The New South Wales Court of Appeal dismissed an appeal brought by an injured child, by way of her tutor, after the New South Wales District Court awarded her $45,825 for non-economic loss (pain and suffering) and $5,000 for future economic loss as a consequence of an injury to her right eyelid.
Background
On 8 January 2020, the plaintiff (the applicant in the Court of Appeal), aged six years, sustained an injury by way of laceration to her right eyelid while shopping at Kmart Australia Ltd (Kmart) with her family member.
The plaintiff sustained the laceration following her collision with a clothing rack that Kmart employees placed in the children's clothing area. Following the accident, the plaintiff underwent two ophthalmic surgeries.
It was not disputed by Kmart that the negligence of its employees caused the injury.
The plaintiff did not suffer any impairment of her vision but was left with mild scarring and a slight drooping of the right eye.
The plaintiff's tutor commenced proceedings on her behalf in September 2021, claiming compensation under several heads of damage, including non-economic loss and future economic loss in the form of loss of earning capacity.
The primary judge, Montgomery DCJ, awarded $59,929.36 to the plaintiff as follows:
i. $45,825.00 for non-economic loss;
ii. $929.36 for past out of pocket expenses;
iii. $8,000.00 for future medical treatment; and
iv. $5,000.00 for future economic loss in the form of loss of earning capacity as a buffer.
Section 16 of the Civil Liability Act 2002 (NSW) confirms that for damages to be awarded for non-economic loss, the severity of the case must be at least 15% of a most extreme case. For the assessment of non-economic loss, Montgomery DCJ assessed the plaintiff at 25% of a most extreme case without providing reasons.
The plaintiff appealed the decision of the District Court on the basis that the amounts awarded for non-economic loss and future economic loss were insufficient. The plaintiff submitted that her injury should have been assessed between 28 – 30% of a most extreme case for the purposes of non-economic loss.
Kmart cross appealed arguing that no compensation should have been awarded for future economic loss, as it was not proved to the sufficient standard, the balance of probabilities, that the plaintiff would suffer any reduced earning capacity in the future as the result of her injuries.
The appeal
The Court of Appeal (per White JA, Griffiths AJA and Weinstein J) considered the following:
i. Whether the primary judge failed to consider the full impact of the plaintiff's physical and emotional trauma caused by her injury, such that the award of damages for non-economic loss was too low.
ii. Whether the primary judge undervalued the impact of the plaintiff's psychological sequelae to potentially affect her future earning capacity, such that the award of damages for future economic loss was too low.
iii. Whether there was sufficient proof (on the balance of probabilities) to establish that the plaintiff would suffer a reduced future earning capacity and whether should she have received compensation for future economic loss.
As to the first issue, the plaintiff submitted that the primary judge had erred by failing to consider the total impact of the accident when considering non-economic loss, including the psychological harm and the physical pain on the day of the accident. White JA, with Griffiths AJA and Weinstein J agreeing, did not accept these submissions and referred to specific sections of the first instance judgment that contemplated the evidence from Dr Lee and Dr McGlynn when contemplating non-economic loss. The Court of Appeal ultimately found that the primary judge's assessment of non-economic loss at 25% was arguably generous but did not disturb the finding.
As to economic loss, and point (ii) and (iii) above, the Court of Appeal confirmed that if it is accepted that there has been an impairment of the plaintiff's earning capacity, that impairment is only compensable in damages to the extent that it is, or "may be", productive of financial loss 1. As an eight and a half year old girl at the time of trial, the plaintiff had no current earning capacity. Her earning capacity lies in the future. The Court of Appeal considered that the plaintiff's scarring and the droop to her right eye would make it more difficult for her to attain and/or maintain employment as a model or actress, and to obtain work in other public-facing roles such as receptionist or shop assistant positions in the future if she chose to do so. The Court also considered that the plaintiff's loss of self-confidence and avoidance of personal contact could affect her employment prospects and therefore there was sufficient evidence to establish a reduced capacity for work in the future. On this basis, the cross-appeal issue at (iii) above was dismissed.
As to the quantification of economic loss, the plaintiff submitted that the award of $5,000 by the trial judge was too low and represented less than half of 1% of net average weekly earnings projected over a 50 year working life after deductions for vicissitudes at 15%. It was further submitted that the buffer awarded at first instance did not adequately consider the possibility that the plaintiff's earning capacity may be diminished by reason of psychological disorder related to the injury. On this basis, the plaintiff submitted an appropriate buffer would be $100,000.
In response, the defendant (the respondent in the appeal), submitted that the figure of $100,000 was no more meaningful or based on evidence than the buffer the primary judge awarded, particularly given no evidence had been led as to the occupations, attitude to life and work history of the applicant's parents and other relatives.
White JA, with Griffiths AJA and Weinstein J agreeing, acknowledged that assessment of this type of buffer is an exercise in intuition based on the information available to the primary judge, which would include the presentation of evidence in Court. His Honour considered that the primary judge focused not only on the physical effects of the plaintiff's injury in assessing her future economic loss, but also the possibility of "some limitation of career choices" due to some degree of inhibition or diminished self-esteem. On this basis, White JA did not consider the buffer awarded to be outside a reasonable range to demonstrate error on the part of the primary judge.
The following orders were made:
i. To refuse the Kmart's application for leave to cross-appeal (on point (iii) above) with costs;
ii. To grant the plaintiff leave to appeal; and
iii. To dismiss the appeal with costs.
The case confirms that while "buffers" are available to be awarded for future economic loss, they are extremely difficult to assess when a child is involved and will be decided on a case-by-case basis. You can read the full Judgment here.
Footnote
1 Graham v Baker (1961) 106 CLR 340 at
347; [1961] HCA 48; Husher v Husher (1999) 197 CLR 138;
[1999] HCA 47.
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