Ruckman v Suncorp Metway Insurance Ltd
[2013] QCA 56
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- Ruckman v Suncorp Metway Insurance Ltd[2013] QCA 56
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Ruckman v Suncorp Metway Insurance Ltd[2013] QCA 56
Ruckman v Suncorp Metway Insurance Ltd[2013] QCA 56
SUPREME COURT OF QUEENSLAND
CITATION: | Ruckman v Suncorp Metway Insurance Ltd [2013] QCA 56 |
PARTIES: | JONATHAN OWEN RUCKMAN |
FILE NO/S: | Appeal No 4378 of 2012 SC No 6745 of 2010 |
DIVISION: | Court of Appeal |
PROCEEDING: | General Civil Appeal |
ORIGINATING COURT: | Supreme Court at Brisbane |
DELIVERED ON: | 22 March 2013 |
DELIVERED AT: | Brisbane |
HEARING DATE: | 17 October 2012 |
JUDGES: | Fraser and White JJA and Applegarth J Separate reasons for judgment of each member of the Court, each concurring as to the orders made |
ORDERS: |
|
CATCHWORDS: | INSURANCE – MOTOR VEHICLES – COMPULSORY THIRD PARTY INSURANCE AND LIKE SCHEMES – PROCEEDINGS WHERE INSURED DEAD OR CANNOT BE FOUND OR SERVED – RECOVERY BY INSURER OR NOMINAL DEFENDANT FROM OWNER OR DRIVER – where insurer settled motor vehicle personal injury claim at compulsory conference – where s 58 of the Motor Accident Insurance Act 1994 (Qld) entitles an insurer to recover from the insured any costs reasonably incurred if the insured, at the time of the accident, was “unable to exercise effective control of the motor vehicle because of the consumption of alcohol” – where the insurer brought proceedings to recover the settlement amounts from the appellant – where the appellant submitted, inter alia, that the settlement amount paid by the insurer was not reasonably incurred with respect to future economic loss, future out-of-pocket expenses and future care – where the primary judge concluded that the amounts paid by the insurer for future out-of-pocket expenses and future care were reasonably incurred – where the primary judge concluded that the amount paid by the insurer to the passenger for future economic loss was not reasonably incurred – where the primary judge ordered the appellant to pay the insured the settlement amounts paid by the insured to the driver and the passenger, minus the amount paid by the insured to the passenger for future economic loss – whether the primary judge erred in finding that the amounts paid for future out-of-pocket expenses and future care were reasonably incurred – whether the judgment was divisible as to heads of damages for the purposes of s 58 recovery Civil Liability Act 2003 (Qld), s 62 Motor Accident Insurance Act 1994 (Qld), s 4, s 58, s 58(3), s 58(3)(c)(i) Motor Vehicles Insurance Act 1936 (Qld), s 4G(1) Motor Vehicles Insurance Regulations 1968 (Qld), reg 17 Biggin & Co. Ltd v Permanite Ltd [1951] 2 KB 314; [1951] 2 All ER 191, considered Nominal Defendant v Chaffey & Others [2011] QSC 88, considered Nominal Defendant (Qld) v Langman [1988] 2 Qd R 569, considered Suncorp Insurance and Finance v Ploner [1991] 1 Qd R 69, considered Unity Insurance Brokers Pty Ltd v Rocco Pezzano Pty Ltd (1998) 192 CLR 603; [1998] HCA 38, considered |
COUNSEL: | P F Mylne for the appellant R J Douglas SC for the respondent |
SOLICITORS: | Sajen Legal for the appellant Quinlan Millar & Treston for the respondent |
- FRASER JA: I have had the advantage of reading the reasons for judgment of White JA. I agree with those reasons and with the orders proposed by her Honour.
- WHITE JA: On 8 June 2005 Benat Larrasquet and Julien Brettes sustained personal injury when the Toyota HiAce van in which they were travelling was involved in a head-on collision with a Toyota LandCruiser driven in the opposite direction by the appellant.
- Each injured man completed a Notice of Accident Claim Form which was served on the respondent insurer (“the insurer”). The insurer settled the claim at a compulsory conference, paying Mr Larrasquet (the driver) $42,539.60 and Mr Brettes (the passenger) $1,221,567.22.
- The insurer brought proceedings to recover those amounts from the appellant pursuant to s 58 of the Motor Accident Insurance Act 1994. That provision entitles an insurer to have recourse against its insured in respect of any costs reasonably incurred if, relevantly, the insured at the time of the accident was “unable to exercise effective control of the motor vehicle because of the consumption of alcohol”.[1]
- The appellant resisted the insurer’s claim below on two bases: that the respondent could not demonstrate that the costs were reasonably attributable to his inability to exercise effective control over the motor vehicle; and that the costs, the subject of the claim, were not reasonably incurred.
- The primary judge concluded that the appellant had been unable to control his vehicle at the time of the collision because of his consumption of alcohol. The appellant does not appeal that finding. The primary judge also concluded, as was conceded by the appellant, that the amount paid by the respondent to Mr Larrasquet was within the range that could have been achieved had the matter gone to trial. The primary judge gave judgment for the insurer in the sum of $42,539.60 in respect of that claim.
- The appellant challenged the settlement sum reached with Mr Brettes arguing that the insurer had not demonstrated that it had reasonably incurred those costs. He identified three components which informed the respondent’s approach to the settlement figure – future impairment of earning capacity, future out-of-pocket expenses and future care – which he contended demonstrated that the costs were unreasonable. Of the settlement figure, $500,000 had been notionally allocated by the solicitor advising the insurer as representing loss of future earning capacity; $175,000 to future out-of-pocket expenses; and $115,000 for future care.
- The primary judge concluded that at the time of settlement there was no justification for including any figure for the loss of future earning capacity. His Honour found that the amounts allowed for future out-of-pocket expenses and future care expenses were supported by the evidence. His Honour, accordingly, deducted the amount for loss of future earning capacity ($500,000) and gave judgment against the appellant in the sum of $764,106.82 comprising $42,539.60 in respect of Mr Larrasquet’s claim and $721,567.22 ($1,221,567.22 - $500,000) in respect of Mr Brettes’ claim.
Ground of appeal
- At the hearing the appellant abandoned his first two grounds of appeal, arguing only that the primary judge erred in fact and in law:
“(c)in finding that the sum of $721,567.22 were costs which were reasonably incurred by the plaintiff on the claim for personal injury brought by Mr. Brettes.”[2]
Notice of Contention
- The respondent has filed a Notice of Contention arguing that the amount of $721,567.22 in respect of the claim by Mr Brettes “was an apt recovery sum” because the serious injuries sustained by him were such that he had, in fact, suffered a permanent impairment in his capacity to engage in his vocational employment in hospitality contrary to the finding of the primary judge. As a consequence, any weaknesses in the other contested heads of damage which were not reduced by the primary judge were amply covered by his Honour’s exclusion of any amount for loss of future earning capacity.
The legislation
- The Motor Accident Insurance Act 1994 provides in s 58(3):
“(3)If –
- personal injury arises out of a motor vehicle accident; and
- the insured person was, at the time of the accident, the driver of the motor vehicle; and
- the insured person was, at the time of the accident, unable to exercise effective control of the motor vehicle because of the consumption of –
- alcohol; or
- a non-medicinal drug or a combination of non-medicinal drugs; or
- a combination of alcohol and a non-medicinal drug or non-medicinal drugs;
the insurer may recover, as a debt, from the insured person any costs reasonably incurred by the insurer on a claim for personal injury that are reasonably attributable to the insured person’s inability to exercise effective control of the motor vehicle.”
