Husher v Husher[1998] QCA 235

IN THE COURT OF APPEAL

SUPREME COURT OF QUEENSLAND

 Appeal No. 9690 of 1997

Brisbane

[Husher v.  Husher & Anor]

BETWEEN: 

JOHN LESLIE HUSHER

(Plaintiff) Appellant

AND:

WENDY JOAN HUSHER

(First Defendant) First Respondent

AND:

TRANSPORT ACCIDENT COMMISSION INSURANCE

(Second Defendant) Second Respondent

McPherson J.A.

Thomas J.A.

Derrington J.

Judgment delivered 21 August 1998

Separate reasons for judgment of each member of the Court; each concurring as to the orders made

APPEAL DISMISSED WITH COSTS.

CATCHWORDS: DAMAGES - Assessment of damages - loss of earning capacity - partnership - whether damages assessed by reference to prior income actually received by plaintiff or to his full earning capacity contributed to the partnership.

DAMAGES - Allowance to be made for the contingency as to termination of pre-accident partnership - effect of actual post-accident termination known at trial.

PRECEDENT - Adherence to prevailing authority.

Seymour v Gough [1996] 1 Qd R 89

Batt v Wilkinson [1983] 2 Qd R 619

Cole v Ellis [1992] ATR 61,650

Lago v Lago [1983] 2 Qd R 29

Nguyen v Nguyen (1990) 169 CLR 245

Queensland v The Commonwealth (1977) 139 CLR 585

Baker v Willoughby [1970] AC 467

O'Brien v Dunsdon (1965) 39 ALJR 78

Counsel: Mr D Fraser QC, with him Mr R Trotter for the appellant

Mr W Sofronoff QC, with him Mr J McDougall for the respondent

Solicitors: Dempseys for the appellant

Quinlan Miller & Treston for the respondent

Hearing Date:  28July1998

IN THE COURT OF APPEAL

SUPREME COURT OF QUEENSLAND

 Appeal No. 9690 of 1997

Brisbane

Before McPherson J.A.

Thomas J.A.

Derrington J.

[Husher v. Husher & Anor.]

BETWEEN:

JOHN LESLIE HUSHER

(Plaintiff) Appellant

AND:

WENDY JOAN HUSHER

(First Defendant) First Respondent

AND:

TRANSPORT ACCIDENT COMMISSION INSURANCE

(Second Defendant) Second Respondent

REASONS FOR JUDGMENT - McPHERSON J.A.

Judgment delivered 21 August 1998

For the reasons given by Derrington J., I agree that this appeal should be dismissed.

IN THE COURT OF APPEAL

SUPREME COURT OF QUEENSLAND

 Appeal No.  9690 of 1997

Brisbane

Before McPherson J.A.

Thomas J.A.

Derrington J.

[Husher v.  Husher & Anor]

BETWEEN: 

JOHN LESLIE HUSHER

(Plaintiff) Appellant

AND:

WENDY JOAN HUSHER

(First Defendant) First Respondent

AND:

TRANSPORT ACCIDENT COMMISSION INSURANCE

(Second Defendant) Second Respondent

REASONS FOR JUDGMENT - THOMAS J.A.

Judgment delivered 21 August 1998

I agree with the reasons and order proposed by Derrington J.

IN THE COURT OF APPEAL

SUPREME COURT OF QUEENSLAND

 Appeal No. 9690 of 1997

Brisbane

Before McPherson J.A.

Thomas J.A.

Derrington J.

[Husher v.  Husher & Anor]

BETWEEN: 

JOHN LESLIE HUSHER

(Plaintiff) Appellant

AND:

WENDY JOAN HUSHER

(First Defendant) First Respondent

AND:

TRANSPORT ACCIDENT COMMISSION INSURANCE

(Second Defendant) Second Respondent

REASONS FOR JUDGMENT - DERRINGTON J.

Judgment delivered 21 August 1998

The primary point of this appeal is the method of assessment of damages for loss of earning capacity of the appellant, an injured tradesman who conducted his business in partnership with his wife.  She contributed little in the way of services to the partnership but received half its income.  This is a common business structure for spreading income in order to reduce tax.

One method has the authority of Seymour v Gough [1996] 1 Qd R 89, which overruled Batt v Wilkinson [1983] 2 Qd R 619 which had earlier been authority for the competing method.  It had been applied in Cole v Ellis [1992] ATR 61, 650 (affirmed on appeal 15 May 1993 No. 89/1074 SA Full Court).  Batt v Wilkinson had declined to follow the earlier authority of Lago v Lago [1983] 2 Qd R 29.

In brief, Seymour adopts as the measure the loss of earning capacity that would have produced income actually received by the injured party in the circumstances that would have prevailed if the injury had not occurred.  Those circumstances include the reduction in his actual income consequent upon the partnership arrangement.

