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“Trial Judge’s awards for economic loss and attendant care set aside” – Arnott v Choy [2010] NSWCA 2569

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Author: Nathan Morehead
Judgement Date: 16th November, 2006
Citation: Arnott v Choy [2010] NSWCA 2569
Jurisdiction: New South WalesCourt of Appeal[1]
In Brief
  • A finding as to whether a plaintiff has a residual earning capacity will be dictated by the medical and lay evidence.  For a finding to be sustainable, the medical and lay evidence relied upon must be considered and applied as a whole, not selectively.
  • A plaintiff is required to mitigate the damage caused by his/her loss of earning capacity by taking reasonable steps to pursue alternative employment opportunities.  This will involve consideration of the information that was in the possession of a plaintiff at the relevant time, the factors relied upon by a plaintiff in acting or failing to act, the plaintiff’s accident-related injuries and, therefore, the steps reasonably available to the plaintiff.
  • An award of damages for attendant care may be found to be excessive if there is evidence which indicates a plaintiff retains some capacity for independent living.
  • Damages awarded for future attendant care and future case management should be closely scrutinised.  There exists the potential for over-compensation on the basis that, even though they are separate heads of damage, the same services/facilities may be incorporated into each of them to form the basis for an award.
Background

On 29 January 2004 the respondent, Mr Choy, sustained a severe closed head injury and facial fractures when the vehicle he was driving collided with a truck being driven by the appellant, Mr Arnott.  Mr Choy was left with frontal lobe brain damage.  The parties agreed that Mr Choy had been guilty of contributory negligence and that the correct deduction should be 20%.  His Honour Judge Levy awarded Mr Choy damages of $2,692,664.54, reduced to $2,154,131.60 to account for his contributory negligence.

The damages awarded for past ($175,951) and future ($760,185) economic loss were underpinned by a finding that Mr Choy was, and would remain, unemployable by reason of his accident-related injuries and consequential disabilities and impairments.  Future attendant care ($284,900), future case management services ($247,252) and ad hoc or drop-in supervision by a case manager ($463,369) were also awarded over Mr Choy’s projected life expectancy.

When assessing damages for these heads, Judge Levy placed particular weight on the reports by Mr Choy’s treating rehabilitation specialist, Dr Veerabangsa, and a joint occupational therapy and psychological assessment report by Mr and Ms Ravagnani.  This was because the former had a superior opportunity to observe Mr Choy over a lengthy period of time and become familiar with his presentation whilst the latter were able to consider the evidence of Mr Choy and various family members and, therefore, provide reasonable estimates when examined against the tasks required.  The appellant’s qualified evidence was rejected.

Court of Appeal

Mr Arnott challenged the amounts awarded in respect of past and future economic loss, future attendant care services and case management.  It was submitted that Judge Levy incorrectly found Mr Choy is permanently unemployable and had no residual earning capacity, incorrectly calculated past economic loss and erred in the amounts he allowed for case management.

Mr Choy cross‑appealed, complaining Judge Levy failed to use the correct figure or calculate damages over the entire period of his past economic loss.

Earning Capacity

Although the evidence suggested that Mr Choy’s concentration and memory were adversely affected by his accident‑related injuries, he gave evidence that he intended to seek employment.  In fact, he acknowledged he could undertake labouring work.  Despite that evidence, Judge Levy remarked that such concessions needed to be viewed in the context of Mr Choy’s cognitive, emotional and behavioural difficulties, and his over-confident manner.  These factors were thought to have an adverse overshadowing impact on Mr Choy’s ability to obtain and maintain any form of remunerative employment and his efforts to attempt to exercise an earning capacity.

Mr Arnott asserted that Judge Levy failed to address the extent to which Mr Choy’s earning capacity had been impaired and the extent to which that impairment was productive of loss.  It was contended that the finding that Mr Choy was, and would remain, unemployed was not sustainable.  Both Mr Choy’s evidence, and the overwhelming weight of the medical evidence, supported the conclusion that whilst Mr Choy suffered a reduced earning capacity, he was capable of working full‑time in suitable employment.  It was suggested that whilst Judge Levy referred to much of the medical evidence, he generally rejected that which suggested Mr Choy was fit for employment.