- The expression “costs” in s 58(3) is defined in s 4 of the Motor Accident Insurance Act 1994:
“(a)when used in reference to legal costs, includes disbursements; and
- when used in reference to the costs of an insurer on a claim, includes –
- the amount paid out by the insurer on the claim to the claimant or for the claimant’s benefit, including -
- the cost to the insurer of providing rehabilitation services in connection with the claim; and
- the cost to the insurer of paying private hospital, medical and pharmaceutical expenses in connection with the claim; and
- the cost to the insurer of investigating the claim and of litigation related to the claim (but not the insurer’s general administration costs).”
Approach
- The primary judge considered the appropriate approach where an insurer seeks to recover against its insured in cases like the present. Both parties accept his Honour’s analysis. His Honour considered the decision of Thomas J (as he then was) in Nominal Defendant (Qld) v Langman.[3] Section 4G(1) of the Motor Vehicles Insurance Act 1936 provided a right of recourse to the Nominal Defendant in specified circumstances. The legislative expression was an entitlement to recover “the amount of any costs and expenses properly incurred by it in relation to any such claim.” The primary judge concluded that any difference in the meaning of “properly incurred” and “reasonably incurred” was not such as to preclude the application of Thomas J’s reasoning.
- The primary judge summarised a number of propositions from Langman:
“(a)in reaching the particular settlement there was nothing wrong per se in adopting a 'broad brush approach' to negotiating and settling the claim;
- "the wise practitioner does not often pretend to be able to make accurate forecasts of factual findings, although he [or she] may make an astute assessment of the range of possible results, and perceive one of these to be more likely than the others";
- a court should not be "too astute to make microscopic examinations of compromise arrangements which save costs and which avoid the perils of litigation and which prima facie seem sensible"; and
- "there will come a time when slipshod, inadequate preparation leads to an unnecessary surrender of rights, where the settlement could not be described as 'proper'" and, in those cases, the Nominal Defendant would not be able to recover the money from the owner or driver of the uninsured vehicle.”[4]
- His Honour also referred to Suncorp Insurance and Finance v Ploner.[5] The Full Court was there considering quite different legislation,[6] but McPherson J (as he was then) noted that the court in Biggin & Co Ltd v Permanite Ltd[7] held:
“…that it is not necessary that the reasonableness of the settlement should be proved by adducing all or precisely the same evidence as would have been required if the action had been tried rather than settled.”[8]
- The primary judge considered Unity Insurance Brokers Pty Ltd v Rocco Pezzano Pty Ltd.[9] The issues in that case were different from the present, however, an aspect of the litigation between that insured and the broker was whether the settlement reached between the insurer and the insured was a reasonable one. The primary judge summarised the following propositions:
“(a)The test of reasonableness is an objective one. (Brennan CJ at [6] and Hayne J at [29])
- Evidence of the advice which the insured received to induce it to enter into the settlement is not proof in itself of the reasonableness of the settlement advised. (Brennan CJ at [6])
- Evidence of the receipt of advice is relevant but what will usually be much more important is the reasoning that supported that advice because that will usually disclose why it was thought reasonable to compromise the claim. (Hayne J at [129])
- The reasonableness of a settlement depends on the circumstances existing at the time, provided the plaintiff has acted reasonably in discovering the circumstances material to the settlement at that time. (Brennan CJ at [7])
- Reasonableness is not to be judged according to whether material which was obtained later shows that a different result might have been obtained. (Hayne J at [130])
- Consideration will often be required of whether the party maintaining that the settlement was reasonable had made sufficient inquiries and had sufficient information available to it to warrant reaching the compromise. (Hayne J at [131])
- In making that inquiry attention may need to be given to whether the cost of seeking further information would outweigh the benefit that it was reasonable to expect may be obtained from doing so. (Hayne J at [131])
- What is a reasonable compromise of the claim will almost always require consideration of the chances of the parties succeeding in their respective claims or defences and that prediction of likely outcomes must always be imperfect and imprecise. (Hayne J at [132])”[10]
Injuries sustained by Mr Brettes, their sequelae and his employability[11]
- Mr Brettes was aged 24 and on a working holiday in Australia when he was injured. Mr Brettes had completed school at 19 and had undertaken an apprenticeship in hospitality (waiter) for a period of four years. He studied for a diploma of hospitality management for two years thereafter. Prior to coming to Australia he had worked for approximately five years as an apprentice and then as a waiter in French hotels. It was his pre-accident aspiration to become an assistant maître d’hôtel and progress in due course to employment as maître d’hôtel.
- Mr Brettes was taken by ambulance from the scene of the collision to the Townsville General Hospital where he was admitted to the intensive care unit, intubated and ventilated.[12] He was assessed as having sustained the following injuries:
- Bilateral haemo-pneumothorax
- Surgical emphysema left chest wall
- Bilateral pulmonary contusions
- Fractured left clavicle
- Multiple rib fractures
- Compound left distal humerus fracture
- Displaced compound supracondylar fracture left femur
- Fracture subluxation 5th toe left foot
- Unplaced fractured lamina C6
- Right orbital fracture.
The injuries were described more colloquially as :
“(a)head injury with scalp lacerations;
- facial injury with fracture of eye socket with lacerations;
- chest injury involving fractured ribs;
- contusions to internal organs and bilateral pneumothoraces;
- injury to left shoulder involving fractured left clavicle;
- injury to left upper arm involving fracture to humerus;
- injury to left foot involving injury to little toe;
- injury to cervical spine involving fracture of the C6 lamina;
- injury to left upper leg involving fracture of femur;
- injury to left lower leg involving fracture dislocation of the left distal fibula.”[13]
- External fixators were applied to the left humerus and left femur. Mr Brettes underwent further surgical intervention to the left femur, left ankle and left humerus as well as skin grafts. He remained in the Townsville General Hospital for about three weeks before being medevaced to France for ongoing treatment. Once in France Mr Brettes was admitted to the Pellegrin Tripode Hospital in Bordeaux where he remained an inpatient for some three weeks during which time he required further surgical intervention.
- On 13 July 2005 Mr Brettes was transferred to the Napoléon Rehabilitation Centre in Saint Paul lès Dax. Whilst an inpatient he participated in extensive rehabilitation including physical therapy, occupational therapy and balneotherapy. He was discharged home in approximately May 2006, almost a year later. He had required numerous surgical interventions during his rehabilitation period and returned to the Pellegrin Tripode Hospital in Bordeaux for each operation.[14]
- In or about July 2006 Mr Brettes underwent further surgical intervention to his left knee and used a walker for mobilisation for three weeks following surgery. He returned home from the rehabilitation centre during weekends. Modifications were carried out to his home including the installation of ramps. He mobilised with a wheelchair and required much assistance with activities of daily living from his parents and brother.
- As reported by Mr Stephen Hoey, who examined Mr Brettes in London[15] in May 2009, and after reviewing the relevant French reports, Mr Brettes’ rehabilitation was hampered by an infection in the left femur requiring intravenous antibiotics and the insertion of a porta catheter.[16] Dr Duprey, from the Clinique Napoléon, who had been caring for Mr Brettes since November 2005, reported on 3 April 2006 that Mr Brettes’ principal injuries were related to his left ankle, knee and elbow. He observed that Mr Brettes was not able to work in his former job as a waiter due to his inability to use his left arm and suggested that he would need to pursue a different profession.
- Mr Hoey noted that in September 2006 Mr Brettes commenced a diploma in hospitality management through the “[Thames] Valley University, London”. He undertook the first six months in France and final 18 months in Birmingham in the United Kingdom. He completed the course in June 2008 and returned to France. Shortly afterwards he underwent further surgical intervention to his left elbow. Subsequently, in November 2008, he acquired fulltime employment as a waiter at the Hotel Concorde La Fayette in Paris. He ceased that work two months later because his contract had ended.
