Goode v Thompson[2002] QCA 138

SUPREME COURT OF QUEENSLAND

1. THE COURT: The respondent, who was born on 23 March 1984, was 12½ years old when he suffered severe injuries when struck by a motor vehicle insured by the appellant.  The appellant appeals from various aspects of the assessment of damages undertaken after the trial of the action at which it was found that liability for the accident should be apportioned, as to 80%, to the driver of the motor vehicle and, as to 20%, to the respondent.

2. In the collision, the respondent suffered fractures in the right basal and occipital regions of his brain with cerebral oedema. He also suffered a fractured right pelvic ischium. He received intensive therapy in hospital for approximately three months. He had a prolonged phase of post-traumatic amnesia and exhibited bilateral spasticity. He suffered visual impairment and also exhibited behavioural problems. Prior to the accident the respondent had been assessed as average to above average range of ability. A psychological assessment performed in March 1997 placed the respondent as having a full-scale IQ of 66 with a verbal IQ of 73 and a performance IQ of 64 which indicated a greatly reduced cognitive function post accident. Prior to the accident the plaintiff had difficulty socialising with other children and coping with school discipline and was diagnosed as having Attention Deficit Disorder, but it was observed that he was within “the gifted range”. Subsequent medical opinion given in the course of the trial doubted whether the respondent had suffered from ADD.

3. The respondent returned home after being discharged from hospital and was given intensive care from his mother and immediate family which he was still receiving at the time of trial. At the time of trial the respondent was attending the Aitkenvale Special School for 6 hours per day 5 days per week. The respondent’s mother stated that when the respondent was not attending school, she constantly spent time trying to find something for the respondent to do that would hold his interest. He was able to amuse himself for 10 minutes, but then would want something else to do. The respondent exhibits behaviour consistent with frontal lobe injury – disinhibition and impulsive and repetitive behaviour. The respondent’s mother stated that the respondent needed to be the centre of attention of his carer for about 14 hours per day. On the basis of this and other evidence including that of psychiatrist Dr John Warlow, the learned trial judge concluded that the respondent needs to be in the presence of or close by an adult all the time and it would be impossible for him to live on his own.

4. The learned trial judge assessed the plaintiff’s damages as being in the total sum of $4,560,170.60 which, after apportionment for contributory negligence, amounted to damages of $3,648.136.40. The learned trial judge determined future management fees on the sum available for investment on behalf of the respondent as $188,922, making the total damages assessed in favour of the respondent as the sum of $3,837,058.48.

General damages

5. The learned trial judge assessed general damages for pain, suffering and loss of amenities at $150,000. The learned trial judge stated at para [67] of his reasons for judgment:

“I have described in some detail the injuries from which the plaintiff has suffered.  He will need very substantially one-on-one care for the rest of his life.  His brain damage has resulted in grave intellectual impairment.  He has been left with an epileptic condition and regular headaches both of which need medication.  He has been left with spasticity.  As well as the orthopaedic injury which he suffered in the injury his neuronal problems have produced hip problems and a problem with his Achilles tendon which has put him at risk when walking on uneven ground or even when bumped in a crowd.  He has already fractured one ankle as a result of a fall attributable to the impediment on mobility and balance attributable to his brain injury.  It is not improbable that he will hurt himself again as a result of that lack of balance.  It is not improbable that he will hurt himself again as a result of that lack of balance.  He has little insight into his pitiable condition – due to medication he takes and to the unfailing care and support which his family and particularly mother and father give to him.”

6. The appellant claims that this award for general damages, given the learned trial judge’s statement about the respondent’s degree of insight into his plight, was manifestly excessive. The appellant submits that the award for general damages should have been no more than $135,000.

7. These comments of the learned trial judge were made after a careful and extremely detailed analysis of all the relevant evidence dealing with the consequences for the respondent of the accident. It is apparent that the learned trial judge was not making a finding that the plaintiff had no insight into the extreme disabilities with which he was afflicted as a result of the accident, but that his insight was ameliorated by the treatment and care to which he had been subject.

