing of his ambitions regarding advancement to a position of Operations Manager without objection, nor did cross-examination challenge the plaintiff in this regard. This was critically important as Beazley JA stated:

"Whilst a party responding to a claim is entitled to require that the party asserting the claim be bound by the case particularised, it frequently occurs that a case is expanded at trial beyond that which has been particularised. If that occurs without objection, the trial judge is entitled to act upon the evidence given."


"... it was open to his Honour to assess the respondent [plaintiff] as a person who would at some stage have achieved his ambition. In my opinion, therefore, there was no error in his Honour finding that the respondent would, sooner or later, have advanced to the position of an Operations Manager at a higher salary than he was presently earning notwithstanding the absence of particularisation of any such claim in the statement of claim or particulars of injury provided at trial."

Beazley JA referred with approval to the judgment of Giles JA in Penrith City Council v Parks 6 that a buffer for economic loss is appropriate under s 13 of the CLA "when the impact of the injury upon the economic benefit from exercising earning capacity after injury is difficult to determine."

Basten JA confirmed the appropriateness of utilising a buffer figure in relation to the plaintiff's economic loss in his closing remarks:

"... the fact that a diminution in earning capacity had resulted from the injury was reasonably clear: the extent to which it was likely to result in financial loss and at what time in the future that might occur was far less certain. That degree of uncertainty rendered artificial a calculation based on the current value of the future loss."

Interestingly, Basten JA did concede that there may be a point at which the size of the buffer will be disproportionate with any plausible calculation based on a percentage diminution in earning capacity having regard to current rates of pay, life expectancy and vicissitudes. However, in this matter Basten JA did not consider the $120,000 buffer to be "so high as to justify such concerns".


This decision reinforces the need for caution when seeking an appeal in relation to a non-economic loss award, given that an appellate court will only alter an award in limited circumstances. For example, as set out in the decision of Crystal Wall Pty Ltd v Pham 7:

"... unless it can be demonstrated that the trial judge has erred in the application of principle, in order to attract appellate review it will be necessary to show that the conclusion reached by the primary judge was manifestly erroneous ..."8

Assessing non-economic loss remains a matter of "opinion, impression, speculation and estimation" : Dell v Dalton 9 . In this regard, Basten JA's reference to plus or minus 5% for non-economic loss being within the range contrasts with the decision in Clarence Valley Council v Macpherson 10 where Tobias AJA in delivering the unanimous judgment of the court considered 30% of a most extreme case on the facts in that case was manifestly excessive and reduced the damages for non-economic loss to 25%.

This decision emphasises the importance of objecting to evidence which expands the plaintiff's case further than that which was pleaded and particularised.

A buffer figure may appropriately be used in circumstances where a diminution in earning capacity is clear, however, the extent to which it was likely to result in financial loss and at what time in the future that might occur is uncertain.


1 Beazley and Basten JJA
2 [1991] 23 NSWLR 528. See also, Crystal Wall Pty Ltd v Pham [2005] NSWCA 449 and following decisions.
3 [1961] HCA 48
4 [1995] 182 CLR 1
5 [2007] NSWCA 353
6 [2004] NSWCA 2001
7 [2005] NSWCA 449
8 For some good recent examples of appropriate considerations see Sretenovic v Reed [2009] NSWCA 280; Basha v Vocational Capacity Centre Pty Ltd [2009] NSWCA 409; and Clarence Valley Council v Macpherson (2011) NSWCA 122.
9 (1991) 23 NSWLR 528
10 (2011) NSWCA 122

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