Mr Choy submitted the medical and lay evidence supported the conclusion by Judge Levy, the criticisms of Mr Arnott’s medical evidence were soundly based and the evidence, taken collectively, did not demonstrate that Mr Choy was capable of full‑time employment.

McColl JA, who delivered the leading judgment, found that Judge Levy erred in concluding that Mr Choy had, in effect, no residual earning capacity.  The weight of medical opinion, including Dr Veerabangsa, who was well aware of Mr Choy’s tendency to be overconfident, was to the effect that he did.  The frequent invocation of the notion that Mr Choy’s overconfidence was a disqualifying factor in obtaining employment was also thought to defy common experience.

Although the objective evidence pointed to the fact that Mr Choy’s emotional, behavioural and cognitive residual disabilities inhibited his capacity to perform in a competitive manner in full employment, he was found to still be capable of working in a supported environment where wages could be generated.

An agency known as Head2work assisted Mr Choy in his post-accident return‑to‑work efforts.   Judge Levy found this agency had been unsuccessful in placing Mr Choy in employment between 2004 and 2007, a factor which he relied upon to reinforce his conclusion that Mr Choy had no significant or measurable residual earning capacity.  McColl JA found that doing so failed to acknowledge a number of factors.  Firstly, during the year of the accident Mr Choy demonstrated significant ability.  This was reflected in the medical evidence and the fact that, shortly after his discharge from hospital, Mr Choy enrolled in and completed a motor mechanics course at TAFE and achieved passes and credits.  Secondly, Mr Choy undertook two work trials where he appears to have been able to work at least 20 hours on a weekly basis.  Thirdly, he worked in his parents’ business at various times.

The Court also found that Judge Levy incorrectly rejected Mr Choy’s evidence that he was capable of labouring work by reason of his cognitive and emotional difficulties and his overconfidence.  This was because Mr Choy suffered no continuing physical limitations and there was no evidence that his cognitive and emotional disabilities caused him to behave in an anti‑social manner.

As far as the future is concerned, the Court ordered that a 30% discount for vicissitudes be applied to acknowledge the uncertainties of supported employment.

Mitigation of Damages

The appellant submitted that, from at least 2007, Mr Choy failed to mitigate the damage caused by his loss of earning capacity and damages should be reduced accordingly.

At the commencement of 2007 Head2work discontinued their efforts to assist Mr Choy in seeking employment.  Thereafter, and prior to the trial in July 2008, it appears he made no effort to locate work.  Mr Choy indicated that it was his preference to await the conclusion of the pending Court proceedings and thereby minimise any inconvenience to his prospective employer, prior to returning to the workforce.

At paragraph 161 of her judgment, Justice McColl found that Judge Levy did not err in finding that Mr Choy had not failed to mitigate his damages.  This was because Dr Smith concluded, in that section of the report which the primary judge adopted, that Mr Choy suffers a slower mentation and has difficulties with insight, reasoning and coping with significant information:

A person with such disabilities might reasonably, in my view, be overwhelmed by the prospect of having to deal both with seeking employment and complying with the demands of an impending court case, particularly where many demands are made on the person to attend medical examinations.  In this respect it should be noted that the period in which the respondent did not seek work coincided with the commencement of the proceedings in April 2007 and the hearing in July 2008.  In my view it was open to the primary judge, having regard to the disabilities he concluded afflicted the respondent, to conclude the latter’s explanation for not seeking work in the 18 or so months prior to trial was cogent rather than baseless.

Future Attendant Care

The appellant made a number of complaints on this issue.  Firstly, Judge Levy failed to properly address Mr Choy’s evidence, as well as the medical and other evidence, in relation to his capacity to engage in domestic chores and perform his daily activities independently.  Secondly, His Honour erred in rejecting the report by the appellant’s qualified Occupational Therapist, Ms Zeman.  Thirdly, the award was excessive in light of the evidence.

The respondent submitted the findings by Judge Levy were open on his assessment of the expert opinion and it was available to His Honour to reject, and treat as unreliable, Mr Choy’s evidence of his capacity to care for himself.