8. The award for general damages was within the range which was appropriate to the injuries sustained by the respondent.

Future economic loss

9. The appellant challenges the amount of the future economic loss. It was conceded by the respondent that in calculating future economic loss an error was made by the learned trial judge in using a weekly salary of $1,066.75 gross for the respondent from the ages 21 to 28, when the material which was the basis for choosing that figure was referring to fortnightly salary rates. The parties were agreed that future economic loss should be reduced from $569,652.23 to $498,156.60, in order to correct this error. The appellant otherwise sought to impugn the use made by the learned trial judge of the wage rates for the Administrative Stream found within the Public Service Award – State which was appended to the report of accountants, White Perry.  The learned trial judge used those figures on the basis of findings which he made about the likely employment history of the respondent, if he had not been injured.  There is no inconsistency between the learned trial judge’s findings and the use which he made of those figures.

10. In addition, the appellant seeks to challenge the award for future economic loss on the basis that the contingencies’ discount of 15% which was adopted was too generous to the respondent and should have been in the order of 25%. The use of the discount of 15% was in conjunction with the other assumptions made by the learned trial judge in the calculation of the future economic loss. The overall calculation of future economic loss is supported by the findings made by the learned trial judge relevant to this issue. There is no basis for interfering with one aspect of that calculation.

Future loss of superannuation contributions

11. Because of the reduction in the award for future economic loss, there has to be a concomitant reduction in the award for future loss of superannuation contributions. Calculated at 6 per cent, this head of damages reduces from $36,684.42 to $29,889.40.

Future care

12. The appellant submits that the award for future care is manifestly excessive. In calculating this award the learned trial judge divided the future into two periods. The first period was the period of 20 years following the trial which was the period which the learned trial judge assessed as that during which the capacity of the respondent’s parents to continue to provide the sort of gratuitous care which they had provided for the past five years would continue. The second period of the next 40 years to follow that first period was when the learned trial judge found that gratuitous future care would cease and be replaced by professional care which in all likelihood would be procured through a commercial organisation.

13. After referring to the decision of the Court of Appeal in Mott v Fire and All Risks Insurance Co Ltd [2000] 2 QdR 34 where it was held that an award for damages for future gratuitous care must be assessed by reference to the 3% discount tables, but when the future care ceases to be gratuitous, it is necessary to use the 5% discount tables pursuant to s 16(1) of the Supreme Court Act 1995, the learned trial judge stated at para [115] of his reasons for judgment:

“Accepting that the plaintiff has a present life expectancy of about 60 years, the extraordinary result of this latest requirement in the assessment of Griffiths v Kerkemeyer damages is that an award of damages for gratuitous care will be significantly greater than one for non-gratuitous care over the same period albeit having regard to the principle in Van Gervan v Fenton as applied in Grincelis v House.  Indeed, the market cost of procuring those services used to assess the Griffiths v Kerkemeyer claim should be precisely the same.  The consequence, which might seem extraordinary to some, is that with respect to precisely the same future period during which Griffiths v Kerkemeyer type services will be provided to an injured plaintiff, the plaintiff will receive a significantly larger award of damages if those services are to be gratuitously provided than will another plaintiff requiring the same services at the same commercial cost who in fact must pay for those services at market rates.”

14. The learned trial judge accepted the evidence of Ms Susan De Campo of Lifecare, an organisation which provides care services and medico-legal assessments. Ms De Campo was previously employed by Domicare which was in the business of providing in-home care. The award for future care assessed by the learned trial judge was based on Ms De Campo’s evidence.

15. In calculating the commercial costs of the gratuitous care for each of the first and second periods, the learned trial judge used rates which incorporated an agency fee payable to a commercial organisation in the business of providing the necessary carers. The appellant did not dispute that process for the second period, but submits that no agency fee should be included in the calculation of the future care for the first period of 20 years, when it was likely that the care would be provided by the respondent’s family. The learned trial judge calculated the damages for future care for the first period at the rate of $2,949.24 per week. The comparable rate, but exclusive of the average agency fee of $7.73 per hour, was $2,191.70 per week.

