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[1984] Part 4 Case 2 [PC] |
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www.ipsofactoJ.com/archive.index.htm
[1984] Part 4 Case 2 [PC] |
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THE PRIVY COUNCIL |
Tiong
- vs -
Vinetti
Coram LORD KEITH OF KINKEL LORD ELWYN-JONES LORD BRIDGE OF HARWICH LORD BRANDON OF OAKBROOK SIR ROBIN COOKE |
19 JUNE 1984 |
Judgment
Lord Brandon of Oakbrook
(delivering Judgment of Board)
On 6 October 1977 a collision took place in a road named Jalan Bunga Raya, Kuala Belait, in the State of Brunei, between a motor-cycle driven by Giovanni Venetti and a motor car driven by Tiong Ing Chiong, as a result of which the former was badly injured.
On 27 August 1980 Giovanni Vinetti (“the plaintiff”) brought an action against Tiong Ing Chiong (“the defendant”) in the High Court of the State of Brunei, in which he claimed damages for negligent driving. The action was tried on 7 December 1981 by Penlington J, before whom both liability and damages were in issue, save for a small part of the plaintiff’s special damages relating to matters other than past loss of earnings. On 9 December 1981 Penlington J delivered a judgment in which he found for the plaintiff on liability and awarded him total damages of B$1,300,792 with interest.
The defendant appealed against the order giving effect to that judgment of the Court of Appeal of the State of Brunei on both liability and damages and the plaintiff cross-appealed on damages. By an order of 18 December 1982 the Court of Appeal (Sir Geoffrey Briggs P, Sir Alan Huggins and Bewley J sitting as Commissioners) dismissed both the defendant’s appeal on liability and the plaintiff’s cross-appeal on damages, but allowed in part the defendant’s appeal on damages by reducing substantially the sum awarded for past loss of earnings.
The defendant appealed and the plaintiff cross-appealed from the order of the Court of Appeal to this Board, as the amount involved in the action entitled them to do. Both appeal and cross-appeal were, however, limited to two issues only,
first the amount of damages awarded for past loss of earnings, and
secondly, that awarded for future loss of earnings, the defendant contending that both sums were too high and the plaintiff that they were too low.
Most of the difficulties with regard to the amount of damages which have arisen in this case have done so by reason of the want of care, thoroughness and foresight with which the parties’ legal advisers first prepared for, and later conducted, the trial at first instance.
In the statement of claim it was pleaded that the plaintiff had suffered loss of earnings totalling B$244,650 and continuing. It was further pleaded that the plaintiff would also at the trial claim damages for loss of future earnings.
Some particulars of the claim for past loss of earnings were given but they were wholly inadequate and in part misleading, in that they implied that in his employment, which was that of a deep sea-diver, he was paid in Brunei dollars, whereas in fact, as an Italian working for an Italian company, he was paid largely in Italian lire. The pleading further implied that, in his new business as a seller of solar energy panels, his profits were like-wise made in Brunei dollars, although, since he had returned to Italy in order to engage in this new business, it should have been obvious that this could not be so. No particulars of the plaintiff’s claim for future loss of earnings were given at all.
The question of the currency in which the plaintiff was paid or made profits before the trial, and the currency in which he would make profits in the future, was one of great potential importance, because the rate of exchange between the Brunei dollar and the Italian lire was at all material times changing rapidly in favour of the Brunei dollar.
The statement of claim, being in this form, clearly cried out for a request, and if necessary an order, for extensive further and better particulars of the claims for past and future loss of earnings. The advocates for the defendant, however, failed to ask for any such particulars. The claims also clearly cried out for a request, and if necessary an order, for full discovery of all the relevant documents in the possession or power of the plaintiff. The advocates for the defendant, however, failed to make a request, or seek an order, for such discovery.
The only effort made by the advocates for the defendant to obtain documents from the plaintiff was a Notice to Produce dated 26 November 1981, asking for production at the trial of all relevant documents, including in particular
all records in writing showing past earnings and
all previous and present income tax returns filed and receipts for income tax paid in Italy or elsewhere.
No consideration appears to have been given to the likelihood that many of the relevant documents would be written in Italian, so that, if they were to be put in evidence or otherwise used at the trial, translations into English would be required. In any case a Notice to Produce at the trial was no substitute for pre-trial discovery.
At the trial before Penlington J three witnesses gave oral evidence for the plaintiff with regard to his past earnings and what his future earnings would probably have been but for his injuries. These were the plaintiff himself; Vittorio Majoni, the Operations Manager of the Company by which the plaintiff had been employed by another company active in the off-shore oil industry. The plaintiff further gave evidence about the profit of his business of selling solar energy panels.
During his cross-examination the plaintiff produced for the first time a bundle of statements relating to his past earnings as a diver, which was put in evidence as exh P4. These statements were written in Italian and contained somewhat complex figures, so that translation into English and a close study of such figures would have been necessary to enable them to be properly understood. The advocate for the defendant might reasonably have asked for an adjournment for these purposes. He chose, however, not to do so, and put no questions to the plaintiff about the statements. In particular he never put to the plaintiff that, by reason of the changing rate of exchange between the Brunei dollar and the Italian lire, or for any other reason, there were any inconsistencies between his evidence-in-chief in which he had referred to his earnings in terms of Brunei dollars only, and the figures in Italian lire shown in the statements produced. Penlington J said in his judgment that both the plaintiff and Vittorio Majoni were good witnesses on whose evidence he could rely.
Later, dealing with the question of loss of earnings he said:—
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... there was an unfortunate lack of documentary evidence on this head which should have been easy to calculate. |
As will be apparent from what has already been said, their Lordships can only regard this observations as a charitable understatement.
