Personal injury claims, the assessment of non-economic loss and the use of “buffers” : Chen by her tutor Huang v Kmart Australia Ltd

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By Louise Cantrill, Partner and Genevieve Robinson, Paralegal

Introduction

The case Chen by her tutor Huang v Kmart Australia Ltd[1] raises two significant issues in awarding monetary compensation for personal injury. The first relates to the court’s consideration for non-economic loss, as outlined in section 16 of the Civil Liability Act 2002 (NSW). The second, and possibly of more interest, is the use of “buffers” in personal injury claims.

Facts

On 8 January 2020, the plaintiff sustained an injury while shopping at Kmart Australia Ltd (Kmart) with a family member. The injury was a laceration to Miss Chen’s right eyelid due to a collision with a clothing rack that Kmart employees placed in the children’s clothing area. Miss Chen was six years old at the time of the incident. Following the incident, Miss Chen underwent remedial ophthalmic surgeries on the day of the incident and further surgeries months later. Kmart did not dispute that the negligence of its employees caused the injury. Miss Chen did not suffer any impairment of her vision and was left with mild scarring and a slight droop in her right eye.

Proceedings were commenced by Miss Chen’s tutor on her behalf in September 2021, claiming compensation under a number of heads of damage, including non-economic loss and future economic loss in the form of loss of earning capacity. Montgomery DCJ, the primary judge, awarded $59,929.36 to Miss Chen, including $45,825 for non-economic loss and a buffer sum of $5,000 for future economic loss in the form of loss of earning capacity. Miss Chen challenged both amounts as insufficient.

Assessments of non-economic loss

The Civil Liability Act 2002 (NSW) section 16(1)[2] states that, for damages to be awarded for non-economic loss, the severity of the case must be at least 15% of the most extreme case. The primary judge assessed the applicant’s non-economic loss at 25% without providing reasons, amounting to an award of $45,825. The applicant challenged this assessment, pressing for an assessment between 28% and 30%.

The applicant believed that the primary judge had erred in exercising the discretion[3] by failing to take into account the trauma of the accident including psychological harm and the prolonged physical pain on the day of the accident. However, White JA did not accept these submissions, instead finding that the primary judge’s assessment of non-economic loss at 25% was somewhat generous (although declining to disturb the finding).

Buffers for future economic loss

A topic of more interest is the award of a “buffer”, particularly when children are involved. It can be extremely difficult to estimate a child’s future earnings but for their injury, and it is not unusual to award a “buffer amount” (at least in the NSW jurisdiction).[4] General statistics can provide the court with assistance, however, they must be used with care when extrapolating for an individual’s assessment.[5]

In the current case, the following would need to be satisfied for loss of future earning capacity to arise:

  1. The applicant suffered a deterioration in her psychological state;
  2. Psychological treatment were unsuccessful;
  3. Her ptosis did not improve with time;
  4. Revision surgery were unsuccessful; and
  5. The psychological disturbance was productive of loss.

The applicant submitted an appropriate buffer would be $100,000.  The respondent argued that ‘no evidence had been led as to the occupations, attitude to life and work history of the applicant’s parents and other relatives’.

The primary judge acknowledged the possibility of ‘some limitation of career choices’ due to some degree of inhibition or diminished self-esteem. However, White JA acknowledged that assessment of this type of “buffer” is a matter of intuition based on the information available to the primary judge, which would include the presentation of evidence in Court. in the circumstances White JA did not consider the buffer awarded to be outside a reasonable range so as to connote error on the part of the primary judge.

The case, therefore, confirms that “buffers” are available although extremely difficult to assess when a child is involved and will vary on a case-to-case basis.

Outcome

The court dismissed the appeal relating to non-economic loss and the buffer for future economic loss with costs.

[1] Chen by her tutor Huang v Kmart Australia Ltd [2023] NSWCA 96.

[2] Civil Liability Act 2002 (NSW) s 16(1).

[3] House v The King (1936) 55 CLR 499 the plaintiff was required to demonstrate an error in exercising the discretion

[4] Luntz H and Harder S, Assessment of Damages for Personal Injury and Death (LexisNexis Butterworths, 5th ed, 2021), 638.

[5] Ibid.

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