Australia: Severity of non-economic loss and economic loss District Court decision overturned by NSW Court of Appeal
Basha v Vocational Capacity Centre Pty Limited [2009] NSWCA 409 15 December 2009

In Brief

• In order for an Appellate court to overturn the decision of the primary judge in respect of an award of damages for non-economic loss it is necessary to show that the conclusion reached by the primary judge was manifestly erroneous.
• In determining whether the duty of care owed by the defendants has been breached regard must be had to the provisions of s 5B of the Civil Liability Act 2002.
• The question of whether or not the defendants discharged their duty of care is determined by identifying what a reasonable person in their position, confronted with a foreseeable risk of injury, would have done in response

Background

In March 2001, the plaintiff sustained a work related injury whilst employed by the Government Insurance Office. As a result of that injury, the plaintiff underwent a right shoulder rotator cuff repair on 12 August 2005 and a decompression procedure on her left shoulder on 9 August 2004. The employer's workers compensation insurer required the plaintiff to attend a vocational assessment on 1 & 2 September 2004.

The plaintiff commenced proceedings against the Vocational Capacity Centre and David Verhagan alleging that in the course of the vocational assessment, she was required to perform physical tasks and exercises which were "beyond her capacity and which were ill advised, having regard to her medical condition". In particular, the plaintiff was required to crawl a distance of about nine metres, causing her to put excessive weight on her right shoulder. It was alleged that in consequence of being required to undertake that exercise, less than four weeks following her surgery, the plaintiff sustained an aggravation of injuries she had previously suffered in her shoulders and neck, requiring surgery.

District Court Decision

On 19 December 2008, Judge Garling handed down his decision in relation to the plaintiff's claim. Judge Garling agreed with the plaintiff that she had suffered significant and adverse consequences from the vocational assessment and that the performance of the assessment was "ill advised, misdirected, poorly executed and negligent". He found there to be no reason that the appointment which had been booked had to be carried out at that time, except as a matter of convenience.

Judge Garling determined that the defendants owed the plaintiff a duty of care and that it was foreseeable that this type of injury could occur if the plaintiff was required to put strain on her right shoulder so shortly after her operation. It was therefore held the defendants were negligent in not rearranging the appointment for a much later time when the plaintiff's fitness for work could be properly assessed without risk of further injury.

In assessing damages, Judge Garling accepted the plaintiff's evidence that as a result of the vocational assessment, she had experienced constant shoulder pain, a restriction in her ability and decline in her quality of life. He found that the defendants aggravated her pre-existing conditions at a time when she was recovering from her work related injury and "settling down to a reasonable situation in life". The plaintiff was assessed as having non-economic loss of 20% of a most extreme case, amounting to an award of $16,000. For past and future economic loss, Judge Garling awarded $100 per week representing a "partial loss of income".

In relation to the plaintiff's claim for domestic assistance of 11.5 hours per week, the primary judge found the plaintiff had only demonstrated that the aggravation had caused the plaintiff to require an additional two hours per week, on top of the 6 to 8 hours per week she required as a result of the work related injury. Accordingly, the two hours being less than the statutory thresholds in s 15 of the Civil Liability Act 2002 Judge Garling made no award of damages for domestic assistance.

Court of Appeal Decision

In a unanimous decision of the Court of Appeal, the defendants' Cross Appeal on the issue of liability was discussed first. The primary ground of appeal relied on by the defendants was that the primary judge had erred in finding that the defendants had breached any duty of care owed to the plaintiff. The defendants submitted that in all the circumstances to which the defendants had regard, it was reasonable to proceed with the vocational assessment, including the crawling exercise, because that did not involve excessive loading. It was contended that the mere fact the assessment could have been postponed did not in itself demonstrate the defendants had exposed the plaintiff to an unreasonable risk of further injury.

In response, the plaintiff submitted that the defendants had a duty not to carry out testing when it was inappropriate to do so and that they had breached their duty in carrying out the tests too soon after the plaintiff's surgery. Rather than modifying the vocational assessment tests, the plaintiff argued that the injury would have been avoided if the assessment had been postponed. This was especially so in light of medical evidence available to the defendants that the plaintiff was under strict instruction from her treating doctors to minimise manual handling and not lift weights in excess of two kilograms.

In rejecting the defendants' submissions that the defendants owed a duty to exercise reasonable care and skill, the Court of Appeal instead preferred the wider formulation of the scope of the defendants' duty of care, being to take reasonable steps to avoid the foreseeable risk that a crawling exercise could result in increased loading and therefore injury to the plaintiff's right shoulder, pursuant to the decision in Sydney Water Corporation v Turano2.

In determining whether that duty of care had been breached, the Court of Appeal was critical that neither the parties nor the District Court had made reference to s 5B of the Civil Liability Act 2002. The Court of Appeal held that in deciding whether the defendants discharged their duty of care, it was necessary to identify what "a reasonable person in their position, confronted with a foreseeable risk of injury, would have done in response": Vairy v Wyong Shire Council3.

In considering the facts, the Court of Appeal held the reasonable response was not merely adjusting the weight required to be used by the plaintiff but to postpone the assessment. Accordingly, it was held the primary judge did not err in concluding the defendants were negligent in carrying out the assessment rather than postponing it and the Cross Appeal concerning liability was dismissed with costs.