Relaying wholly or mainly on the evidence of the plaintiff and Vittorio Majoni, Penlington J made the following findings of fact with regard to the plaintiff’s earnings:—
That at the time of the accident the plaintiff was employed by an Italian company called Sub Sea as a third class diver earning about B$8,000 a month, which included a basic salary paid in Italy and various bonuses and extra payments.
That, following the accident, the plaintiff’s income was reduced to about B$1,000 a month paid by the Italian Government.
That this continued till August 1978, when he got medical clearance to act as shallow-water diver: he then worked in Libya for a short period at a salary of B$4,000 a month.
That in January 1979 he returned to Brunei, where he was paid B$4,000 to B$4,500 a month.
That in June 1979 he went back to Italy for further medical treatment.
That he afterwards returned to Brunei, where he again earned B$4,000 to B$4,500 a month.
That he resigned from his work as a diver for Sub Sea in January 1980.
That, but for his injuries in the accident, he would have been promoted to second class diver on 1 January 1978 at an increased salary of B$9,500 a month.
That, after giving up diving, he was unemployed from January until August 1980, during which period he again received B$1,000 a month from the Italian Government.
That in August 1980 he began work on his own account selling solar energy panels. He invested B$30,000 in that business, and his father did the same.
With regard to the plaintiff’s earnings in that business Penlington J said:—
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He (the plaintiff) said that the profit from the business varies according to the seasons but the turnover is about B$4,000 a month. He has to spend quite a lot on advertising and there are other overheads. I will, however, assume that he made a profit of B$4,500 per month during that period. |
Their Lordship would pause to observe that Penlington J’s finding that the profit from the plaintiff’s business, as distinct from the turnover, was B$4,000 a month was surprisingly adverse to him. His pleaded case was that his profit was B$1,800 a month, and his oral evidence, though admittedly somewhat confused, certainly did not, if taken at its face value, support any higher figure.
On the basis of these findings of fact Penlington J calculated the plaintiff’s loss of earnings separately over five periods, and arrived at a total loss of B$327,000. It is to be observed that he approached his task throughout on the basis that the currency in which the plaintiff’s salary was paid, and the profits of his business made, was Brunei dollars.
Turning to future loss of earnings Penlington J made the following further findings with regard to the probable future of the plaintiff if he had not been injured in the accident:
That he would in due course have become a first class diver and then a superintendent.
That his earning from the date of trial, when he was aged 27, until his probable retirement at the age of 60 would have been B$27,000 a month.
That, allowing for profits of B$6,000 a month from his new business, his future loss of earnings was B$6,000 a month or B$72,000 a year. Their Lordships would pause again here to observe that it is not apparent what was the evidential basis for the figure of B$6,000 a month deducted by Penglington J from the plaintiff’s hypothetical earnings of B$12,000 a month. Indeed, having regard to the absence of any real evidence on the matter, Penlington J could do no more then make a reasonable estimate of the right figure, and their Lordships must assume that this is what he did.
With regard to the multiplier to be applied to the annual loss of B$72,000 Penlington J said:—
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The plaintiff is now 27 years of age and would normally have retired at 60. He was, however, engaged in a hazardous occupation, and that is a factor that must be considered. The Chief Justice in McGuinness (another case in the High Court of the State of Brunei) applied a multiplier of 12 for a man of 34 who was a driller, also a hazardous occupation, who would retire at 55. I think I should apply a multiplier of 13 here. That gives a figure for loss of earnings of B$72,000 x 13= B$936,000. |
In the result the damages awarded to the plaintiff by Penlington J were as follows:—
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(1) |
Agreed special damages in respect of matters other than past loss of earnings |
10,292 |
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(2) |
Past loss of earnings |
327,000 |
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(3) |
Pain, suffering and loss of amenities |
37,500 |
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(4) |
Future loss of earnings |
936,000 |
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Total (B$) |
1,300,792 |
He further awarded interest on these sums.
The judgment of the Court of Appeal was delivered on 18 October 1982 by Sir Alan Huggins. That court, as indicated earlier, dismissed the defendant’s appeal on liability and the plaintiff’s cross-appeal on damages; but allowed in part the defendant’s appeal on damages by reducing substantially the amount awarded for past loss of earnings. The reductions so made was from B$327,000 to B$233,688.58, with consequential variations in the amount of interest awarded in respect of that item.
The difficulties facing the Court of Appeal on the question of damages for both past and future loss of earnings were stated succinctly by Sir Alan Huggins:—
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In relation to the earnings one must first inquire what the plaintiff was earning at the date of the accident, and at once we run into difficulty because the whole case was tried on the false basis that the plaintiff was being paid in Brunei dollars, whereas the fact is that his basic salary and deep see diving bonus was paid in lire in Italy. |
Shortly afterward he said:—
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Another difficulty which has bedevilled us, as it must the trial judge, is the unsatisfactory nature of the rest of the evidence as to damages. |
Later again he said:—
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The evidence as to the earnings of his (the plaintiff’s) business is woefully inadequate ... |
Sir Alan Huggins reviewed the whole of the evidence, and, using the exchange rate of B$1 = L280 prevailing at the date of the accident, made a revised analysis of the plaintiff’s past loss of earnings, which he expressed in the form of a table as follows:—
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Period |
Lire |
B$ |
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1 Oct 1977 - 31 Dec 1977 |
785,806.44 |
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1 Jan 1978 - 31 Jul 1978 |
1,960,000 |
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1 Aug 1978 - 31 Aug 1978 |
4,000 |
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1 Sep 1978 - 31 Dec 1978 |
4,480,000 |
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1 Jan 1979 - 30 Jun 1979 |
1,680,000 |
21,000 |
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1 Jul 1979 - 31 Jul 1979 |
280,000 |
3,500 |
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1 Aug 1979 - 30 Sep 1979 |
8,000 |
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1 Oct 1979 - 31 Jan 1980 |
4,480,000 |
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1 Feb 1980 - 31 Jul 1980 |
1,680,000 |
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1 Aug 1980 - 6 Dec 1981 |
18,136,774.09 |
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Total |
33,482,580.53 |
36,500 |
In arriving at the plaintiff’s income after he began his own business as a seller of solar energy panels, Sir Alan Huggins, while reasonably doubting the profit figure of B$4,000 a month on the grounds to which their Lordships referred earlier, concluded that, having regard to the unsatisfactory nature of the plaintiff’s evidence on the subject, the trial judge was entitled to use it as a basis for his calculations.