- In March 2009 Mr Brettes acquired fulltime employment as a waiter at the Hotel Lutetia. He was working in that position when Mr Hoey made his report for Mr Brettes’ solicitors dated 12 November 2009. Mr Hoey noted that Mr Brettes worked 39 hours a week but continued to suffer from left knee, ankle and upper limb pain:
“[t]his is aggravated by standing and walking for long periods; traversing stairs from the kitchen to the dining room; lifting and carrying plates, bottles of wine and wine buckets as well as reaching above shoulder height to retrieve glasses or bottles of wine. Lifting and moving tables can be problematic and he avoids the same where possible. He reported that his pain is particularly aggravated by the end of the working day and the end of the working week.”[17]
- Mr Brettes reported to Mr Hoey that he continued to have difficulty dressing his lower and upper body, particularly “donning and doffing socks, shoes and jackets”.[18] He also had difficulty reaching with his left upper limb above shoulder height to retrieve items from high cupboards. His left leg symptoms were aggravated by walking up the stairs to his apartment. He found driving a vehicle difficult due to reduced extension of his left arm. He continued to experience difficulty with toileting independently and also experienced reduced balance which was a problem with showering. He still needed assistance with day to day chores around his apartment including cleaning, meal preparation tasks and grocery shopping.
- His amenities of life were significantly reduced in so far as prior to the collision he had enjoyed playing guitar but could now no longer do so in a band or to practise for any period of time. He had been a black belt in judo but was unable to continue with that recreational sport. He had previously enjoyed running, surfing and skiing but could no longer participate in those activities.
- Mr Brettes ongoing symptomology was depicted by shading on a body pain diagram. This showed continuing pain from his upper left arm extending into his little finger described as a “sharp, burning” pain. The left elbow pain was described as an “aching” pain. Similarly, his left knee and ankle pain he described as “aching” pain. The areas of the skin grafts felt tight and Mr Brettes described his numerous scars as painful and sensitive.
- Mr Hoey conducted a functional capacity evaluation. He noted that Mr Brettes had a significantly reduced flexion and extension of the left elbow and a fixed flexion deformity of the left elbow. He had significant wasting of the left upper limb musculature compared to the right. Mr Hoey noted much scarring of the posterior and lateral aspects of the left upper limb and, in places, the scars were adhered to the underlying tissue. Mr Brettes had reduced movement in the fifth finger of the left hand and was unable to oppose the little finger to the thumb. He had altered sensation in the left hand in the ulna distribution.
- Mr Brettes suffered reduced left knee flexion. Movements of the left ankle were restricted in all directions. Mr Hoey noted a significant wasting of the left thigh musculature compared to that of the right lower limb. Mr Brettes reported pain over the lateral aspect of the left knee and the latter aspect of the left thigh. There was reduced extension of the greater toe on the left foot. As a consequence, he experienced stiffness in his left knee with long periods of sitting. His gait was observed to be antalgic. Long periods of standing or walking aggravated his left knee and ankle symptoms and he favoured his weight to the right leg. He was restricted in crouching. Kneeling was restricted.
- Mr Hoey noted that Mr Brettes’ capacity for heavy pushing or pulling activities was limited due to reduced left upper limb strength and reduced movement of the left elbow. Grip strength was reduced in the affected hand. Mr Brettes’ capacity for lifting from the floor was limited due to his symptoms and reduced crouching ability. His capacity for lifting to chest height and above shoulder height was limited due to decreased left elbow movement and reduced left upper limb strength.
- Mr Hoey had access to the reports of Dr Richard Emery, an orthopaedic surgeon dated 5 March 2008 and 28 September 2009, and a report by psychiatrist, Dr Michael Likely, dated 17 January 2008. He set out their principle findings in his report. They will be discussed below.
- Mr Hoey concluded as to Mr Brettes’ employability:
“[39]Having considered the medical specialist reports to hand, Mr Brettes’s [sic] self report and the results of testing at assessment, it is my opinion that he evidences the following occupational restrictions:
a.Significantly decreased tolerance for long periods of standing or walking;
b.Significant restrictions traversing stairs, slopes, ladders or uneven ground;
c.Unfit for heavy or repetitive lifting (particularly below waist and above shoulder height);
d.Restrictions with crouching or kneeling;
e.Restrictions with the heavy pushing or pulling of loads;
f.Restrictions with forceful or repetitive use of the left upper limb;
g.Significant restrictions with static or repetitive reaching with the left upper limb (related to fixed flexion deformity of the left elbow and decreased strength of the left upper limb).
[40]Mr Brettes has evidenced a capacity for occupations in the SEDENTARY range only (as detailed by the Dictionary of Occupational Titles).
[41]Mr Brettes continues to work full time as a waiter for Hotel Lutetia in Paris. He continues to suffer left knee, left ankle and left upper limb pain. His self report of ongoing difficulties (detailed in the body of this report) is consistent with his injuries and the results of testing at assessment. His symptoms are aggravated by the end of the working day and particularly by the end of the working week.”[19]
- Mr Hoey concluded that Mr Brettes’ ability to continue working in his current position as a waiter would be dependent on his capacity to manage ongoing symptomology. He wrote:
“Ongoing attention to lifting technique and regular breaks will all be important in the ongoing management of his condition. Better management of his condition will include a reduction in working hours … a reduction in workload of some 5 to 10 hours per week would be appropriate … I believe he will struggle to maintain … [his current working hours] long term.”[20]
- Mr Hoey considered that Mr Brettes’ physical deficits would have an adverse affect on his working opportunities, for example, he would not be able to “work back late” because he was not fit for regular overtime. Such things, opined Mr Hoey, “can cause a negative impression in the eyes of workmates, supervisor or employer”.[21] Importantly, Mr Hoey observed:
“Mr Brettes sustained significant multiple injuries in the motor vehicle accident of June 2005. He has participated in extensive rehabilitation and has made a remarkable recovery. Despite this, he continues to suffer considerable ongoing symptoms with associated occupational restrictions. He is struggling in his current position as a waiter related to the long periods of standing, requirement for heavy lifting and long working hours. In the short term reducing his working hours will be appropriate however I believe ultimately he will require re-training to a sedentary occupation. Work in hotel front of house may be appropriate in this regard.”[22]
- Mr Hoey was of the view that, given his restrictions, Mr Brettes’ progression through the hospitality industry would be curtailed. He had already acquired considerable academic qualifications in the field, but in order to progress, Mr Hoey observed, a person required experience and training to become a maître d’hôtel, a position which would in turn require long working hours. It was his view that, ultimately, Mr Brettes would need to look for more sedentary employment, either within the hospitality industry or in another field altogether. Mr Hoey said:
“In my opinion, his ongoing occupational restrictions now preclude his being employed in jobs requiring long periods of standing or walking; repetitive traversing of stairs, slopes or uneven ground; repetitive crouching or kneeling; heavy manual handling (pushing, pulling, lifting or carrying); forceful or repetitive use of the left upper limb or static or repetitive overhead reaching in this pool of occupations. Specifically, he is unfit for work as a factory process worker or labourer, mining or construction labourer, agricultural or horticultural labourer, general labourer and road or rail transport driver.”[23]
- Mr Hoey concluded:
“It is evident that (although currently employed) Mr Brettes’ ongoing occupational restrictions will likely cause him to suffer economic disadvantage over the spectrum of his working life. He is now precluded from his pre-accident vocational aspiration of working as a maitre d’hotel. In any future employment endeavours he will continue to require an empathetic employer and will certainly need to be selective in the type of work that he takes on. This limits the type (and number) of jobs available to his [sic] in his given labour market. In the long term I believe he will need to seek out sedentary employment. He has spent his entire working career in the hospitality industry. He has no training or experience in work outside of the hospitality industry. He has no experience in sedentary occupations. Therefore, the likelihood of economic disadvantage over the course of his working life is quite high. I believe him to be significantly more vulnerable on the labour market then [sic] he was pre-accident.”[24]
- Dr Richard Emery, an orthopaedic surgeon with a spinal disorders specialist practice, examined Mr Brettes for medico-legal purposes on 17 January 2008. Although Dr Emery does not say so it seems likely that he conducted the examination in France.[25] He had access to reports from the Clinic Napoléon directed to the respondent about the progress of Mr Brettes’ rehabilitation. Dr Emery observed:
“It was only lately thanks to the tremendous commitment of the rehabilitation program, that Julien has been able to go back to professional activity as a Restaurant Supervisor. However Julien is still not out of pain and problems related to his accident. He still experiences 4 to 6/10 pain on his left elbow, specifically on the ulna territory with decreased sensation and decreased power. He is suffering on the [sic] daily basis of significant decrease of range of motion of his left elbow, plus his fifth finger of the left hand. Julien just specified to me his main hobby is playing Guitar, which is now very difficult for him. He is also complaining of an insecure feeling of his left knee. He complains of walking with a limp and also trouble of extending toes of his left foot. He is complaining of walking with external rotation of his left foot, a pain at the level of the left ankle, especially at the level of the left skin graft as well as a discomfort at the left cranial area.”[26]
- Dr Emery described Mr Brettes’ appearance:
“On clinical examination multiple scars can be identified. Examination of his left upper limb demonstrates severe muscle wasting. A hyper sensitivity to cutaneous touch and skin adherence. The range of motion of his left elbow is 0-20-100 degrees with full pronosupination. There is a decreasing sensation on the ulna nerve area. There is no flexion of the distal phalanx distal finger left hand. The pulse is present. Examination of his lower limb on the left is severe muscle wasting at the quadriceps, irritability at touching as well as adherence with a decreased range of motion 0-90degrees. There is an antero posterior laxity with a positive draw test. Examination of his ankle demonstrates a good healing of a skin graft, but with irritability and discomfort. The feeling of his foot is normal. The power is normal except for the left EHL, 3/5.
There is a hammer toe reducible on the 2nd toe of his left foot. On examination Julien is walking with a significant limp, he can not walk on his toe or his heel.”[27]
Dr Emery assigned a 58 per cent whole person impairment.[28] It seemed to be common ground that his methodology was flawed.[29] As a result of his injuries, Dr Emery opined that Mr Brettes had had to give up his usual employment and would not ever be able to work in a physical job.
- Dr Emery provided a further report dated 28 September 2009 although he had not examined Mr Brettes again. Because of the left arm and other left sided injury it was his opinion that Mr Brettes could not return to manual work and was suited only to sedentary work. Dr Emery predicted that Mr Brettes’ condition would deteriorate over time forcing him further into restricted and limited sedentary jobs. When he wrote this report Mr Brettes had been in full-time employment as a waiter for approximately six months.
- Dr Emery was of the view that Mr Brettes would benefit from advanced physiotherapy and spa therapy as recommended by Dr Lamazouade at a cost of $40,000 per annum.
- Dr Emery suggested that Mr Brettes would experience secondary osteoarthritis in his left elbow, and osteoarthritis in his left knee requiring future surgery. He nominated the present cost of certain procedures for the elbow and for the knee. He concluded that Mr Brettes would require domestic assistance as his arthritic symptoms gradually worsened.
- Dr J Lamazouade, a general practitioner in France, examined Mr Brettes and provided a brief report (dated 30 October 2008 in the covering email to Mr Brettes’ solicitors in Townsville).[30] He noted Mr Brettes’ painful left arm with decreased extension associated with triceps muscle wasting, and a painful decreased left knee flexion. When Dr Lamazouade examined Mr Brettes he reported painful episodes in his left arm, knee and ankle and those symptoms, as well as post-operative complications, including infections, caused him to describe Mr Brettes’ impairment “as major, permanent, and progressive.”[31] Mr Brettes was not then able to engage in his usual professional life. Dr Lamazouade predicted secondary osteoarthritis and neuro-muscular deficiency that would require nursing, physiotherapy and balneotherapy. He believed that there would need to be some modification of his dwelling to accommodate his growing deficits.
- Dr Likely, a clinical psychiatrist, diagnosed Mr Brettes as suffering from an anxiety disorder (not otherwise specified) and a major depressive disorder (in full remission). He opined that the latter disorder was recurring, was chronic and relapsing. Nonetheless, he concluded, “should Mr Brettes mental state remain at its present level his capacity to work would not be impaired”. He assessed Mr Brettes as having sustained a seven per cent impairment using the psychiatric impairment rating scale.
Were the settlement costs “reasonably incurred”?
- The insurer settled Mr Brettes’ claim for the sum of $1.1 million plus standard Supreme Court costs and outlays. Those costs and outlays were subsequently agreed at $70,000.
- Mr Brettes’ claim was conducted by Mr Ken Taylor of Purcell Taylor Lawyers in Townsville. The insurer admitted liability in full in January 2006. Mr Brettes’ claim was described in the insurer’s classification as “catastrophic”, being a claim estimated to be over $500,000. At trial the appellant had contended that this categorisation had coloured the view of those managing the matter for the insurer. The primary judge rejected this argument rightly identifying the description as an appropriate administrative tool for dealing with the level of the claim and for making allowance for sums to be set aside to meet the claim. Mr Mylne for the appellant did not press this contention on appeal.
- When Mr Brettes’ claim was first received, the file was reviewed by Mr William Barsby, a technical officer. Mr Barsby completed his Bachelor of Laws in 2007 and was admitted as a legal practitioner in 2009.
- In January 2008 the file was transferred to Mr Ben White, a claims advisor. Mr White had the management of this file up to, but not including, the compulsory conference on 30 November 2009. Mr White was on holidays from approximately 27 November 2009 to 24 December 2009. Upon his return from holidays, Mr White resumed management of the file. Mr White had quantum authority to $500,000 and estimate authority to $750,000. Mr White (and Mr Barsby before him) had the day to day management of the file under the supervision of Ms Linda O'Connor. Mr White was a legal practitioner. He had experience of about 500 claims and had attended about two trials a year dealing with personal injuries claims which were litigated.
- After perusing a lengthy statutory declaration by Mr Brettes in mid-2008 about the impact of his injuries on his life, Mr White briefed one of the insurer’s panel of external solicitors – Mr Stephen (Stan) Smith at Grant & Simpson, Rockhampton. Mr Smith had extensive experience as a personal injuries solicitor for over 30 years and had been undertaking the insurer’s work for about 20 years.
- Ms O'Connor, a claims team leader, was involved in the settlement conference and signed off on the settlement figures.[32] She had quantum authority to $3.5 million and estimate authority to $5 million. Mr White had proceeded on leave shortly before the conference. Ms O'Connor was in telephone contact with Mr Smith to give instructions during the compulsory conference although she did not participate in the conference itself. She was not legally qualified. Each of Ms O'Connor, Mr White, Mr Barsby and Mr Smith gave evidence at the trial.
- The focus of the cross-examination, particularly of Mr White, Ms O'Connor and Mr Smith, was the disparity between the pessimistic opinion of Dr Emery (the orthopaedic specialist) that Mr Brettes could not, and would not, ever be able to work in a job with a large physical component, and the fact that Mr Brettes had been working full-time as a waiter for nearly a year before the compulsory conference earning much the same as he had been earning prior to his injury.