The Court found that all grounds of appeal on this issue had not been established, for two primary reasons.  Firstly, Judge Levy was entitled to conclude that the assessment Ms Zeman paid insufficient attention to the cognitive, emotional and behavioural issues that generated Mr Choy’s need for domestic assistance.  Secondly, His Honour was entitled to conclude that the assessment by Ms Zeman was limited due to the fact she did not have the opportunity to interview Mr Choy’s mother whereas Mr and Ms Ravagnani did so.

Case Manager

The appellant submitted the finding that Mr Choy required case management failed to acknowledge the weight of the evidence to the effect that Mr Choy was capable of independent living.  This included the absence of reference in most, if not all, of the medical reports to Mr Choy needing any sort of case manager, Mr Choy’s own evidence regarding his capacity to organise his life and the fact Ms Zeman did not find any requirement for case management. 

McColl JA found the evidence did not support the premise that Mr Choy requires a comprehensive care regime which should follow a supported accommodation and community living model, for various reasons.  Firstly, throughout the period he was engaged in rehabilitation, Mr Choy demonstrated a capacity to attend his TAFE course, regain his driver’s licence and work satisfactorily at two motor mechanic shops.  Secondly, Mr Choy retains a residual earning capacity.  Thirdly, Mr Choy’s treating medical practitioners opined he was capable of independent living.  Fourthly, there was no medical evidence to support the proposition that Mr Choy was not capable of functioning safely within the community.

Although the reports by Mr and Ms Ravagnani and Ms Zeman, and the evidence given by Mr Choy’s mother, indicated Mr Choy may require assistance if living independently, it did not support the conclusion that he required that assistance on the scale allowed by Judge Levy, nor drop‑in assistance of the nature identified in the joint Ravagnani report.

In a comment that has universal application, Justice McColl made the following comments at paragraph 202 of her judgment:

Further there is, as the appellant submits, over‑compensation in the amounts the primary judge allowed.  It is difficult, for example, to understand why the respondent needs domestic monitoring, if he is paying for domestic assistance as part of the award for future attendant care.  The same comment can be made about the need for a case manager to deal with nutritional needs, another area which should be covered by the domestic assistance in respect of meal preparation.

McColl JA found the reference to Mr Choy having access to “appropriate services and assistance” unclear and the award for assistance with prompting for medications at eight hours on a monthly basis “manifestly excessive”.  Her Honour arrived at the following conclusion at paragraph 206 of her judgment:

Finally, I would observe that another way of testing the proposition the respondent was over‑compensated is to look at the total award for the heads of attendant care and case management: 21.8 hours a week – more than half a working week.  In my view the evidence did not support the proposition that the respondent needed paid assistance to such an extent.

Implications

This case is a timely reminder that awards made for various heads of damage must be supported by the medical and lay evidence and internally consistent.  It is erroneous for selective parts of a medical report to be used as justification for a conclusion, particularly if contradictory remarks appear in other sections of the report.  Insurers should carefully and comprehensively review the medical evidence relied upon by Assessors and Judges to support an award of compensation for each head of damage.

Whether or not a claimant has taken reasonable steps to mitigate the damage caused by his/her loss of earning capacity is to be determined on the basis of the information within his/her possession at the relevant time and the balancing of baseless and cogent factors.  This inevitably involves consideration of the medical evidence and an accurate understanding of the nature, extent and duration of the claimant’s injuries.  An insurer’s capacity to successfully demonstrate that a claimant has not discharged his/her statutory obligation will be difficult if the accident has been productive of an acquired brain injury or significant psychiatric condition.

Insurers should pay particular regard to the activities of daily living which are said to lie outside the capabilities of a claimant and thereby justify an award of damages for future attendant care and future case management.  As was highlighted in this case, there can be some degree of overlap between the two, leading to the possibility of over‑compensation.  One method by which this can be measured is by calculating the number of hours awarded on a weekly basis in the context of the available evidence.  This may provide some guidance as to whether an award is excessive and unsupported by the evidence.

[1]   McColl JA and Basten JA

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