Turning to the question what the plaintiff would have earned but for the accident, Sir Alan Huggins accepted broadly the findings of Penlington J as the future course which the plaintiff’s career would have taken, and made a revised analysis of his hypothetical earnings expressed in the form of a second table as follows:—
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Year |
Lire |
B$ |
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1977 |
3,929,032.90 |
8,419.35 |
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1978 |
21,840,000 |
72,000.00 |
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1979 |
21,840,000 |
72,000.00 |
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1980 |
21,840,000 |
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1981 (to 6th Dec) |
25,273,548,19 |
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Total |
94,722,580.39 |
152,419.35 |
Sir Alan Huggins then subtracted the totals in the first table from those in the second table, thereby arriving at total losses of L61,239,999.86 and B$115,919.35 respectively. Then, applying the rate of exchange prevailing at the trial, as given in evidence, namely, B$1 = L520, he calculated the sum of the two losses as B$233,688.58, which was less by B$93,311.42 than what Penlington J had awarded under this head.
With regard to future loss of earnings Sir Alan Huggins examined a number of criticisms made by both sides of both the multiplicand and the multiplier used by Penlington J but rejected them all on the ground that there was evidence to support the figure of B72,000 as the multiplicand, and that the multiplier of 13, although on the low side, was not in all the circumstances of the case so low that the Court of Appeal would be justified in increasing it.
Their Lordships now come to the appeal and cross-appeal which is before them. With regard to these, three preliminary points need to be made.
The first point is that all the issues raised on both sides are issues of fact involving no question or principle of law at all.
The second point is that the issues of fact raised on both sides are issues relating to the assessment of damages for past and future losses of earnings, in respect of which a court cannot, even if it has the benefit or perfect pleadings, all essential discovery, and evidence both oral and written as complete and satisfactory as it is possible to have, arrive at precise answers, because of the many hypothetical facts necessarily involved in any such assessment.
The third point is that, as their Lordships indicated earlier, the want of care, thoroughness and foresight with which the advocates prepared their respective cases for, and conducted them at, the trial at first instance had the result that the trial judge had before him inadequate pleadings and only a small part of the total evidential material, especially documentary evidence, which he needed in order to made a satisfactory assessment of the two items of damages with which this Board is now concerned.
Their Lordships consider first the amount awarded for past loss of earnings. For the defendant (appellant and respondent to the cross-appeal) three main submissions were made.
The first submission was that the rate of exchange of B$1 = L520, on the basis of which Sir Alan Huggins had converted back the plaintiff's loss in lire into Brunei dollars, was erroneous, and that fresh evidence, which counsel for the defendant applied for leave to adduce, would show that the correct figure was L580.
The second submission was that the evidence called by the plaintiff in respect of his actual past earnings as a diver, and the earnings which he would have earned but for the accident, was incomplete and unsatisfactory; there should have been written evidence on these matters from the plaintiff’s employers; and, since the burden of proof in respect of both matters lay on the plaintiff, the losses found by the Court of Appeal were not justified.
The third submission was that the evidence about the profit made by the plaintiff in his new business of selling solar energy panels was wholly inadequate, and that a higher profit than B$4,000 a month should have been attributed to him in respect of it.
For the plaintiff (respondent to the appeal and cross-appellant) two main submissions were made.
The first submission was that Sir Alan Huggins, in converting back the plaintiff’s past earnings from Italian lire into Brunei dollars, had throughout used the rate of exchange of B$1 — L280, which was the rate in force at the date of the accident, and that he should instead have applied to the various periods the progressively changing rate of exchange which culminated in the rate of B$1 = L520 by the date of the trial.
The second submission was that both Penglington J and the Court of Appeal were wrong to attribute to the plaintiff, as the profit made by him in his new business of selling solar energy panels, a sum as high as B$4,000 a month. On the plaintiff’s evidence this was the figure for turnover and not for profit; there were deductions to be made for the cost of materials and advertising; and a much lower figure for profit should therefore have been found.
Their Lordships consider first the three submissions made for the defendant.
With regard to the first submission, it depended on the grant of leave to adduce fresh evidence with regard to the rate of exchange between Brunei dollars and Italian lire prevailing at the date of the trial. Their Lordships refused such leave on the ground that the fresh evidence could, by the exercise of due diligence on the part of the defendant’s advocates, have been adduced at the trial. It is also pertinent to observe,
firstly, that the evidence that L520 was the correct figure was given by the plaintiff’s witness, Vittorio Majoni, at the trial, and he was not cross-examined with regard to it; and,
secondly, that the defendant made no application to the Court of Appeal for leave to adduce the fresh evidence concerned.
With regard to the second submission, their Lordships have already commented on the unsatisfactory manner in which both sides prepared for and conducted the trial at first instance. If the advocates for the defendant had insisted on further and better particulars of the relevant averments in the statement of claim, and on proper discovery of the plaintiff’s documents, they might well have put themselves in a position to mount an effective attack on the figures given by the plaintiff, Vittorio Majoni and Colin Wilson. Having failed, however, to do either of those things, they were not able to mount any such attack, and, as a result, the figures given by these three witnesses went largely unchallenged. The trial judge expressly stated that he regarded the plaintiff and Vittorio Majoni as good and reliable witnesses, and their Lordships cannot in these circumstances see anything wrong in either the trial judge or the Court of Appeal accepting and acting on the figures spoken to by these witnesses.