Under this method, it is accepted that in suitable circumstances an additional allowance should be made for the positive contingency that, absent such injury, the partnership may have  otherwise terminated at some time in the future so that he would then have received the full return from his earnings: Seymour.  For this chance the damages assessed by the learned trial Judge included a component of 25% of the maximum possible increase from this source.

The Batt v Wilkinson principle would have assessed the loss on the full value of the plaintiff’s capacity to earn income actually exercised by him even though he had chosen to divert the benefit of part or all of the proceeds of that exercise to some other party by some means such as a partnership.  It says that this represents his loss of capacity that he would have exercised, and that even though he may have diverted part of the fruits of his labour away from himself to another, that is something that he has lost.  In the present case that would lead to an assessment based on the value of the earnings which the appellant brought to the partnership.

Both methods recognise the need for evaluation of the earning capacity rather than actual earnings, though the latter may afford evidence of the value of the former.

Further, both methods recognise a limitation on the assessment by reference to the extent to which the earning capacity would in fact have been used by the injured party.  That is not relevant to the present issue since the appellant fully exercised his capacity to produce income.  The question is whether any income so earned but never received by him should be disregarded.

In Seymour v Gough, it was said at p.95:

“The defendant must take the plaintiff as he finds him and, prima facie, one would expect that rule to apply to the plaintiff’s working arrangements as well as his physical condition.  If a plaintiff is, under provisions in a partnership agreement, excluded from the partnership because he or she is so injured as not to be able to work full-time, one would expect the whole loss to be recoverable, even if disproportionate to the diminution of working capacity.”

And at p.96 it was further said:

“I do not understand how the respondent in the present case can be treated as having lost more than the records of the business, whose accuracy is unchallenged, show.  Perhaps purely for tax reasons, but nevertheless genuinely, the respondent entered into a partnership with his wife.  The consequence of his having done so is that the profits and losses of the business are shared between the partners; one cannot, simply on the grounds that the partnership was probably formed for tax reasons and that the respondent is the dominant partner, justify treating a partnership loss as if it were a loss to that partner alone.”

This is the current authority in Queensland and while this Court is free to depart from it, it “should do so cautiously and only when compelled to the conclusion that the earlier decision is wrong”:  Nguyen v Nguyen (1990) 169 CLR 245 at 269.  “The occasions upon which the departure from previous authority is warranted are infrequent and exceptional and pose no real threat to the doctrine of precedent and the predictability of the law”: Queensland v The Commonwealth (1977) 139 CLR 585, 620 et seq.  This Court  is certainly not compelled to find that Seymour v Gough is wrong.  Further than that it is unnecessary to go.  Consequently, the appeal cannot succeed on this ground.

There is a subsidiary issue relating to the principle referred to above that allowance should be made for the contingency that the partnership may have terminated, in which case the plaintiff might have received a greater return from his earnings. The appellant claims that the allowance in this respect made by the learned trial Judge was inadequate because of events which actually happened.  Due to his injuries, the appellant was obliged to discontinue his business and consequently his partnership with his wife had terminated before trial.   In reliance on the principle that the Court will not speculate as to future events when the result is known at the time of trial (Baker v Willoughby [1970] AC 467), it is argued that because the actual termination of the partnership at a certain date earlier than the hypothetical one allowed for in the award is established as a fact, the assessment should have been made on that basis.

An assessment of the loss of earning capacity attributable to an injury requires the deduction of the earning capacity remaining to the injured party from that which would have been, but for the injury.  Usually the former is substantially established in fact though there may still be some features where a prediction of a future position is necessary.  In the latter, all is prediction.

The error in the appellant’s proposition in respect of the latter is that it fails to take into account that the assessment necessarily assumes that except for other contingencies of life the appellant would have continued to exercise his earning capacity during the relevant period; and that if that had been so, he would most probably have continued to remain in his partnership arrangement indefinitely.  The hypothetical exclusion of the relevant injury from this prediction requires for consistency that its other consequences be disregarded also. 

Consequently, although it is correct to refer to the fact that the partnership is dissolved in fact in order to establish the first side of the equation, that is, that the appellant will now in fact receive no income from that source, it is not valid to rely upon it on the other side.  It has come about only because, contrary to the basic assumption of that assessment, the earning capacity is no longer exercised.

In this way it is different from, for example, termination of the partnership by the death of the appellant’s wife if that had been the case and had occurred before the trial.  Had that happened, then the effect suggested by the appellant would apply because it would have been within the contingencies to be allowed for in the hypothesis but not associated with the appellant’s injuries which it excluded.  Aliter if, for example, in that case the wife had suicided as a result of stress from the appellant’s injuries.  The cases cited by the appellant such as O'Brien v Dunsdon (1965) 39 ALJR 78, are within this category. This point too must fail.

The appeal is dismissed with costs.