- The appellant’s contention is that in light of Dr Emery’s erroneous understanding of Mr Brettes’ capacity for physical work which necessarily affected his future predictions, as well as his whole person impairment opinion, the insurer ought to have obtained its own orthopaedic specialist report.
- The appellant also contends that to the extent that Dr Emery’s opinion underpinned Mr Hoey’s assessment particularly of which physical aides would be required, those calculations were brought into question. Furthermore, the appellant contends, Dr Lamazouade’s recommendation that future care would be needed for Mr Brettes in the sum of 20,000 euros per year ought to have been subject to some further analysis.
- Finally, the appellant contends that the settlement sum is not amenable to redeployment as to its components as proposed by the insurer in its notice of contention, that is, the whole of the costs had to be reasonably incurred and if any component part was shown not to be reasonable nothing was recoverable.
Progress of the claim to the compulsory conference
- In order to consider these challenges to the primary judge’s decision insofar as it concerned Mr Brettes’ claim, the progress of the claim to the compulsory conference, at which the claim was settled, must be reviewed.
- Mr White and Mr Smith attended an informal settlement conference in Mr Brettes’ counsel’s chambers in Townsville in September 2008. In round figures, Mr Brettes offered[33] to compromise the claim for $1.4 million and the insurer for $600,000. In advance of that conference, Mr Smith had provided the insurer with a lengthy advice on quantum, liability having already been conceded. Mr Smith had Mr Brettes’ Statement of Loss and Damage and Dr Emery’s report of 6 March 2008 and that of Dr Likely of 17 January 2008. Mr Smith described Dr Emery’s 58 per cent whole person impairment as “rather generous”, adding “but it is difficult to comment accurately without separate assessments of individual injuries”.[34]
- This made it difficult to assign an ISV to each injury as required by s 62 of the Civil Liability Act 2003, for the purpose of assessing general damages. With respect to Mr Brettes’ impairment of earning capacity Mr Smith wrote:
“In any event the Claimant has now decided to upgrade his skills and has undertaken a business management course in the hospitality industry. The Claimant initially undertook this course at the Savignac School in France before transferring to the Stratford Avon College in England. I think that the Claimant’s decision to undertake retraining into hospitality management is reasonable having regard to the consequences of his accident-related injuries.”[35]
He continued:
“The Claimant in his Statement of Loss and Damage claims future economic loss in the sum of $929,120.00 as outlined on page 13 of that document.
There is no doubt that the Claimant has been left with significant accident-related impairments that will restrict him to sedentary employment but the Claimant’s decision to undergo retraining into hospitality management should enable him to obtain suitable permanent employment in the longer term … I think that Dr Emery is overly pessimistic about the Claimant’s future employment prospects. Dr Emery specifically states that it has become impossible for the Claimant to work in a physical job but does not go on to suggest that the Claimant will now be suited to work in hospitality management following the completion of his current retraining course. Dr Emery does recognise a need for possible future surgery and his views in this regard do not seem to be unrealistic.
It is not possible for us in the short term to check the accuracy or otherwise of the claims made by the Claimant regarding employment opportunities and salary levels in France.
Having regard to the available evidence and doing the best that I can to estimate future economic loss I think that it would be reasonable to allow the same in a range from $500.00 to $600.00 per week for 37 years discounted firstly in accordance with 5% tables (894 multiplier) and then further discounted by 15% on account of contingencies. On this approach the range of damages will be from $379,950.00 to 455,940.00 which I have rounded off to a range of from $380,000.00 to $450,000.00.”[36]
- Mr Smith summarised his assessment under the various usual heads of damage and recommended settlement of the claim in a range from $650,000.00 to $800,000.00.
- During the year following, details of various aspects of the claim were received, although the insurer had difficulty in extracting primary documents from Mr Brettes’ solicitors. This was the case up to the compulsory conference[37] set for 30 November 2009. Despite this, Mr Smith and the insurer (through Mr White and Ms O'Connor) thought that it was to the insurer’s advantage not to delay the compulsory conference further. Mr Smith maintained that in his experience large claims rarely got better for the insurer and tended to get worse as time passed.
- On 20 November 2009 Mr Smith forwarded to Mr White a draft outline of Mr Brettes’ claim. It was a seven page document arranged under the usual heads of damage containing a detailed analysis of each. Mr Brettes’ claim for past economic loss identified that he had been in employment with some periods of unemployment as a waiter, and, particularly, that he had been employed from March 2009 at the Hotel Lutetia. Under the heading “Future Economic Loss” the following appears:
“The claimant continues to work fulltime as a waiter for Hotel Lutetia. He works 39 hours per week but suffers left knee, left ankle and left upper limb pain. This is aggravated by standing and walking for long periods, traversing stairs from the kitchen to the dining room, lifting and carrying plates, bottles of wine and wine buckets as well as reaching above shoulder height to retrieve glass or bottles of wine. Lifting and moving tables can be problematic and he avoids the same where possible. He reported to the occupational therapist, Stephen Hoey, that his pain is particularly aggravated by the end of the working day and the end of the working week.
He continues to have ongoing symptoms in the left knee, left ankle and left arm. He has significant restrictions in respect to lifting, crouching, kneeling and other movements.”[38]
- Mr Taylor included Mr Hoey’s findings about Mr Brettes’ occupational restrictions noting, that although the occupational therapy assessment indicated that Mr Brettes was suitable only for occupations in the sedentary range, he continued to work full-time as a waiter. However, he suffered consistent pain with aggravation of his symptoms. Mr Taylor noted, as had been observed by Mr Hoey, that the appellant was unable to work back late when requested by his employer or supervisor and was not fit for regular overtime. He commented that, ultimately, the appellant would require retraining to a sedentary occupation.
- Mr Taylor referred to Dr Emery’s assessment but noted that Mr Brettes had a residual employment capacity and that he may be able to be retrained into sedentary employment. He commented that in whatever capacity the appellant sought employment:
“… he will always be under restrictions as detailed in the reports of Dr Emery, Dr Likely (for depressive and psychiatric conditions) and Mr Stephen Hoey.”[39]
He noted the real possibility of time off work for operative procedures as outlined in Dr Emery’s report and the likely degeneration of his injuries leading to osteoarthritis with further restrictions in his movements.
- Mr Taylor summarised:
“On the basis that he was totally unemployable therefore the claimant has a total claim before deductions of $765,352.00. This needs to be discounted for the residual earning capacities but also reflect the fact the complainant may be rendered unemployable because of the degeneration of his injuries and also the fact that he is going to have time off for operations and has been denied the opportunity to set up his own business.”[40]
The discount proposed was 15 per cent leaving a claim of $650,549.20.
- The other components of the settlement figure argued by the appellant to be unreasonable are expenses related to future out-of-pocket losses and future care. Relying on the recommendations of Dr Lamazouade, Dr Emery and Mr Hoey, Mr Taylor made a detailed case for future out-of-pocket expenses of $317,419.28 made up of motor vehicle conversion to automatic transmission, physiotherapy expenses, aides suggested by Dr Lamazouade, surgical procedures mentioned by Dr Emery, medication, aides and appliances identified by Mr Hoey and home modifications. The claim for future care was in the sum of $138,426.55. This was based on Mr Hoey’s assessment of Mr Brettes’ future needs and Dr Emery’s comments that he would need ongoing assistance of approximately 10 hours per week.