16. The total amount for future care assessed by the learned trial judge was $3,344,421. If the agency fees were excluded from the calculation of future care for the first period, the appellant has calculated that the total assessment for future care would be $2,746,687.50 which results in a significantly lesser figure for future care than that assessed by the learned trial judge.

17. The appellant submits that the issue of whether an administrative charge should be included in the calculation of future gratuitous care in respect of a period for which there was a finding that the gratuitous care would be provided by family members was not something which had been the subject of express finding in Van Gervan v Fenton (1992) 175 CLR 327 or Grincelis v House (2000) 201 CLR 321.

18. On this basis the appellant sought to rely on statements made in 2 decisions of the Court of Appeal to support its argument. There was a challenge to the rate allowed for past and future care in Buckland v Biggenden Shire Council (Unreported, Qld CA Appeal No 11 of 1993, 4 May 1993).  The trial judge had relied on a Domicare rate which included an administrative fee related to the work done by the agency to organise the assistance.  Because the assistance in the past had been rendered by relatives and was likely to continue to be so, it was submitted on appeal that that component of the fee should not be included.  The assessment of past care of $77,515 included an administrative fee of $13,475.  The assessment for future care of $123,125 included an administrative fee of $29,550.  Although the joint judgment of the Court referred to the applicability of such a component in applying the commercial rate not having been considered by the High Court in Van Gervan v Fenton and that there were grounds for arguing that where services were rendered by family members and the related administration was of small compass, such a component should not automatically apply, it had been found in that case, however, that some organisation had been necessary in the past and would continue to be necessary.  In any case the Court found that a reduction of the award by the sum of $13,475 in respect of the past care did not warrant interference with what was otherwise a substantial award.  The appeal against the inclusion of the administration fee was therefore unsuccessful.

19. The other decision of this Court relied on by the appellant is Kars v Kars (1995) Aust Torts Reports 81-369.  Damages for past gratuitous care had been assessed on the basis of $9.50 per hour where the evidence was that the market cost of the services was $12.50 per hour which allowed for $3 as an administration fee.  Davies JA (with whom McPherson JA agreed) stated at 62,817:

“Notwithstanding the absence of other evidence it is most unlikely that, in a labour market such as the present one in which there is a high level of unemployment, particularly in unskilled labour, unskilled services such as this could not be obtained at the price charged by the commercial care giver before adding its administration charge.  I would not therefore be prepared to say that in this case the learned trial Judge was wrong in accepting $9.50 per hour as the reasonable rate for the services which will be provided to the plaintiff in the future.”

20. The injury sustained by the plaintiff in Kars v Kars was to her back, leaving her with a 35% permanent disability which prevented her from working full-time and required services such as assistance with shopping which were provided by her husband, other relatives and her neighbours.  There was no finding that the plaintiff was disabled from organising such services.

21. The respondent relies on the decision of the Full Court of the Federal Court in Grincelis v House (1998) 84 FCR 190.  The plaintiff in that case suffered significant brain damage in a motor vehicle accident and required extensive daily care and supervision.  The issue in respect of past gratuitous care was that it was calculated at $670,088 by reference to commercial rates, but had been allowed at only $250,000 on the basis that the care had been provided by the plaintiff’s parents with whom he resided and that the evidence did not justify allowing the full amount calculated at commercial rates.  The appeal to the Full Court was heard by 5 members of the Court.  In the joint judgment of Hill and Kiefel JJ (with whom the other members of the Court agreed on this issue) it was stated at 207:

