By Bronwyn Ackland, Partner and Cindy Ting, Special Counsel

This South Australian Supreme Court of Appeal (SASCA) judgment is one of the few cases which have considered the assessment of damages in South Australia, particularly in compulsory third party (CTP) injury claims, since the inception of the 2013 amendments to the Civil Liability Act (SA) 1936 (CLA) on 1 July 2013.  With this judgment, the SASCA re-instates a balanced and reasonable assessment of damages in South Australia in accordance with settled law and legal principles.

Factual Background

On 27 April 2014, Mr Adrian Raccanello (Mr Raccanello) was involved in a motor vehicle accident (MVA).

As a result, Mr Raccanello brought a CTP claim for damages for personal injuries.

His wife, Mrs Deanne Raccanello (Mrs Raccanello) brought a claim for loss of consortium.

At the time of the MVA, Mr and Mrs Raccanello were engaged in farming, contract carting and vermiculture via their 2 companies, Rayen Estates Pty Ltd (Rayen) and Wormtech Pty Ltd (Wormtech).  Both Rayen and Wormtech brought per quod servitim amisit (per quod) claims related to losses suffered arising from Mr Raccanello’s inability to work as an employee and working director in these businesses.

Liability was not in dispute with the parties having agreed a 25% reduction of the damages to be assessed to account for Mr Raccanello’s failure to wear a seatbelt.

However, the quantum assessment was hotly contested with the parties’ positions on several aspects of the claim in dispute since the claims included :

• Per quod claims which were framed in terms of compensation for the costs of Mr Raccanello’s lost time from work and a loss of business profits;
• Claims for capital loss from the (early) sale of water rights which subsequently increased in value post-sale;
• Claims for caring services which were assessed on the basis of the needs of the entire family/household;
• Issues of causation for the nature and extent of Mr Raccanello’s injuries arising from the MVA against a background of pre-existing injuries/medical conditions and illicit drug use;
• Difficulties in assessing the causation for losses in circumstances where Mr Raccanello returned to work on almost full duties less than 1 year post-MVA despite undergoing cervical spine surgery in that time, progressed and grew his businesses from financially insecure positions to successful and expanding businesses over the next 5 years, before allegedly succumbing to his escalating drug addiction during those 5 years and developing physical complaints resulting in cessation/reduction of work.

Case At First Instance

On 12 July 2023, Her Honour Judge Deuter in the South Australian District Court (the Trial Judge) delivered judgment in favour of the Applicants (after a reduction for liability and in addition to past paid payments received from a workers compensation claim) comprising of the following, and in addition to interest and costs in favour of the Applicants on an indemnity basis from 10 April 2021 (on the basis of the Respondent’s failure to better the Applicant’s filed offer in the sum of $760,000 plus costs) :

Mr Raccanello	$         1,126,885.98
Mrs Raccanello	$           494,690.35
Raden	$             75,922.82
Wormtech	$           504,843.75
Total	$        2,202,342.90

The Trial Judge’s assessment was based on several findings of fact and law which included the following :

• Medical records and business records could not be tendered as evidence unless (each of) their authors were called to give evidence;
• There was “no evidence” that the Applicants had made preliminary steps towards selling their water rights even prior to the MVA and that they would have required to sell their water rights in order to fund the expansion of their business in any event;
• Mr Raccanello would have worked through to age 70 years;
• The entirety of Mr Raccanello’s injuries inclusive of his drug addiction were caused by the MVA;
• Consequently, Her Honour assessed loss of consortium on this basis;
• Rayen’s per quod claim was based on a provision of services by Mr Racanello despite the per quod claim for Wormtech being assessed on the basis of Mr Racanello providing full services to Wormtech;
• Further, Rayen’s per quod claim was calculated based on requiring 2 full-time employees to replace Mr Raccanello’s lost services despite him continuing to be paid his full-time wage by Rayen;
• Relying on the calculations provided by the Applicants’ expert as to Rayen’s losses which were premised on an (erroneous) assumption that Mr Raccanello did not work between 2014 and 2019;
• Assessed Mr Racanello’s entitlement to future care damages for domestic tasks he did not perform in the past and was unlikely to perform in the future, and by reference to the totality of domestic tasks required for a family of 4 adults.