- In his response letter of 24 November 2009 to Mr Brettes’ solicitors, Mr Smith complained that he had not received any information “at all” regarding Mr Brettes’ employment at either the Hotel Concorde La Fayette from November to January 2009 or at the Hotel Lutetia since March 2009. He affirmed, however, that the insurer would prefer the compulsory conference to proceed but sought to be provided with sufficient information and evidence properly to assess the claim and deliver a realistic mandatory final offer. Mr Smith also reserved the insurer’s rights to have Mr Brettes examined by an alternative orthopaedic surgeon and “perhaps” an alternative occupational therapist in the event that the claim failed to settle and was litigated. As Mr Smith swore in his affidavit dated 11 February 2011 which was tendered at the trial:
“There were logistical issues with respect to making arrangements for medico-legal examinations as Mr Brettes resided in France this would have delayed the matter.”
- Mr Smith reviewed the claim and provided advice to the insurer on 24 November. In his advice he offered the following range:[41]
| “General Damages (ISV 62 to 65) | 127,280.00 | 136,100.00 |
| Past Out of Pocket Expenses | 84,000.00 | 90,000.00 |
| Future Out of Pocket Expenses | 140,000.00 | 175,000.00 |
| Past Economic Loss | 91,500.00 | 111,750.00 |
| Interest on past economic loss | 10,630.00 | 12,980.00 |
| Future Economic Loss | 380,000.00 | 450,000.00 |
| Past Care | 12,000.00 | 15,000.00 |
| Interest on past care | 1,400.00 | 1,750.00 |
| Future Care | 90,000.00 | 120,000.00 |
| $936,810.00 | $1,112,580.00” |
- Mr Smith provided a detailed analysis under each head of damage. He acknowledged Dr Emery’s assessment as:
“generous but currently there is no alternative orthopaedic medico-legal opinion available in relation to the Claimant’s accident-related injuries.”[42]
His analysis for general damages was as follows:
“Having regard to the evidence as it now stands I am inclined to agree with the Claimant’s solicitors that item 233 is applicable to the dominant injury. The Claimant’s solicitors have suggested an uplift of 50% to the maximum ISV of 55 but I do not think that this is justified and it is my view that the multiple injuries do not justify an uplift of more than 25%. I am inclined to allow an uplift of up towards 25% to suggest an ISV range of from 62 to 65, which converts to a range of from $127,280.00 to $136,100.00 for general damages. I appreciate that I have substantially increased my ISV range since providing my substantive advice, but I think that the increase is justified having regard to the evidence as it now stands.”[43]
- Mr Smith set out Mr Brettes’ claim for future out-of-pocket expenses which was in the sum of $317,419.28. Of that aspect of the claim he said:
“There are definite elements of overlap in the claim for future out of pocket expenses, but in my view the Claimant will have a reasonably significant claim for future out of pocket expenses. Again doing the best that I can with the available information I have allowed future out of pocket expenses as follows:
Allowance for use of automatic vehicles 8,000.00 10,000.00
Cost of physiotherapy, associated therapies
and [aides] @$100.00 to $120.00 per week
for 40 years (917.5 multiplier)91,750.00 110,100.00
Surgical procedures noted by Dr Emery25,000.00 30,000.00
Pain relief medication and medical
treatment10,000.00 15,000.00
Home modifications 5,000.00 10,000.00
$139,750.00 $175,100.00
I have rounded my range of damages off to $140,000.00 to $175,000.00.”[44]
- In his discussion of Mr Brettes’ loss of future earning capacity Mr Smith said:
“The fact of the matter is that the Claimant is realistically restricted to sedentary work in the longer term and will face the surgical procedures identified by Dr Emery in later life.
In my substantive advice I had suggested a range of from $380,000.00 to $450,000.00 for future economic loss and I still think that this is a realistic range.”[45]
- With respect to the claim for future care and assistance which was in the sum of $138,426.55 Mr Smith wrote:
“The opinions expressed by Stephen Hoey in his report of the 12th November 2009 in relation to future care needs are not in my view much overstated, particularly having regard to the comments by Dr Emery of a need for ongoing assistance in the order of some 10 hours per week.
I have allowed future care at the rate of $32.50 per hour, which seems to me to be quite reasonable, having regard to the current exchange rate between the Australian dollar and the Euro. I have taken into account the comments made by Dr Emery and reinforced by Stephen Hoey about increased care needs with the progression of time and have allowed future care as follows:
5 years (231.5 multiplier) @ 2 to 3 hours per week | 15,047.50 | 22,571.25 |
Further 20 years (753.6-231.5 = 522.1 multiplier) @ 3 to 4 hours per week | 50,904.75 | 67,873.00 |
Further 20 years (950.4-753.6 = 196.8 multiplier) @ 6 to 8 hours per week | 38,376.00 | 51,168.00 |
| $104,328.25 | $141,612.25 |
I have applied discounting of 15% on account of contingencies to reduce the above allowances to $88,679.02 to $120,370.42 which I have rounded off to a range of from $90,000.00 to $120,000.00.”[46]
- Mr Smith was cross-examined extensively about advising to proceed to the compulsory conference in light of his recognition of “gaps” in the claim, the reservation of the right to obtain further reports, and the acknowledged overreach of Dr Emery’s assessment. It is however, appropriate to set out the whole passage in his advice for balance:
“There is a considerable amount of speculation in my reviewed range of damages for this claim because the Claimant’s solicitors have not been proactive in providing information and evidence regarding the Claimants’s current employment situation or even in properly identifying and proving past out of pocket expenses.
In any event however the undeniable facts are that the Claimant did sustain significant injuries in the subject motor vehicle incident which have already impacted and will in the future impact significantly on his ability to pursue his preferred career in the hospitality industry. In addition we cannot avoid the fact that damages will be assessed in Euros rather than in Australian dollars so that with the current exchange rate between those currencies, we face higher than usual claims under virtually all of the heads of damage.
I had previously recommended a reserve of $860,000.00 for this claim but on further consideration of the evidence I think that it would be prudent for you to increase your reserve up to $1,200,000.00 which will allow $1,120,000.00 for damages and $80,000.00 for the Claimant’s costs and outlays.
I have indicated to the Claimant’s solicitors that we wish to reserve our rights to have the Claimant examined by an alternative orthopaedic surgeon and occupational therapist in the event that the claim is litigated and I will let you know if they have any objection. I do think that it would be prudent for us to reserve our rights in this regard because Dr Emery in particular seems to me to have been overly generous with his assessments of impairment as well as his views on future surgery and care needs.
As mentioned earlier in this letter I believe that there is some lack of information and evidence currently available but there is probably no benefit to Suncorp in delaying the compulsory conference, as long as the Claimant’s solicitors have no objection to us reserving our rights in relation to the further medico-legal assessments that I have mentioned.
Generally I think that we are probably better off proceeding with the proposed compulsory conference and hopefully being able to negotiate a realistic settlement of the claim. As you know from experience it is always difficult to contest claims by plaintiffs residing overseas and heavy costs are always involved with efforts to obtain information and evidence in relation to the various heads of damage.”[47]
Mr Smith’s explanation will be considered below.
- At the compulsory conference on 30 November 2009 Mr Brettes was represented by counsel and Mr Taylor. Mr Brettes attended by telephone conference. Mr Smith attended on behalf of the insurer. Ms O'Connor, whilst not linked by conference telephone to the conference, was in telephone contact with Mr Smith. Mr Smith conveyed information to her and gave advice. Mr Brettes’ claim was compromised for the sum of $1.1 million plus standard Supreme Court costs and outlays and any refunds required from Mr Brettes’ travel insurers who had paid some medical expenses.