The appeal filed by the plaintiff alleged that the primary judge had erred in awarding inadequate sums for non-economic loss and past and future economic loss and for failing to award any sum for domestic assistance. The plaintiff submitted that the awards did not accurately reflect the findings that the plaintiff would have been fit for a "significant amount of work" but, as a result of the vocational assessment, could not go back to work. It was argued a finding that the plaintiff had no residual earning capacity justified a calculation of economic loss on the basis of $300 per week, not $100 per week. The plaintiff's counsel submitted the plaintiff's gross income as disclosed in her tax returns averaged about $270 per week and on the basis that the amount was slowly increasing and that the increase could be expected to continue an appropriate figure was $300 per week.

In relation to gratuitous attendant care services, the plaintiff submitted the primary judge should have had regard to the plaintiff's estimation of the time she required family members to carry out household tasks. The plaintiff's counsel submitted the plaintiff's evidence should be accepted that she required 11.5 hours per week domestic assistance resulting from the aggravation of her injury.

In relation to non-economic loss, it was argued by the plaintiff's counsel an amount reflecting 30% of a most extreme case was more appropriate than the 20% awarded by Judge Garling.

In response, the defendants submitted that the plaintiff had not demonstrated Judge Garling made a wholly erroneous estimate of damages which would justify appellant intervention. It was also contended that a finding of 20% for non-economic loss was reasonable when viewing medical evidence which suggested the subsequent injury had not greatly affected the plaintiff's symptoms. The defendants also submitted that $100 per week for economic loss was appropriate in light of the finding by Judge Garling that the plaintiff had only suffered a partial loss of income flowing from the defendants' breach.

Regarding gratuitous attendant care services, the defendants argued Judge Garling had been correct in finding that medical evidence provided by Dr Conrad demonstrated the plaintiff only required an additional two hours per week of domestic assistance in addition to the hours she already required from the work related injury. In this argument the defendants relied on two separate reports from Dr Conrad pre and post the aggravation.

In relation to damages awarded for non-economic loss, the Court of Appeal firstly applied the decision of Wynn Tresedder Management v Barkho4 that the determination of non-economic loss involved an "exercise of discretion with which the Court will rarely intervene... not readily susceptible of appellate review" and requires a demonstration the "conclusion reached by the primary judge was manifestly erroneous". In considering the conclusion that the vocational assessment had made the plaintiff's pre-existing injuries and disabilities much worse and her problems "significantly aggravated" on a continuing basis, the Court of Appeal could not accept that the assessment of the severity of the plaintiff's non-economic loss as 20% was appropriate. Rather, they considered the exercise of Judge Garling's discretion to be manifestly erroneous and unsound and instead awarded the plaintiff non-economic loss at 30% of a most extreme case.

Reflecting on the conclusion by Judge Garling that the plaintiff had no residual earning capacity as a result of the vocational assessment, the Court of Appeal found the calculation of $100 per week for economic loss did not reflect the evidence. Accordingly, they substituted an award assessed at $300 per week for past and future economic loss.

In relation to gratuitous attendant care services, the Court of Appeal noted it was necessary for the plaintiff to establish that the need for those services arose solely because of the injury, that the services would not have been provided but for the injury and that those services were provided for at least six hours per week for at least six consecutive months, pursuant to s 15 of the Civil Liability Act 2002. The Court of Appeal adopted the approach taken in Woolworths Limited v Lawlor5 that the correct approach in assessing domestic assistance for a subsequent injury was to establish that the care required as a result of the aggravation was required for six hours per week for at least six consecutive months in addition to care resulting for a primary injury. In light of Dr Conrad's evidence, the Court of Appeal accepted the plaintiff, at best, required only an additional two hours per week as a result of the aggravation caused by the defendants. Accordingly, the decision to award no damages for domestic assistance was upheld.

Implications

This case reflects recent decisions of the Court of Appeal which highlight the importance of plaintiffs, defendants and the courts to refer to any relevant sections of the Civil Liability Act. In particular, specific reference must be made to the requirements contained in s 5B of the Civil Liability Act in determining whether a party has breached a duty of care. Defendants should also plead in the defence any provisions of the Civil Liability Act on which they intend to rely.

Consistent with the High Court decision in Sydney Water Corporation v Turano6 in determining the scope of a duty of care the test to be applied is by asking, prospectively, what the exercise of reasonable care required in response to a foreseeable risk of injury, not by retrospectively focusing on how the injury could have been avoided after the injury occurred.

This case also highlights the reluctance of the Court of Appeal to reconsider assessments made by lower courts for non-economic loss unless it can be demonstrated they are manifestly erroneous. The increase from 20% to 30% of a most extreme case goes against the trend of recent decisions of the Court of Appeal where there has been a reluctance to interfere with decisions of a primary judge in respect of non-economic loss. However, in the recent decision of Sretenovic v Reed7 the Court of Appeal went the other way reducing damages for non-economic loss from 35% to 20% of a most extreme case notwithstanding the fact the infant plaintiff received significant scarring from a dog bite and resulting psychiatric disabilities. The other surprising aspect of the decision in this case is that age was not a limiting factor in determining damages for non-economic loss such was the situation in Reece v Reece8 which involved injuries to a 64-year old woman with the Court of Appeal holding there was an error in assessing damages as would be appropriate for a much younger person.

The decision highlights the requirement that plaintiffs demonstrate that a subsequent injury created a need for an additional six hours per week of domestic assistance for at least six consecutive months in order to be entitled to any damages for domestic assistance pursuant to s 15(3) of the Civil Liability Act.

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