It is clear from Van Gervan v Fenton (1992) 175 CLR 327 that the process to be undertaken is an assessment of the injured person’s need for care and services, which is then valued by reference to commercial rates charged for its provision, regardless as to whether they were in fact provided gratuitously, by relatives or partners: see also Kars v Kars (1996) 187 CLR 354.  It follows that, unless there be shown some basis for differentiating between the extent of the need, or what was necessary to fulfil it, the calculation for past and present care must be the same.  In this case once the appellant’s injuries stabilised the need remained the same, save that in the future it may increase somewhat should his intellectual processes further deteriorate.  The cost of care likewise remains the same.  It has however been calculated to include, with respect to both the past and future costs, live-in components referrable to carers.  One would not think this ought to be applied to the cost of the parents’ care, since they resided with the appellant in any event.  Such an approach would not however be consistent with Van Gervan.  The appellant’s need was for full-time care and the commercial value of it, which is the exercise to be undertaken, includes a live-in allowance.  In our respectful view the only basis apparent from the Master’s reasons for what is a very substantial reduction in the award for this head was a concern that the cost of the parents’ services appeared to be too much.  The evidence however required such a conclusion.  It follows, in our view, that the award must be increased by the sum of $420,088 ($670,088 less the $250,000 awarded).

22. The issue in Van Gervan v Fenton was how to calculate damages for gratuitous care where there had been an assessment in the judgment under appeal of those damages by reference to the income foregone by the plaintiff’s wife who provided the care for the plaintiff on a full-time basis.  The majority in the High Court held that the damages were to be assessed by the market cost of providing those services.  It was stated in the joint judgment of Mason CJ and Toohey and McHugh JJ at 333-334:

Once it is recognised that it is the need for the services which gives the plaintiff the right to an award of damages, it follows that the damages which he or she receives are not determined by reference to the actual cost to the plaintiff of having them provided or by reference to the income forgone by the provider of the services.  As Stephen J. pointed out in Griffiths, the principle laid down in Donnelly “is concerned not with what outlays of money the plaintiff will in fact incur as a consequence of his injuries but with the objective monetary ‘value’ of his loss”.  Because the market cost of services is ordinarily the reasonable and objective value of the need for those services, the market cost, as a general rule, is the amount which the defendant must pay as damages.  But in some cases the market cost may be too high to be the reasonable value of the services.  Where, for example, the cost of providing the services at a remote location is much greater than providing those services in a densely populated area, it might be necessary to discount the market cost or value of the services needed by the plaintiff on the ground that the market cost or value was unreasonable in the circumstances.  In other cases, there may be so little competition to provide the services that, judged objectively, the market cost is not the reasonable value of the services.  No doubt the circumstances of particular plaintiffs may reveal other cases where the market cost of the services provided is not the reasonable value of the services reasonably needed.  But the case will be rare indeed where the income forgone by the care provider is ever an appropriate guide to the fair value of the services required by the injured person.  Whether the income forgone is below or above or equivalent to the market cost, the income forgone will usually be irrelevant, for the market cost will ordinarily represent the objective value of the services.  Where there is no relevant market for the services or the market cost is objectively too high to be reasonable, the income forgone may be a starting point in cases where the nature and duration of the services provided and the previous work and hours of the care provider are roughly comparable, but such cases are likely to be rare.” (Footnotes omitted)

23. Van Gervan v Fenton is therefore authority for the principle that, as a general rule, the market cost or value of services provided gratuitously to an injured person is the method of assessing the reasonable value of those services.

24. Although the issue of whether an administrative charge such as an agency fee charged by a commercial organisation which provides carers was not expressly considered by the High Court in either Van Gervan v Fenton or Grincelis v House, if the administrative charge is part of the market cost of the services required by an injured plaintiff, it must, subject to the qualifications expressed in Van Gervan v Fenton be included as part of the damages in respect of those services.  This is illustrated by the manner in which the live-in allowance payable to a carer was included as part of the commercial cost of the care under consideration by the Full Court of the Federal Court in Grincelis v House.

25. What is the market cost of the services which are required by a plaintiff in any particular case is a question of fact which will be affected by the nature of the services required by that plaintiff and the capacity of the plaintiff to engage and organise those services. By way of example, the plaintiff in Kars v Kars did not need to pay an agency for obtaining or organising the services which that plaintiff required, as the necessary carers were apparently readily available and she was capable of engaging and organising them.

26. The respondent in this matter is incapable of engaging or organising the kind of care which he requires. The commercial cost of the care which he needs for the first period must therefore be calculated on the basis of the care being provided by and through a commercial organisation. Consistently with Van Gervan v Fenton, the market cost of that care must include the agency fee, even though for the first period it was anticipated by the trial judge that the care would be provided by the respondent’s parents.