- On 2 December 2009 Mr Smith set out the terms of the settlement in a letter to the insurer. After Mr Smith noted that Mr Brettes had participated by telephone he observed:
“I suspect that he would have made quite an impressive plaintiff witness if his claim had been litigated.”[48]
Mr Smith noted that Mr Brettes worked in a supervisory role at the time of the conference in a 200 patron restaurant and worked a double shift, five days a week from 12.00 noon to about 3.00 pm or 4.00 pm and again from 7.00 pm to as late as 12.00 midnight. Mr Smith wrote:
“The Claimant says that he is required to undertake physically demanding work such as the moving and setting of tables and actually waitressing, notwithstanding his supervisory position. It also arose at the compulsory conference that apart from his declared income the Claimant received substantial tips that he does not declare in his taxable income.”[49]
- Mr Smith was of the view that a very reasonable settlement had been negotiated and that there could well have been significant other risks and costs involved if that had not occurred. He concluded that “a reasonable break-up of the settlement” might be as follows:
| “General Damages (ISV 65) | 136,100.00 |
| Personally paid Past Out of Pocket Expenses | 30,000.00 |
| Future Out of Pocket Expenses | 175,000.00 |
| Past Economic Loss | 115,000.00 |
| Interest on past economic loss | 12,900.00 |
| Future Economic Loss | 500,000.00 |
| Past Care | 14,000.00 |
| Interest on past care | 2,000.00 |
| Future Care | 115,000.00 |
| $1,100,000.00”[50] |
- There has been no challenge to the costs which were paid by the insurer to Mr Brettes’ solicitors and, accordingly, it is unnecessary to canvass them further.
Discussion
Future Economic Loss
- Ms O'Connor had overall responsibility for signing off on any awards over $500,000 which were being managed by Mr White but it was apparent from her cross-examination, that she was not in command of the detail of the file. She had stepped in because Mr White was on leave. She indicated that she would have reviewed the file during the day leading up to the commencement of the compulsory conference at 7.00 pm.[51] She accepted that she would have been told by Mr Smith during the conference about Mr Brettes’ present working status but was unable to recall precisely what she had been told. She agreed, however, that the figures indicated that he was earning a little over $500 net per week and that the work was physically demanding. She agreed that the way in which the claim proceeded from the insurer’s perspective and the means by which she had formed the assessment in relation to his damages for economic loss were flawed by virtue of the information which she had received at the conference from Mr Smith about his current working capacity.
- This passage occurred in cross-examination:
“You’d agree with me, wouldn’t you then, that the only prudential approach in respect of the approach to this claim in light of the information obtained at the compulsory conference was to downgrade Suncorp’s assessment of the quantum of damages for Mr Brettes, would you not?- - On the evidence that’s before me now.
Hmm? – But I can’t recall everything that Mr Smith said to me.
But the evidence was before you at the compulsory conference, we’ve established that, have we not? - - That’s correct.
So I’ll ask you the question again. Would it not have been in accordance with ordinary prudential – an ordinary prudential approach to the assessment of the claim in relation to Mr Brettes in light of the information you received at the compulsory conference to reduce the quantum of damages relating to Mr Brettes which Suncorp were going to pay? - - That’s correct.
And you didn’t reduce that, did you? – No, I didn’t.”[52]
- Importantly, however, Ms O'Connor said that she would have looked to the advice of Mr Smith, arising out of the participation of Mr Brettes in the conference, to which she was not privy, as to whether the assessment for economic loss should be reduced.
- The primary judge summarised the appellant’s case put to Ms O'Connor in cross-examination that Mr Brettes was working on a full-time basis which was entirely inconsistent with Dr Emery’s prognosis. His Honour concluded:
“On the basis of that knowledge it was put to Ms O'Connor that it would have been in accordance with an ordinary prudential approach to the assessment of the claim to reduce the quantum of damages being offered by Suncorp. Ms O'Connor accepted that.”[53]
His Honour then concluded:
“But, in circumstances where the entire basis for the assessment of future economic loss has been either removed or radically changed it is not going to be a cost reasonably incurred by the insurer if the claim is paid upon a basis which has been demonstrated to be incorrect. This will apply even in circumstances where the information only becomes apparent at the compulsory conference. Suncorp should have, on becoming aware of this radical difference in the factual basis for the settlement negotiations, sought further information and made further inquiries. This was not a case where any adjustment to the offer might have been small or, when weighed against the difficulties of dealing with a plaintiff in another country, the logistical problems favoured maintaining the offer.”[54]
- With respect, it was not the case that “the entire basis for the assessment of future economic loss had been removed or radically changed”. Information about Mr Brettes’ employment status had not become known only at the conference. Although Mr Smith did not have primary documents, as early as the September 2008 advice he understood that Mr Brettes was retraining and expected to be in employment related to hospitality. He expressed the view that Dr Emery was “unduly pessimistic” about future employment. Mr Smith was able to appraise the insurer quite fully about Mr Brettes’ employment sufficiently prior to the compulsory conference to have deferred the conference if that were thought necessary.
- Mr Smith accepted Dr Emery’s medico-legal report insofar as it related to an analysis of Mr Brettes’ orthopaedic injuries. After all, the orthopaedic injuries were well documented elsewhere and uncontroversial. He was guided by Mr Hoey’s report about Mr Brettes’ occupational capacities. Mr Smith had originally expected that Mr Hoey would assess Mr Brettes’ future care needs “generously” and would offer “a fairly negative view about Mr Brettes’ employment prospects”.[55] He thought, in fact, that they were moderate. When challenged about his view about Mr Hoey’s assessment, Mr Smith responded that Mr Hoey was giving expert evidence and, by implication, in doing so abided by his obligation to the court. He added: “And [Stephen] Hoey is quite an impressive witness; I know that too.”[56] He continued:
“Well, because of this fellow’s injuries, you know. It hadn’t been really well addressed, and this was going to be the person who was going to start to really turn these things up, that is, the care and the negativity about work. I didn’t really put much store in what Emery said about – I think he said totally unable to work, whatever Emery said. But I knew that Hoey would look at it more closely, and with the seriousness of the fellow’s injuries, I could just see it was going to be a pretty negative view and fairly generous on care …”[57]
- When challenged that the medico-legal reports were unreliable since Mr Brettes was working, Mr Smith responded that “[Mr Brettes] had a pretty poor outlook for the fellow in the long-term”.[58] Moreover, Mr Smith thought that Mr Brettes overestimated his own ability and, in his experience, he doubted that he could sustain that level of activity.[59] He maintained that he might not recommend to the insurer that other medical reports be obtained if litigation ensued, particularly since he considered Mr Hoey’s assessment “a bit light” and a second opinion might bolster the original report.[60]
- When cross-examining Mr Smith counsel appeared to concede that Mr Brettes was entitled to some award for future impairment. The tenor of his oral submission and his cross-examination of Mr Smith was to the effect that a global assessment ought to have been made. In his submissions he mentioned a ceiling figure of $200,000.[61]
- There was ample evidence to support advising the insurer that a substantial claim for loss of future earning capacity was justified on the uncontentious facts about Mr Brettes’ injuries and, to a large extent, their consequences. The advice was well-reasoned by a very experienced solicitor who identified appropriately the weaknesses in the claimant’s case as it then stood. However, Mr Smith brought his judgment to bear on the advantages of settlement and the possible disadvantages of proceeding to trial. Clearly many of these matters would have been known, at least broadly, to the insurer. It was reasonable of the insurer to accept that advice.