With regard to the third submission, there is no doubt that the plaintiff’s evidence about the profit made by him in his new business was, as Sir Alan Huggins said, woefully inadequate. It was however, never put to the plaintiff in cross-examination that the profit exceeded B$4,000 a month, and, as their Lordships have already observed at an earlier stage, the findings that the profit was even as high as this was, on the plaintiff’s evidence, surprisingly adverse to him. That being so, their Lordships can see no reason for holding that the profit made by the plaintiff should have been found to be even higher. Here again, if there had been proper discovery of the plaintiff’s documents, the evidential situation might well have been different.
In the result their Lordships reject all the three main submissions made by the defendant, and turn to the two submissions made in a contrary sense for the plaintiff.
With regard to the first submission, there is logical force in the contention that, for each period of loss of earnings calculated, the amounts in Brunei dollars should have been converted to Italian lire at the contemporaneous rate of exchange, rather than all being calculated at the rate of exchange prevailing at the date of the accident. Because of the way in which the trial was prepared and conducted, however, the Court of Appeal had no evidence which would have enabled it to follow this theoretically more correct approach. This was as much the plaintiff’s fault as the defendant’s in not preparing and conducting the case adequately, and in these circumstances their Lordships do not consider that the Plaintiff has any legitimate complaint against the Court of Appeal on this score.
With regard to the second submission, it will be apparent from what their Lordships have already said that they have some sympathy with the plaintiff on this issue. It was, however, for the plaintiff to satisfy the trial judge what was the profit made by him in his new business. Having regard to the woeful inadequacy of the evidence adduced by him on this topic, including the failure to produce any accounts or other relevant documents, their Lordships agree with the Court of Appeal that Penlington J was justified in interpreting the plaintiff’s evidence on this topic adversely to him.
In the result their Lordships reject each of the two main submissions made for the plaintiff.
It remains for their Lordships to examine the question of future loss of earnings. This involves a consideration,
firstly, of the multiplicand, and,
secondly, of the multiplier adopted by Penlington J and accepted by the Court of Appeal.
The multiplicand was attacked for the defendant as being too high, on the ground that a larger profit than B$6,000 a month should have been found as likely to be earned by the plaintiff in his new business as it developed in the future. The multiplier was attacked by both sides: by the plaintiff on the ground that it was too low; and by the respondent on the ground that it was too high, although counsel did not in the end press his argument to this effect.
So far as the multiplicand is concerned their Lordships have already observed at an earlier stage that the evidence before the trial judge was so inadequate that he had no alternative but to make what amounted to no more than a reasonable estimate. Like the Court of Appeal, their Lordships do not consider that the estimate which he made was an unfair or unreasonable one for him to make. Here again the absence of discovery of the plaintiff’s documents, and the failure to deal with the matter properly either in the plaintiff’s evidence-in-chief or in his cross-examination, rendered the task of the trial judge, and that of the Court of Appeal, an extremely difficult one.
So far as the multiplier is concerned the main submission made for the defendant was that Penlington J was wrong to calculate the multiplier by reference to an assumed rate of interest on the notional income from the lump sum awarded of as much as 6%: the rate which should have been taken was 4% to 5%, which would have produced a higher multiplier and resulted in a substantial increase in the sum awarded for future loss of earnings.
Their Lordships think it right to emphasise that, even when a court has the best possible evidence (which was far from being the case here), the selection of an appropriate multiplier can never be a matter of precision. A number of factors have to be taken into account, and their Lordships agree with the Court of Appeal that, although a multiplier of 13 was on the low side, it was not in all the circumstances of the case so low as to justify its being increased by an appellate tribunal.
In the result their Lordships are of the opinion that, despite the contentions advanced on either side, the figure of B$936,000 as damages for future loss of earnings has not been shown to be wrong and should stand.
There is a further point to be made with regard to this second issue relating to future loss of earnings. The question what is a proper amount to award is, as their Lordships said earlier, one of fact involving no question or principle of law. There are concurrent findings of fact on this issue by both the trial judge and the Court of Appeal, and it is not the practice of this Board, save in exceptional circumstances, to interfere with such findings. There are, in their Lordships’ opinion, no such exceptional circumstances in the present case.
For the reasons given by their Lordships, they will humbly advice Her Majesty that both the appeal and the cross-appeal should be dismissed, with no order as to costs.
Court of Appeal, Brunei
Dato Mohamed Ali Salleh, Chief Registrar
(delivering the Judgment of the court written by Sir Alan Huggins)
There was an accident outside the Kuala Belait General Hospital at about 10.10pm on 6 October 1977. The Respondent Plaintiff was riding a motor-cycle towards Kuala Belait when a motor-car, driven by the Appellant Defendant, crossed in front of him in the course of a turn from the opposite lane into the hospital entrance. The Plaintiff’s motor-cycle struck the car and the Plaintiff was injured.
LIABILITY
The trial judge found the Defendant solely to blame for the accident and the Defendant appeals, contending that the Plaintiff contributed to his own loss at least to some extent.
