Calculating economic loss - pre-existing medical conditions and causation

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By David Slatyer, Partner and Edward Cope, Lawyer 

Peebles v WorkCover Queensland [2021] QCA 21

The Queensland Court of Appeal recently allowed an appeal on the issue of damages in a case where the plaintiff had a relevant pre-existing medical condition, and causation was in issue.

Background

The appellant worked as a truck driver until 2014, when he became permanently incapacitated as a result of a back injury which he suffered in the course of his employment.

He suffered a spinal disc herniation, which occurred in May 2014 and he was permanently incapacitated by the end of that year, when he was then aged 32 years.

It was accepted that the injury was caused by the negligence of the employer, by requiring him to drive a truck with a defective driver’s seat. Accordingly, the only issue on appeal was the assessment of the damages awarded by the trial judge, which were in the sum of $764,345.12.

In particular, the appellant challenged the amounts allowed for past and future economic loss (“PEL”; “FEL”), both of which the trial judge had discounted by 50%. The appellant argued that PEL should have been discounted by no more than 20%, and FEL by no more than 10%.

The appellant also disputed the amount used by the trial judge for future weekly earnings, which was $1,200 per week. The appellant contended that the amount used by the trial judge was baseless, and that an amount of $1,500, or alternatively $1,300 per week should have been used instead.

Outcome and Observations

McMurdo JA (Fraser and Mullins JJA agreeing) allowed the appeal, applying a discount rate for PEL of 10% (not 50%) and using future weekly earnings of $1,300 (not $1,200). The discount rate applied to FEL remained at 50%.

Medical Evidence

At trial, WorkCover adduced evidence that the appellant had a pre-existing symptomatic degenerative disease in his lumbar spine, evidenced by episodes in 2003, 2006 and 2011.

The first of those episodes involved generalised back pain, after lifting 25‑40 kilogram bags, for which he was off work for a couple of days.  The second episode involved a consultation with a general practitioner about lower back pain for two days after lifting and moving heavy things at work. The third episode, in 2011, involved another consultation with a general practitioner, who noted back pain and restricted movement as having occurred for 10 days, and referred the plaintiff for diagnostic imaging by CT scans of his lumbar spine.  However, the result of the scans did not support a finding of pre-existing degenerative disease of the plaintiff’s lumbar spine, as at December 2011.

Dr Licina expressed the opinion that had the injury in May 2014 not occurred, it is likely that the plaintiff would have developed symptoms of back pain at some stage in the future, in any event.  Dr Licina could not say with any accuracy what was the likelihood of such an occurrence or when it would have occurred, but that his “best guess” was “that it was more likely than not to have occurred within 5 years of the subject accident.”

Another witness, Associate Professor Fearnside, opined that the forces on the plaintiff’s spine, which he experienced when driving with the defective seat, would not be expected to be encountered in day to day living. Nevertheless, he considered that “there [was] no certainty at all that but for the nature and conditions of his work, [the appellant] would have enjoyed anything other than a pain-free course.” Responding to that evidence, Dr Licina said that “prediction of problems in the future is difficult and it is accepted that degenerative change does not necessarily mean symptomatic back pain”.

Discount rate for PEL

WorkCover contended that the appellant’s pre-existing condition would have prevented the appellant from working at some time, in any event.

In light of the above, at trial WorkCover had argued that a 65% discount should be applied to FEL, whereas the plaintiff argued that a 10% discount should be applied.

Given that the hypothetical factual bases used for the calculation of FEL were particularly uncertain in this case, the plaintiff argued that the defendant had the onus of disproving the assumptions relied on the by the plaintiff.

The trial judge disagreed with the plaintiff’s argument, noting that overall, the plaintiff bears the onus of proof on the issue of damages. The trial judge further observed that the question of damages should be considered having regard to the obvious difficulties of such a hypothetical assessment and the attendant complexities raised by the evidence.

Following the High Court decision of Malec,[1] the trial judge observed that, where there is a pre-existing condition which gives rise to causation issues, it is not appropriate to formulate a date by which a similar injury would have been suffered in any event. The correct approach is to consider the percentage prospect overall of the event which would reduce the damage suffered and decrease the amount of the award of damages accordingly.

The trial judge found the plaintiff’s proposed discount to be too low because it did not adequately account for contingencies including the plaintiff’s vulnerability to impairment and loss of earning capacity from his lumbar discs.

The trial judge also found that WorkCover’s discount rate could not be justified without accepting that there was a more than a 50 percent chance that, absent the injury suffered in May 2014, the plaintiff would have suffered a similar disabling back condition. This was contrary to the medical evidence.

Accordingly, the trial judge held that it was just as likely as not that a disabling back condition would have occurred in any event. His Honour applied a discount rate of 50% for contingencies including the contingency relating to the pre-existing back condition.

On appeal, the appellant’s argument suggested that the 50% discount rate applied by the judge was wholly attributable to the contingency relating to the pre-existing back condition. Accordingly, the discount represented a finding that the appellant was certain to have been fully incapacitated by the pre-existing back condition by halfway through the relevant earning period, when in fact the trial judge had found that it was just as likely as not that incapacity would occur.

The Court found that the extent of the discount applied by the trial judge for the particular contingency relating to the plaintiff’s pre-existing back condition was not as high as 50%. The 50% discount accounted for other contingencies that could affect the appellant’s future income. That said, the trial judge’s discount rate for FEL was not so unreasonable that the Court should infer that an error had been made.

On the other hand, the Court found that a much lower discount rate should have been applied to PEL (10%), because a) the appellant’s health and circumstances over the relevant period were known, and many of the contingencies which might have affected income in that period did not occur; and b) the PEL period was 5 years, compared with the 29 year period used to calculated FEL.

Future weekly earnings figure

The Court noted that, at trial, the appellant and WorkCover had agreed on an amount for past weekly earnings of $1,300 per week, and that the trial judge had found that there was an evidentiary basis for that figure.

Accordingly, the Court found that there was no reason not to use the past weekly earnings figure for future weekly earnings.

Takeaways

This case is a reminder that calculating FEL is often a difficult exercise involving great uncertainty. This exercise is not aimed at ascertaining a particular date by which a similar injury would have occurred to the plaintiff, in any event. Rather, the correct approach is to consider the percentage prospect overall of a similar injury occurring and reducing damages accordingly.  The decision also confirms that the onus of proof is on the plaintiff when it comes to the issue of damages. It also suggests that the same discount rate should not necessarily be applied to FEL and PEL, especially where many of the contingencies factored into the FEL discount rate did not actually occur in the PEL period. Finally, the case highlights that, where there is an evidentiary basis for a past weekly earnings figure, that figure should also be used for future weekly earnings.

[1]  Malec v JC Hutton Pty Ltd (1990) 169 CLR 638.

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