Future out-of-pocket expenses
- With respect to future out-of-pocket expenses the primary judge accepted that Mr Smith had made his own assessment not informed by the reports provided by Mr Brettes’ solicitors. That seems at odds with Mr Smith’s advice to which reference has been made. The claim under this head had been for $160,000 for aides recommended by Dr Lamazouade in his report. Mr Smith identified $3,510 as an appropriate allowance for future physiotherapy which was, it appears, derived from Dr Lamazouade’s report. That need was current and ongoing. The aides calculations were likely derived from Mr Hoey’s report and related to later in life requirements. Mr Smith’s range was $91,750 to $110,100. The claim was for $317,419.28 for this whole head of damage. Of the surgical procedures mentioned by Dr Emery – left knee, left second toe and plastic surgery for scar revision – the knee and toe could hardly be described as controversial. Whether Mr Brettes would undertake plastic surgery would depend on factors which remained unexplored but would doubtless have been at trial.
- In his settlement breakdown Mr Smith made an allowance under this head at the top of his range. It might be thought to have been “generous” but not necessarily “not reasonably incurred”.
Future care
- The primary judge concluded that on the claim for future care:
“Notwithstanding Dr Emery’s opinion that Mr Brettes would need assistance in the order of some ten hours a week, Mr Smith’s opinion was that an offer should be made on the basis of two to three hours a week for five years, then three to four hours a week for the next 20 years, and then six to eight hours a week for the 20 years after that. That approach, even with the pessimistic views expressed by Mr White about the opinions of both Dr Emery and the occupational therapist is still within a logical and justifiable range for this claim.”[62]
That assessment by his Honour was, in a sense, (although unstated) something of an offset against an exhausting and pain-filled working regime which had been undertaken by Mr Brettes. Extrapolating from Mr Brettes’ present needs, Mr Smith’s breakdown did not reveal any unreasonableness.
Conclusion
- The primary judge ought, with respect, to have considered it reasonable of the insurer to have allowed a sum to represent loss of future earning capacity. It would not be minor. At trial, in submissions, mention was made of $200,000 on behalf of the appellant. No figure was submitted by the insurer on this appeal. The insurer has been content to accept the total figure as reduced by the primary judge.
- The primary judge was correct to have found that the insurer reasonably incurred the amounts representing future out-of-pocket expenses and for future care. In any event, any weakness in these heads of damage which had not been reduced by the primary judge were amply covered by his Honour’s exclusion of any amount for loss of future earning capacity.
- Mr Smith was fully seized of Mr Brettes’ case going into the compulsory conference. He gave sensible and well considered advice. He was acutely aware of the vicissitudes of litigation and, no doubt, the good impression on a court that a plaintiff gives who has overcome serious and debilitating injury with an arduous program of rehabilitation and retraining. A significant factor in wanting to settle was the high cost of managing a claim by a foreign claimant. Looking at Mr Brettes’ injuries and their sequelae, his long rehabilitation marked by numerous operations and his valiant efforts, the figure of $1.1 million does not appear overly generous. There were no credit issues to be resolved. The insurer relied on its experienced solicitor. That Ms O'Connor made concessions is not determinative especially given of her lack of familiarity with the file. The settlement figure was “reasonably incurred”.
- The appellant seeks to identify error on the basis that if one part of the amount paid was not “reasonably incurred” none could be recovered. Of this his Honour observed:
“Section 58 allows for an insurer, in the circumstances provided for, to recover the “costs reasonably incurred’ by it. The word “costs” is defined to include separate categories of cost including, for example, the provision of rehabilitation services. It follows, then, that the term “costs” should not be viewed as a global amount within which there can be no subdivision of amounts. This must be the case in personal injuries matters where it has been the practice for a very long time to assess a claim and to make an offer in accordance with accepted heads of damage. It is possible for a payment made by an insurer to an injured person to be reasonably incurred as to one part and unreasonably incurred as to another.”[63]
- Although in the past a global sum to compensate for personal injury was the usual practice,[64] it is now well-established that an indication must be given of how much of the total award has been allocated to the recognised heads of damage.[65] This allows error to be more readily identified and separates out those parts of the judgment sum which attract interest. If that dissection had not occurred here, it would have been very difficult to have challenged the settlement figure. From a statutory construction basis, and from a common sense perspective, his Honour’s approach was correct.
Orders
- The orders which I propose are:
- Appeal dismissed.
- The appellant to pay the respondent’s costs of and incidental to the appeal.
- APPLEGARTH J: I have had the advantage of reading the comprehensive reasons of White JA, and agree with them. I also agree with the orders which her Honour proposes.
Footnotes
[1] Motor Accident Insurance Act 1994, s 58(3)(c)(i).
[2] AR 588.
[3] [1988] 2 Qd R 569.
[4] Reasons at [8]; AR 579.
[5] [1991] 1 Qd R 69.
[6] Motor Vehicles Insurance Regulations 1968, regulation 17.
[7] [1951] 2 KB 314; [1951] 2 All ER 191.
[8] [1991] 1 Qd R 69 at 76.
[9] [1998] HCA 38; (1998) 192 CLR 603.
[10] Reasons at [13]; AR 580.
[11] The following discussion of Mr Brettes’ injuries and treatment is largely derived from the report of Mr Stephen Hoey, occupational therapist, dated 12 November 2009, AR538-551.
[12] Volume 2 of the Appeal Record comprises some 250pp of records from the Townsville General Hospital relating to the two injured men. They predominately concern Mr Brettes.
[13] Letter of advice from solicitor to insurer of 2 September 2008; AR 163.
[14] The detail of those operative procedures are set out at AR 550, footnote 2.
[15] AR 538.
[16] AR 539.
[17] AR 540.
[18]AR 541.
[19] AR 544.
[20] AR 545.
[21] AR 545.
[22] AR 545.
[23] AR 545-6.
[24] AR 546.
[25] The claim for travelling expenses for Mr Taylor (Mr Brettes’ solicitor), Dr Emery and Dr Likely to Paris to examine Mr Brettes appears at AR 190, 192 and 196 and indicates that the Australian solicitors decided to use local (Townsville) specialists rather than find appropriate persons in France. It may be reasonably inferred that Dr Emery was a French speaker.
[26] AR 554-555.
[27] AR 555.
[28] AR 571.
[29] See ‘Combined Values Chart’ in Guides to the Evaluation of Permanent Impairment, Fifth Edition, American Medical Association, at 604, provided by the appellant’s counsel at the request of the court.
[30] Original in French, AR 573, translation AR 574.
[31] AR 574.
[32] At the time the claim was received, Ms O'Connor was a senior claims officer in major claims.
[33] Only his lawyers participated in this conference, AR 26.
[34] AR 165. Dr Emery did this subsequently at the request of Mr Brettes’ solicitors and it is in his second report.
[35] AR 165.
[36] AR 165.
[37] AR 33.
[38] AR 176.
[39] AR 177.
[40] AR 177-178.
[41] AR 168.
[42] AR 169.
[43] AR 169.
[44] AR 171.
[45] AR 171.
[46] AR 172.
[47] AR 172-173.
[48] AR 188.
[49] AR 188.
[50] AR 188-189.
[51] The conference was scheduled at this time to accommodate Mr Brettes participating from France.
[52] AR 69.
[53] AR 584 at [31].
[54] AR 584 at [33].
[55] AR 81.
[56] AR 82.
[57] AR 82.
[58] AR 86.
[59] AR 86-87.
[60] AR 88.
[61] AR 108.
[62] Reasons at [40]; AR 585.
[63] Reasons at [42]; AR 586.
[64] Teubner v Humble (1963) 108 CLR 491 at 505 per Windeyer J.
[65] See discussion in Harold Luntz, Assessment of Damages for Personal Injury and Death, Fourth Edition, at 51 and ff.