In my view the judge was entitled to reach the conclusion that he did. Whether or not the Plaintiff was negligent in failing to see the Defendant’s car sooner (and I am not sure whether his evidence should be read as meaning that he was entirely unaware of the presence of the Defendant’s car until it turned across his path), that negligence in no way contributed to his damage. I accept the judge’s finding that the Defendant’s car was displaying not only the regulation driving lights but also a trafficator light indicating an intention to turn right. The fact remains that until the car started its fatal turn the Plaintiff was justified in assuming that it represented no danger to him. By that time it was too late to take effective avoiding action. Just as the use of a trafficator gives a driver no right to carry out the manoeuvre which he indicates, so it does not impose on other road users any obligation to suppose that the manoeuvre will be performed until it is safe. Only when the danger becomes apparent to another road user does that road user have a duty to take reasonable precautions to protect himself from it.
DAMAGES
The judge awarded $10,292 special damages, $27,500 for pain, suffering and loss of amenities, $327,000 for loss of earning to the date of trial and $936,000 for Loss of future earnings, making a grand total of $1,300,792. The Defendant appeals against the award for pain, suffering and loss of amenities and against the awards for past and future earnings. The Plaintiff cross-appeals against the award for past and future earnings.
(1) Pain, Suffering & Loss of Amenities
The judge was referred to several cases where comparable injuries were suffered and based himself on these cases, after taking the effect of inflation into account. The Defendant thinks the figure of $27,500 too high but does not challenge it. The Plaintiff submits that it is too low and ought to be increased to $35,000. There is a body of opinion that the general level of awards under this head has, in the past, been too low and there is much to be said for it. However, a general level has been established and I do not think we should disregard it. In my view the award in the present case is not substantially out of line with past awards and I would not interfere with it.
(2) Loss of Earnings
In relation to the earnings one must first inquire what the Plaintiff was earning at the date of the accident, and at once we run into difficulty because the whole case was tried on the false basis. that the Plaintiff was being paid in Brunei dollars, whereas the fact is that his basic salary and deep sea diving bonus were paid in lire in Italy. As I understand it, he was then a third class diver earning:
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Basic month salary (equivalent to B$3,500 at B$1 = L 280) |
L 980,000 |
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Deep or off-shore sea allowance (equivalent to B$1,500.00) |
L 420,000 |
|
Total |
L 1,400,000 |
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Local allowance (a variable which the judge took at the higher end of the bracket) |
B$3,000 |
As he had been abroad for more than 12 months, no tax was payable in Italy.
Another difficulty which has bedevilled us, as it must the trial judge, is the unsatisfactory nature of the rest of the evidence as to damages. For example, it is not entirely clear whether the Plaintiff’s company paid him anything when he became unable to work by reason of an accident unconnected with his employment. The judge obviously thought that it did not and that the “$1,000” allowance which was paid for a time by the Italian Government was in the nature of an unemployment allowance. (That figure should, of course, be expressed in lire, say L 280,000)
The question arises whether, and if so to what extent, the Plaintiffs failure to call satisfactory evidence as to his actual past-accident earnings has prejudiced his claim. Where lies the burden of proof? The basic rule is that a plaintiff must prove his loss. Where a defendant contends that loss should have been mitigated, the onus of proving the possible mitigation is on the defendant.
A loss of earning capacity is generally, and was here, sought to be established by showing what the plaintiff would have earned if he had not been injured and by deducting therefrom what he will be able to earn in his injured state. By “mitigation” in this type of case is meant, for example, the undergoing of medical treatment which would reduce the loss of earning capacity or the acceptance of available employment in another area.
The proper approach to the assessment of damages for loss of earning capacity has been the subject of several decisions in the courts of New South Wales in the past ten years and a useful statement of general principle is to be found in the judgment of Mr. Mohoney J in Baird v Roberts: (1977) 2 NSWLR 389, 397.
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The way in which the loss is to be taken into account must, as I have said, be determined according to the, circumstances of the case before the court. Although that for which compensation is given may be the loss of economic capacity, that loss often will be best quantified by considering what is the relevant result from it, viz. the difference between the remuneration which could have been obtained by employment of the plaintiff’s pre-injury capacity and that which can be obtained by employment of his reduced capacity after the injury: cf Ruby v Marsh (1975) 132 CLR 642, at p 663, per Stephen J. This is the approach frequently adopted and, in my opinion, rightly so. In the kind of case where the compensation sought is for a reduction, and not for a complete destruction, of the economic capacity, such an approach will afford, prima facie, the most direct assistance in quantifying the compensation. This does not mean that it is the only approach which can be made. There, no doubt will be circumstances in which a comparison between such pre and post-accident remuneration possibilities cannot be made. In such cases, the court has the more difficult task of taking into account or fixing upon a figure for a reduction in capacity generally. However, in many cases, it will be to the advantage of the plaintiff and the defendant to have the compensation assessed upon the basis of a comparison of such pre-and post-accident possible earnings. But, if the court is to be asked to adopt this approach and the parties are to have from such an approach the benefits which they seek to obtain from it, then, in my opinion, appropriate evidence must be adduced to support it. |
In the present case it was for the Plaintiff to prove his loss and, since he sought to compare the pre-and post-accident possible earnings, to show what he was now able to earn in his injured state (see Allan v Loadsman (1975) 2 NSWLR 789): there was no question of mitigation. The fact that the evidence of the prospective earnings of his business was far from satisfactory does not mean that the judge was unjustified in doing his best to arrive at a just conclusion. Even though the onus was on the Plaintiff to prove his loss, it was open to the Defendant to adduce evidence to refute such evidence as the Plaintiff did provide. Indeed I would accept the view of Mr. Justice Reynolds in Yammine v Kalwy (1979) 2 NSWLR 151, 155 that
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... in seeking to quantify his damages, a plaintiff could be well advised to offer such evidence in many cases; and likewise a defendant, in seeking to cut down the damage, might similarly be well advised to tender such evidence; neither, in the absence of such evidence, could complain, to the same effect, at any quantification arrived at. This, however, is far from asserting that in the absence of such evidence only nominal damages is appropriate. In Kealley v Jones [1979] 1 NSWLR 723, at p 732 et seq the President dealt with this matter in terms with which I express respectful agreement. In my opinion, where a plaintiff has suffered a significantly disabling injury which obviously affects the range and nature of the work, he can, therefore, perform, a tribunal of fact can, without specific evidence as to what other persons with that kind of disability can earn, make a judgment and assessment, on a percentage basis or otherwise, of the value of the lost capacity. Allan v Loadsman should not be understood as deciding otherwise. |
In truth Mr. Cashin did not contend that the Plaintiff had failed to prove any loss but merely that, on the whole of the evidence, it was wrong to conclude that the loss was as great as the judge found it to be.