27. The fact that inclusion of the agency fee for the first period results in a significantly greater award for damages for future care is not a basis for departing from the application of the relevant authorities. Although there have been reservations expressed in a number of authorities, as to the results in particular cases from the application of the principle in Griffiths v Kerkemeyer (1977) 139 CLR 161, it has been recognised by the High Court that “It is too late to go back” (per Toohey, McHugh, Gummow and Kirby JJ in Kars v Kars (1996) 187 CLR 354, 369).  As Kirby J stated in Grincelis v House at 332 “… it would now require legislation to secure a second change of direction”.  That has in fact been heeded in Queensland by legislative provisions such as s 55D of the Motor Accident Insurance Act 1994 which commenced on 1 October 2000.

28. The appellant also relies on the approach to the assessment of the cost of future care applied in Winterton v Mercantile Mutual Insurance [2000] QCA 249.  In view of the learned trial judge’s findings as to the type of future care which the respondent requires, it is that future care which needs to be costed at commercial rates for assessing the damages for future care.

29. The appellant also submits that the learned trial judge ignored alternative costings for future care found in correspondence from occupational therapist, Mr Bruce Morgan. Mr Morgan provided costings on a 24-hour basis in shared accommodation for up to 3 or 4 persons. The learned trial judge made findings which expressly rejected that type of alternative care as appropriate for the respondent:

“It was Dr Warlow’s view that the plaintiff will need the level of care he is now receiving from his mother and immediate family in the future.  He said that a shift of care from his family into a group housing accommodation could be highly detrimental to the plaintiff. … Dr Warlow said that he would be afraid that in a group accommodation care situation the plaintiff would get into impulsive acts of a criminal nature or could easily become involved in substance abuse under the influence of others.  Even if he were living in a group housing environment, he would nevertheless require a similar degree of one-on-one attention to that which he is currently receiving from his mother and other family members.  I must say I am unpersuaded on the probabilities that he would receive comparable attention in such an environment to that which he presently receives in his family environment.

30. The appellant is therefore unsuccessful in its challenges to the damages awarded for future care.

Arithmetical errors

31. The notice of appeal raises an arithmetical error in the award for other items of agreed damages in that there was double counting for future surgery which results in the award for this item being reduced from $46,931 to $42,367. The respondent agrees with this reduction.

32. The appellant also points to double counting the allowance for total agreed special damages and interest in the sum of $8,187. The respondent agrees with the appellant’s contention that the award ought to be reduced by $8,187.

Future management costs

33. The learned trial judge’s allowance of $188,922 for future managements costs is also challenged by the appellant as being manifestly excessive. The amount available for investment for the purpose of determining future management costs was calculated by the learned trial judge as follows:

Damages assessed$4,560,170.60

Less 20% contribution   $912,034.12

Judgment sum before Perpetual Trustee charges$3,648,136.48

Damages for past care

(Griffiths v Kerkemeyer)

Special damages and interest thereon

less contribution (20%) paid to next friend   $246,492.85

Total for investment$3,401,643.60

34. Although the learned trial judge appointed Perpetual Trustees Australia Ltd to be the trustee to manage the respondent’s damages award, the parties had agreed that the respondent would not seek for damages for management fees a sum greater than that which would have been payable to the Public Trustee of Queensland. The figure of $188,922 for future management costs had been calculated by the Public Trustee as follows:

Amount to be invested $3,400,000.00

i.Capital Commission

3.85% on $   100,000.00  3,850.00

2.75% on $   400,000.0011,000.00

1.65% on $   250,000.00  4,125.00

1.10% on $2,650,000.0029,150.00$48,125.00

ii.Income Commission

(NB assuming that of the projected 5.2% return,

3.53% is attributable to income.)

$3,400,000.00 invested = income of:

3.53% on $3,400,000.00$120,020.00 p.a.