Appeal

The Respondent appealed the Trial Judge’s assessment on several grounds including with respect to the assessment of the following claims:

• The per quod claims;
• Future economic loss;
• Capital loss from sale of water rights;
• Future care;
• Loss of consortium; and
• Costs.

The Applicants cross-appealed seeking increased awards for future economic loss and the per quod claims.

On appeal, the SASCA overturned the Trial Judge’s assessment of damages and substituted it’s own as follows (after a reduction for liability and in addition to past paid workers compensation claim benefits, but with interest and costs to be determined) :

Mr Raccanello	$          296,321.96
Mrs Raccanello	$            18,750.00
Raden	($          35,227.18)
Wormtech	NIL
Total	$          279,844.78

In doing so, the SASCA was mindful of and carefully considered, the Trial Judge’s advantage in making findings of fact.  Nevertheless, the SASCA concluded that the Trial Judge had made “material errors of fact” and that Her Honour’s assessment was also affected by “other errors of approach or principle”.

In particular, the SASCA considered that:

• The bank records were cogent evidence in support of a finding that the Applicants had made preliminary steps towards selling their water rights even prior to the MVA and that they would have required to sell their water rights in order to fund the expansion of their business in any event, and would therefore have likely sold them irrespective of the MVA and the alleged need for funds caused by Mr Raccanello’s inability to work following the MVA;
• The Trial Judge’s refusal to accept medical records on the basis the authors were not called to give evidence and the admission of the Applicant’s psychiatric expert report despite Mr Raccanello failing to give evidence to support the history upon which these opinions were based, “materially affected” Her Honour’s assessment both in under-estimating the significance of Mr Raccanello’s pre-existing difficulties (which included a disc fusion in 2008 and subsequent development of right hand symptoms between 2011 and 2014 for which he had previously been cautioned may result in the need for further surgical intervention) and over-estimating the significance of his later and ongoing impairments;
• The evidence did not support the Trial Judge’s finding that Mr Raccanello’s significant incapacity was masked by his drug taking in the 5 years when he returned to work and grew his businesses;
• Furthermore, the Applicants failed to establish on the facts, causation for Mr Raccanello’s alcohol and drug addictions;
• In addition, even if such causation was established, the scope of liability does not extent to Mr Raccanello’s deliberate and illegal conduct involving the use of cannabis, amphetamines and then later methylamphetamine;
• There was “no proper basis” in the evidence for finding that the escalation of Mr Raccanello’s drug taking over 5 years was due to the MVA;
• The Trial Judge had been mistaken as to Mr Raccanello’s age at the date of assessment;
• The Trial Judge’s assessment of the claim for future economic loss did not adhere to the legislative requirements, and in particular, the legislative requirement that a chance or circumstance has to have at least a 20% chance of occurring to be taken into account at the time of assessment;
• Any capital loss arising from the timing of the sale of water rights was beyond the Respondent’s scope of liability considering the remoteness of this loss;
• In any event, these capital losses (if any) did not fall within the Respondent’s scope of liability;
• The per quod award of damages were “flawed” and “contrary to principle and the ruling in Barclay v Penberthy regarding the usual of damage” which should have been confined to the cost of replacement labour engaged at a time when Mr Raccanello was unable to provide services.

Relevance

This judgment is particularly important as it confirms:

• Settled law that per quod damages can only be awarded for costs of replacement labour.
• The importance of proving causation between any alleged injury (such as addiction to illicit drugs) and the Incident.
• The importance of proving causation between any claimed losses (eg capital loss from sale of an asset) and the Incident.
• The requirement to limit an award for caring services to only compensate for the injured person’s needs (rather than the family as a whole).
• The necessity of determining the likelihood that any caring services will be commercially purchased rather than voluntarily/gratuitously provided since differing monetary amounts per hour of care apply.