On the question whether the Plaintiff's company paid him anything when he became unable to work, I incline to the view that there was just enough evidence for the judge to find as he did. The Plaintiff was unable to work from the date of the accident to the end of 1977 and, therefore during that period he received only L 785,806.44 in unemployment allowance.
In 1978 he was unable to work until August and for the first seven months he received a total of L 1,960,000 from the Italian Government. He then obtained a licence to work as a shallow water diver and went to work in Libya. He was there for 20 days and was paid “$4,000 a month”. Presumably that was expressed, but not paid, in Brunei dollars and meant the rate at which he was paid. There was no evidence as to where it was paid and I shall leave the amount in Brunei dollars. The judge did not explain how he arrived at his figure of the loss for 1978, but Mr. Chan suggests that he assumed an income limited to the unemployment allowance throughout the year. If that be so, it cannot be right: the Plaintiff worked in August and we must not assume that he was unemployed upon his return to Italy. On the contrary, I would assume that he continued to be paid the equivalent of $4,000 a month, say L1,120,000 making a total of L 4,480,000 for the four months.
Although the judge assumed a loss of earnings of $5,000 a month from 1 January 1979 to “1 January 1980”, I think we need to consider this period in detail. In January the Plaintiff returned to Brunei and was re-employed by his old company at a salary of “$4,000 — $4,500 per month”. I say he was “re-employed” although there was no evidence that he was ever discharged by the company. and there is the evidence of pay sheets suggesting that he was never discharged. Those pay sheets are in Italian and no translations were provided. The judge did not rely upon them and I do not think we can do so, save as evidence that the Plaintiff was still employed. Although his evidence was contradictory, his basic salary appears now to have been paid locally with “two other payments in Italy”, say B$3,500 and L280,000 a month. This continued until June, when he returned to Italy for medical treatment. That makes B$17,500 and L1,400,000 for the first five months and, since he did not say what form the treatment took or how long it took, one cannot assume he was not working during the treatment and I shall assume, as did the judge, the same rate of earnings as in January to May. The Plaintiff returned to Brunei for one month, during which he would have earned B$3,500 and L 280,000, and then returned to Italy, whereupon he asked to be sent to Libya. He went to Libya for two months at a salary of “about $4,000” — as before. That comes to the equivalent of B$8,000. After that — it would be October 1979 — he returned to Italy. Until he started his own business in “August/September 1980” his income is unclear. There are pay sheets up to January 1980, when, he says, he resigned. He did not say why he resigned or what he earned prior to his starting in business. The judge assumed that he was unemployed from October 1979 to the end of July 1980. We have seen that he was still employed until the end of January 1980, but I do not think we can quarrel with the finding that he was unemployed thereafter.
The evidence as to the earnings of his business is woefully inadequate, but the Plaintiff said that by the date of the trial he had a turnover equivalent to “about B$4,000”. This varied according to the season. What we are concerned with is not turnover but profit, and there is no evidence at all as to that. All the Plaintiff said was that a bit less than $3,000 went into buying new stock and a bit more than $1,000 ‘is expenses’. What is ‘new stock?’ I take it that he meant increased stock for the purpose of building up his business and that the replacement of old stock which had been used in making the ‘$4,000’ was covered by ‘expenses.’ Nevertheless the evidence is so unsatisfactory that I think the judge was entitled, as he appears to have done, to treat the entire ‘$4,000’ as profit. It should, however, be expressed in lire without the benefit of the increasingly favourable exchange rate i.e. L1,120,000. Accordingly, in the period August 1980 to 6 December 1981 the total would come to L18,136,774.09.
The actual pre-trial income can be summarized as follows:
|
Period |
L |
B$ |
|
1 Oct 1977 - 31 Dec 1977 |
785,806.44 |
|
|
1 Aug 1978 - 31 Jul 1978 |
1,960,000 |
|
|
1 Aug 1978 - 31 Aug 1978 |
4,000 |
|
|
1 Sep 1978 - 31 Dec 1978 |
4,480,000 |
|
|
1 Jan 1979 - 30 Jun 1979 |
1,680,000 |
21,000 |
|
1 Jul 1979 - 31 Jul 1979 |
280,000 |
3,500 |
|
1 Aug 1979 - 30 Sep 1979 |
8,000 |
|
|
1 Oct 1979 - 31 Jan 1980 |
40,000 |
|
|
1 Feb 1980 - 31 Jul 1980 |
1,680,000 |
|
|
1 Aug 1980 - 6 Dec 1980 |
18,136,774.09 |
|
|
Total |
29,002,580.53 |
76,500 |
Pre-trial earnings if not injured
The pre-trial earnings, if the Plaintiff had not been injured, would have been as follows. From the day following the accident until 31 December 1977 he would have been paid at the pre-accident rate. In January 1978 he would probably have been promoted to second class diver and would have been paid L1,400,000 as basic salary plus L420,000 deep sea allowance and a local allowance of B$3,000. That would have been continued until the end of 1979, when the company ceased operations in Brunei. In 1980 he would still have been a second class diver but it is not known where he would have worked. Presumably he would have continued to draw his basic salary and deep sea allowance, both payable in Italy. The judge found that in 1981 he would have been likely to be promoted to first class diver and his basic salary would then have been L1,820,000 plus the deep sea allowance of L420,000. The annual totals would thus be:
|
Year |
Lire |
B$ |
|
1977 |
3,929,032.90 |
8,419.35 |
|
1978 |
21,840,000 |
72,000.00 |
|
1979 |
21,840,000 |
72,000.00 |
|
1980 |
21,840,000 |
|
|
1981 (to 6th Dec) |
25,273,548,19 |
|
|
Total |
94,722,580.39 |
152,419.35 |
As tax was payable in Italy for only one year after the Plaintiff went abroad and no tax was payable in Brunei, I think the judge was justified in ignoring the incidence of taxation.