Annual commission (expressed as weekly amount):

6.6% on $50,000.00$3,300.00

5.5% on $70,020.00$3,851.00$7.151

   52=       $137.52

Present value of $137.52 weekly for 60 years using a discount rate of 5% (multiplier being 1012.2):

$137.52 x 1012.2$139,198.00

3. Recoupment of outlays

$82.00 p.a.=$1.58 per week

Present value of $1.58 weekly for 60 years using a discount rate of 5% (multiplier being 1012.2):

$1.58 x 1012.2    $1,599.00

Total administrative charges (including GST) are therefore:$188,922.00

35. The challenge made to this calculation is in respect of the second stage for income commission on the basis that it fails to recognise that, over time, the total sum available for investment will progressively diminish, resulting in a corresponding diminution in the income generated by the fund and the commission chargeable in respect of that income. The appellant therefore seeks to calculate the commission on the basis of a straight line reduction in the fund over time. This would result in the commission being reduced by one-half to $69,599 which reduces the future management fees to $119,323.

36. The respondent argues that the appellant’s approach ignores the reality that with an investment sum of $3.4m and a return at 3.53% per annum, the capital sum will increase initially and substantially during the first period of 20 years, when the respondent’s parents are caring for the respondent and not incurring the cost of commercial care. The respondent submits that, in combination with a likely rise in returns for the fund over time, there will be a substantially higher level of annual income, a substantially higher level of annual fees and the fund increasing in amount in the foreseeable future, but depleting in the respondent’s later years.

37. The appellant’s approach of a straight line reduction in the fund over time makes assumptions which are unrelated to what is likely to be the actual progress of the investment fund. In the circumstances the basis on which the learned trial judge assessed the income commission as part of the future management costs was not unreasonable.

38. A correction of the calculation and arithmetical errors has an impact on the calculation of the future management costs. The calculation for damages (before reduction for contributory negligence) has been reduced by the following:

$71,495.63

    6,795.00

    4,564.00

    8,187.00

$91,041.63

39. The amount available for investment by the respondent therefore needs to be reduced by 80% of $91,041.63, namely the sum of $72,833.30. This makes the sum of $3,328,810 available for investment. When the same method of calculation for future management costs is undertaken in respect of that sum as was undertaken by the learned trial judge, it results in future management costs of $185,447.

Conclusion

40. As a result of correcting the calculation and arithmetical errors, the damages are reduced to $3,575,303.18 plus management fees in the sum of $185,447, making a total award of $3,760,750.18. The award made by the learned trial judge should therefore be reduced by the sum of $76,308.30. As the amount of damages payable to the respondent by the appellant for investment was paid on 26 July 2001, the appellant seeks that interest be paid by the respondent on the amount to be repaid of $76,308.30 from 26 July 2001 until the date of repayment, relying on Commonwealth of Australia v McCormack (1984) 155 CLR 273, 276.

41. The appellant submits that the interest should be calculated at the rate of 10% per annum prescribed for the purpose of s 48 of the Supreme Court Act 1995.  The respondent submits that the interest should be no more than what was estimated to be the actual return on the respondent’s investment fund for the purpose of calculating the future management costs.  That was a rate of 5.2% per annum.  In the circumstances the latter is the appropriate rate, as the respondent should not have to repay a sum on account of interest calculated at a rate greater than it was anticipated that he would earn on the investment fund.

42. On the issue of costs of the appeal, the appellant has had success only in correcting calculation and arithmetical errors. The respondent submits that these errors could have been corrected under the slip rule and did not justify an appeal. As the appellant has been unsuccessful on the substantive challenges which it made to the assessment of damages and the errors which have been corrected on appeal would have been amenable to the slip rule, it is appropriate that the appellant bear the costs of the appeal.

43. The orders which should be made are:

1. Para 1 of the judgment of Ambrose J dated 2 July 2001 be varied by deleting the sum of $3,837,058.48 and inserting in lieu the sum of $3,760,750.18.

2. The appeal otherwise be dismissed.

3. The respondent repay to the appellant the sum of $76,308.30 together with interest at 5.2% per annum from 26 July 2001 to the date of repayment.

4. The appellant pay the respondent’s costs of the appeal to be assessed.