Beazley JA; Ipp JA; Basten JA

In Brief

  • This Court of Appeal decision primarily concerned whether or not the plaintiff was entitled to damages for future economic loss after suffering a rugby league injury, in circumstances whereby his income dramatically increased after the injury. The Court of Appeal agreed with the trial judge that he was not entitled to damages for future economic loss.

Background Circumstances

  • The plaintiff was a well known former rugby league football player from Wests Tigers who suffered a significant strain of the cervical spine and traumatic cervical spondylosis, which ended his career, after a "lifting" tackle by two players from the Melbourne Storm Rugby League Club.
  • The plaintiff brought proceedings against the two players and the Melbourne Storm Rugby League Club ("the defendants").

District Court Decision

  • The trial judge, Hulme J, found that, due to the dangerous nature of the tackle, the defendants were negligent. His Honour took into account that the two players had entered guilty pleas at the League Tribunal in relation to using a dangerous throw when effecting a tackle.
  • In relation to damages, the trial judge noted that the plaintiff's income had risen significantly since the accident due to his property development activities, and that since the plaintiff's injury he had employed his income earning capacity in land dealing and development "far more than he did beforehand".

His Honour concluded that, after his injury, Mr McCracken's use of his capacity to earn from land dealing and development had been very profitable. His Honour pointed out that the profits included amounts in the order of $500,000

  • from the Triangle Shopping Centre, $5,000,000 or more from Northtown on the Mall, $2,500,000 from the Seaview Hotel and in the order of $10,000,000 from the Watermark project. These amounts totalled some $18,000,000. The judge concluded that Mr McCracken had not suffered a relevant loss of earning capacity by reference to the profits derived from these four properties.
  • His Honour held making reasonable allowances for the contribution made by the capital invested by Mr McCracken, and other contingencies, the profits earned over the relevant period far exceeded the approximately $760,000 (less 10% for contingencies) that Mr McCracken would have earned from playing rugby league.
  • In concluding that there would be no award for future economic loss the trial judge stated that:

"The plaintiff's earning capacity in the field of land dealing and development has been productive of more financial gain than the loss due to the diminution in his football earning capacity".

  • The plaintiff was awarded $97,500 made up of $90,000 for general damages, $6,500 for interest and $1,000 for future out-of-pocket expenses.
  • The plaintiff appealed in relation to the non award of damages for lost income, and the defendants issued cross appeals in relation to liability.

Court of Appeal Decision

  • Justice Ipp, who delivered the unanimous decision, held that he was "left in no doubt whatsoever that the tackle constituted a gross infringement of the laws of the game and there was no modicum of care in the actions of Messrs Kearney and Bai". Accordingly, the cross appeals in relation to liability were dismissed.
    • The primary issue in relation to the appeal was that of the non award for future economic loss.
    • Counsel for the plaintiff submitted that no extra earning capacity had been released by reason of the plaintiff's injury and that the extra time freed up was of no use to him.
    • The Court of Appeal referred to the case of Graham v Baker (1961) 106 CLR 340 where it was held that:

    " 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. And if, notwithstanding such impairment, both his contract of employment and his right to ordinary wages continue, how can it be said that his impairment has resulted in any loss so far as his earning capacity is concerned? "
    • The Court of Appeal also cited with approval McHugh J in Medlin v The State Government Insurance Commission (1995) 182 CLR 1 who stated in part 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'. "
    • The Court of Appeal also cited with approval Husher v Husher (1999) 197 CLR138 where the High Court stated that:

    " The financial loss occasioned by impairment of earning capacity is the loss of what (if there had been no accident) the injured plaintiff would (as opposed to could) have expected to have had under his or her control and at his or her disposal by exercising that capacity. We refer to 'control' and 'disposal' because what the plaintiff has lost are the financial rewards from work that are rewards the plaintiff would have been able to direct to whatever purpose or destination he or she chose. "
    • The Court of Appeal stated that the above authorities meant that the issue was whether, in the relevant period, the plaintiff incurred a loss (in comparison with what he could have earned had he not been injured) after exercising whatever earning capacity he then had. This involved examining the financial rewards the plaintiff derived from work that he in fact had under his control or at his disposal.
    • The Court of Appeal also quoted from Professor Luntz Assessment Of Damages for Personal Injury and Death (Sydney; Lexis Nexis Butterworths, 4th ed, 2002) as follows:

    " Where the plaintiff is only partially disabled, the damages to the date of trial are the difference between what would have been earned if the plaintiff had not been injured and what the plaintiff has now earned, or was capable of earning, less tax, in each instance. "
    • The Court of Appeal accordingly considered that, on the basis of the above authorities, the onus was on the plaintiff to prove what, if anything, he was now not capable of earning.
    • The Court of Appeal quoted from the multiple financial documents which demonstrated that the plaintiff's income from property development far exceeded his income as a professional rugby league player.
    • Ipp JA noted the plaintiff led no evidence to support directly his contention that, even if the accident had not occurred, he would have improved his financial position by dealing in property, and he led no direct evidence supporting the quantification of any such capacity. He led no evidence of the capacity he had to earn income from property dealings had he not been injured and had he played rugby league in England.
    • For the above reasons the Court of Appeal agreed with the trial judge's decision that there should be no award for future economic loss and accordingly dismissed this part of the appeal with costs.

    Implications

    • Whilst this decision was based primarily on its own facts and concerned a plaintiff with substantial property investments, it does provide a useful discussion of the principles to consider in respect of awards for future economic loss.
    • The decision also illustrates that defendants should always investigate the plaintiff’s financial position post accident, notwithstanding that the plaintiff may have suffered significant injuries.
    • The plaintiff carries the onus of proof in respect of a claim for loss of earning capacity and must discharge it before being entitled to any damages for financial loss.
    • Defendants may rely on this decision to argue there should be no award for future economic loss in circumstances where a plaintiff’s post-injury earnings are greater than his or her pre-injury earnings irrespective of whether they arise out of capital gain from property developments.

    The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.