Loss of earnings to date of trial
We are now in a position to calculate the loss to the date of trial and it comes to L65,719,999.86 and B$75,919.35. At the rate of exchange ruling at the date of trial, namely B$1 = L 520, that amounts to B$202,303.96, which is $124,696.04 less than the judge awarded.
Future earnings if not injured
We then come to the loss of future earnings. Here we must estimate what he was likely to have earned had he not been injured and what he was likely to earn in his injured state. Clearly the Plaintiff has not been wholly incapacitated and, to arrive at his actual loss, some deduction must be made from the amount he would have earned had he not been injured. The judge thought the loss could properly be arrived at by deducting the prospective profits of the Plaintiff’s business and that it was fair to assess those profits at $6,000 a month. The attack on the award is, in effect, in two stages: first it is said that the finding that the prospective profits can properly be assessed at $6,000 a month is not supported by sufficiently cogent evidence: then it is said that, however one calculates the loss of earning capacity, the final figure of $936,000 is manifestly too high.
The judge accepted the evidence that the Plaintiff was a proficient diver who would have done particularly well. He therefore made his entire calculation on the basic salary of a Superintendent Diver which was said to be equivalent to B$12,000 to B$14,000. He took the lower figure. Mr. Chan objects that, although it was reasonable to base the calculation on a Superintendent Diver’s salary, it was unfair to take the lower figure in view of the Plaintiff’s record, and he suggests that one ought to take a mean figure of B$13,000. The judge gave no reason for adopting the lower figure, but I do not see that it is open to us to say that he was wrong. It gives an annual figure of B$144,000.
Future earnings in injured state
On the other side of the balance sheet the judge assumed that the Plaintiff’s business would at all material times make a profit of the equivalent of B$6,000 a month. The evidence was, as we have seen, that it had a turnover equivalent to “about B$4,000 pm”, and that it varied according to the season. In the Plaintiff’s evidence there then appears the note: “Now in winter’, I am not sure what that means, but presumably such a business is less profitable in the winter and the suggestion was that in the summer the profit would be higher. How much would it be? The Plaintiff emphasized that his was a new product and he said that he hoped to make enough to live on. This suggests that he was not yet earning enough to live on. In any event he was ploughing all the profit back into the business with the object of building it up. The judge, having taken the entire $4,000 as ‘profit’ for the purposes of pre-trial earnings, then estimated the profit throughout the assumed working life as $6,000. There was no other evidence to support such a finding and the Plaintiff submits that the finding was not justified. I do not see what else the judge could have done than to take a figure out of the air. To assume that the Plaintiff would make no profit at all would mean that he would be entitled to sit back and live at the Defendant’s expense. On the other hand Mr. Cashin points out that the future profits might well exceed the amount of the Plaintiff’s estimated future earnings as a diver: in that event there might be no loss at all and, having regard to the fact that the Plaintiff had a working life of some 28 years ahead of him and to the fact that he was the type of man who was likely to do well at any job he took up, it was too cautious an estimate that a business which had made a monthly profit of $3,000 — $4,000 after only a few months of trading would earn only an average of $6,000 throughout the whole of the material period. Mr. Cashin emphasized that the nature o f the Plaintiff’s injuries might have made him unfit for deep sea diving but they would not affect his managerial capabilities. Moreover, he objected that the judge had accepted the Plaintiff’s statement of his earnings in Brunei dollars, when they should have been expressed in lire and then converted at the current rate of exchange, bearing in mind the large drop in the value of the lire against the Brunei currency.
I have every sympathy with the trial judge: he was trying to do justice to both sides on very slender evidence. He was satisfied that the Plaintiff would suffer some loss, but equally it was obvious that the business would make some profit or the Plaintiff would discontinue it and do something else. It was reasonable to assume that the small initial profit would increase and I think the judge was certainly entitled to take as a minimum the figure he did. I have no doubt that if I had been trying the case at first instance I would have assessed the probable future profit at a higher figure, even though the future is inevitably fraught with uncertainty. Nevertheless, after much deliberation, I have come to the conclusion that I cannot say the judge was not entitled to find as he did.
I have not overlooked two further contentions. The first was that the judge ought to have had regard to the pension which it was said the Plaintiff would have earned if he had remained with the company which was employing him at the time of the accident. Apart from the fact that it appears to have been a non-contributory pension, no details of the scheme can be deduced from the evidence. The trial judge gave three reasons for disregarding the pension:
that the evidence on the subject ‘was not comprehensive and no details were given as to if it was payable before the age of 60 or on what condition’;
‘it was not pleaded’ and
‘the large amount of capital the Plaintiff will now have’.
In my view the last two reasons cannot be supported. Any loss of pension would be part of the future loss and there was no need to plead it specifically. The fact that an award will be very large without taking into consideration a factor which would normally be considered does not justify the judge in disregarding the factor: that is tantamount to reducing a proper award on the sole ground that it is very large, which cannot be right. However, the first reason given for disregarding the pension is ample ground for upholding the decision of the judge.
Secondly, I have not overlooked the judge’s decision that no discount ought to be made for tax. Mr. Cashin submits that there should be a discount of not less than 30%. Although there was evidence that salaries were taxed in Italy, there was none that business profits were taxed or to what extent they were taxed. Perhaps one is entitled to say, on a balance of probabilities, that if salaries are taxed business profits will also be taxed, but the amount is a matter of pure conjecture. Moreover, if prospective profits should be discounted for tax, so should the prospective salary as a diver. I think both sides were at fault in leaving the judge entirely without assistance on the point and it seems to me that he cannot be criticised for having decided to ignore tax.
Loss of future earning capacity
The resulting annual loss of future earnings, which is here the measure of the loss of earning capacity, is B$144,000 less $72,000, i.e. $72,000.
The judge took a multiplier of 13. Mr. Cashin submits that this was generous but does not attack it as such. Mr. Chan submits that it is too low and ought to be increased. I have said before that the use of multipliers in the way in which they have come to be used is arbitrary, often misleading and thoroughly unsatisfactory. However, it is too late to say that it is wrong.
In the present case there has been much discussion of the evidence relating to the hazards of a diver’s occupation. The Plaintiff submits that the judge attached too much weight to this factor in view of the fact that he would rarely have dived after being appointed a supervisor and would never have dived after becoming a Superintendent. However, I am not persuaded that the judge failed to appreciate that the greatest danger would continue for only a limited period we cannot say for certain what discount he did make for it, but my calculation at the end of this judgment may show that he assumed a working life of 25 to 26 years and therefore discounted by about 24%. It was common ground that the Plaintiff could have worked for another 33 years (until the age of 60 years). In Lee Woon Sun v Wong Kin Keung (1976) HKLR 296. I suggested that as a general rule a discount of not more than 10% would be appropriate for the contingencies of life. This is not a normal case and I think a discount of 15% would have been appropriate in view of the hazards under which the Plaintiff would have been working. I would therefore have calculated the damages on the basis of a working life of 28 years.
Whichever way one chooses to make the calculation I think we are bound by authority to say that, after making good the Plaintiff’s loss year by year, the capital (with interest thereon) must be exhausted at the end of what would have been the Plaintiff’s working life. Thus in Taylor v O’Connor [1971] AC 115, the court took a multiplier of 12, but the remaining working life of the Plaintiff was 15 to 18 years and p 143G Lord Pearson said the fund must be exhausted over 15 to 18 years. The reason behind this can be seen from the words of Lord Diplock in Mallet v McMonagle [1970] AC 166, 174.
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My Lords, the purpose of an award of damages under the Fatal Accidents Acts is to provide the widow and other dependents of the deceased with a capital sum which with prudent management will be sufficient to supply them with material benefits of the same standard and duration as would have been provided for them out of the earnings of the deceased had he not been killed by the tortious act of the defendant ... |
The Defendant contends that it is here that the judge went wrong and that he failed to make proper allowance for the fact of a lump sum payment. At some stage the question had to be asked: What sum would need to be invested to produce $72,000 a year during the rest of the Plaintiff’s working life?
For this calculation it was necessary to decide what rate of interest should be allowed. The judge said that in his view
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The court should still base awards on the traditional rates of interests of 5–6% |
Mr. Cashin has submitted that 10% is now the very lowest interest payable on deposits in Europe and that it is unrealistic to assume that the high rates of interest which have now persisted for decades by reason of the continuing inflation will come to an end. Whilst I see the force in this argument (which was advanced in Mallett v McMonagle and dealt with at length by Lord Diplock at p 175E) I think it must be remembered that we are not here concerned with a future of a few years but with a working life of about 28th years and I think it is too early to abandon the more modest rate which have been applied until now. I would not disagree with the figure of 6% which was obviously adopted by the judge.
Mr. Cashin then argued that, whatever the multiplier one takes, the fund must be exhausted at the end of that number of years. As Mr. Chan points out, where the generally adopted method of assessment is employed, that arguments confuses the multiplier with the length of the working life and he cites Munkman on Damages (3rd Ed) 46. If my mathematics are correct, the sum of $936,000 awarded by the judge would be exhausted in the last month of the 25 year. As I would have continued the payments until the 28 year, this supports the view that the judge’s award was slightly on the low side on his assessment of the probable future profits of the Plaintiff’s business, possibly because he made a greater discount for the contingencies of life. Whatever the reason, the award was not so low that I am disposed to increase it. Equally I am not satisfied that the award is so high that it is out of proportion with the loss sustained.
I would therefore allow the appeal to the extent only that I would substitute ‘$202,303.96’ in para (2) of the Judgment with consequential amendments as to interest. I think the Defendant should have (a) 25% of the costs of the appeal and (b) the costs of the cross-appeal.
Cases
Powell v Ng Cheng Tee [1979] 1 MLJ; Lim Phuay Siang v Cheong Yuen Lin [1979] 1 MLJ; McGuinness v Ahmad Zaini Tahir [1980] 2 MLJ 304; Baird v Roberts [1977] 2 NSWLR 389; Allan v Loadsman [1975] 2 NSWLR 789; Yammine v Kalwy [1979] 2 NSWLR 151; Lee Woon Sun v Wong Kin Keung [1976] HKLR 296; Taylor v O’Connor [1971] AC 115; Mallet v McMonagle [1970] AC 166
Authors and other references
Munkman on Damages (3rd Ed)
Representation
TC Chan (SP Wong with him) for the Plaintiff (instructed by Lee Brasseur & Bury).
R Karuppan Chettiar (Sarjeet Singh with him) for the Defendant (instructed by Philip Conway Thomas & Co).
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