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Ger, Caryn --- "Coulda, shoulda, woulda': Assessing lost earning capacity in children" [2014] PrecedentAULA 46; (2014) 124 Precedent 28


‘COULDA, SHOULDA, WOULDA’

ASSESSING LOST EARNING CAPACITY IN CHILDREN

By Caryn Ger

Determining the value of a plaintiff's loss of earning capacity is difficult in almost any case, because it involves assessing the unknowable future. When the plaintiff is a child, that exercise becomes exponentially more difficult.

As Basten JA said, ‘The assessment of future economic loss in relation to a 10-year-old child is an exercise which is fraught with difficulty and uncertainty.’[1]

Many issues influence the assessment of quantum in a claim involving a plaintiff who is a minor. These include the age of the plaintiff, the type of injury from which the child has suffered and the child’s pre-injury earning potential. When approaching these claims, practitioners must have regard to the legislation governing the issue, common law rules, and the evidence that must be gathered to bring or meet such a claim.

THE LAW GENERALLY

In an analysis of this area, it is important to recall one of the most basic principles of compensation: to place the plaintiff, as well as possible, into the position he or she would have been in, but for the wrong suffered. In the context of lost earning capacity, this requires a comparison of what an injured child plaintiff would have earned were it not for their injury, and what they will earn in light of having suffered that injury.[2]

Legislation

In NSW, s13 of the Civil Liability Act 2002 (NSW) governs the assessment of future economic loss and/or lost earning capacity. It relevantly states that:

‘(1) A court cannot make an award of damages for future economic loss unless the claimant first satisfies the court that the assumptions about future earning capacity or other events on which the award is to be based accord with the claimant’s most likely future circumstances but for the injury.

(2) When a court determines the amount of any such award of damages for future economic loss it is required to adjust the amount of damages for future economic loss that would have been sustained on those assumptions by reference to the percentage possibility that the events might have occurred but for the injury.

(3) If the court makes an award for future economic loss, it is required to state the assumptions on which the award was based and the relevant percentage by which damages were adjusted.’[3]

Common law

The legislative provisions above are generally reflected in the Australian common law. In several cases involving the assessment of damages for children,[4] the courts have noted the requirement to carry out that assessment in accordance with the principles laid down in Malec v JC Hutton Pty Ltd.[5] In that case, the court found that determining future economic loss is a matter of weighing up the various possibilities and applying a proportionate approach to those possibilities.[6] Therefore, the practitioner must inquire as to what were the earning possibilities for the child plaintiff if they hadn’t been injured, and how can these be demonstrated with evidence.

PRE-INJURY POTENTIAL

Making out a claim for lost earning capacity will almost always involve looking at the plaintiff's pre-injury position. In the case of children, there is often a paucity of pre-injury evidence relevant to earning capacity. There are two points to bear in mind when encountering this issue. Firstly, as has been noted by the NSW Court of Appeal in New South Wales v Moss,[7] a want of evidence does not result in an inability to recover damages. Heydon JA observed in that case:

‘An illustration of the court’s readiness to award damages for diminution of earning capacity arises when very young children are injured. Strictly speaking it would be impossible to prove that the child would have had an earning capacity as an adult or would have exploited it. But it is conventional to rely on the occupations, attitude to life and work histories of parents and other relatives...’[8]

Secondly, there are several evidentiary options (discussed below) which assist in the assessment of a child plaintiff's pre-injury position and, therefore, their earning potential. It is important to note, however, that in the absence of the demonstration of above-average pre-injury aptitude, the court is likely to apply average weekly earnings to the plaintiff's claim for lost earning capacity.[9]

Above-average pre-injury abilities can be a significant factor in determining lost earning capacity, as discussed in the case of Walshe v Prest.[10] In this appeal from a first instance decision, the plaintiff was a four-year-old in child care when another child stabbed her in the eye with a piece of glass. In determining economic loss, the trial judge accepted that the relevant net figure was that of average weekly earnings, but applied a higher figure for when the plaintiff was to enter the work force, some years later. The Court of Appeal held:

‘It was conceded that her Honour might have adopted a figure other than average weekly earnings if of the view that [the plaintiff] had demonstrated above average abilities, but the judgment does not suggest such a conclusion. Accordingly, her Honour erred in principle in taking a figure at a future date.’[11]

This case also brought to light the need to be meticulous in calculating the value of a child plaintiff's lost earning capacity, which will often involve the use of the deferred table of multipliers.[12] Further, practitioners should have regard to a reduction for the vicissitudes of life, usually 15 per cent for a child in NSW, although this has received criticism for being too high.[13]

TYPES OF EVIDENCE

The courts have at times indicated a preference for adopting the national average of weekly earnings when assessing damages for the lost earning capacity of a child, as was done in Settree v Roberts.[14] In that case, Mahoney JA considered that it was not appropriate for the court to impute ‘social or value judgements’ when assessing a child's lost earning capacity, and therefore favoured the national average approach. However, there are myriad ways in which a child can demonstrate that he or she is above average.

Depending on the injury, avenues to demonstrate above average pre-injury potential include:

• the academic ability and trajectory of the child prior to injury;

• professions that parents or siblings have entered into;

• academic ambitions of the family for the plaintiff, and a familial history of tertiary education;[15]

• records of pre-injury vocational interests; and

• in the case of talented children, their level of ability as commented upon by experts (for example, a promising young athlete or musician).

It is important to consider which approach will be most advantageous for each individual plaintiff. For children with poor pre-injury performance, or from lower socio-economic backgrounds, an approach based on the average is most advantageous. Conversely, children from high-achieving backgrounds may glean a benefit from the idiosyncrasies of their case.[16]

When considering what sorts of evidence should be gathered, practitioners should bear in mind the benefits that different experts can bring to bear on their client's case. For example, while occupational physicians are perhaps best placed to comment on the physical limitations faced by young plaintiffs in the work force, vocational psychologists are able to incorporate IQ tests and pre-morbid school results into a report which can be extremely useful in comparing pre-morbid and post-morbid earning capacity.

Tilley (a minor) v Lawless & Ors[17]

This is an exemplary case of the effort to bridge the evidentiary gap in a child plaintiff's claim. The plaintiff here was 10 years old at the time of injury. He was assisting his grandfather to place fence posts on a farm when his hand became caught between a fence post and the machinery being used to place it. The plaintiff suffered crush injuries to that hand and his ring and little fingers were amputated. The plaintiff claimed pain and suffering and loss of earning capacity from the farm's public liability insurer. The plaintiff's evidence comprised opinions from a psychiatrist, a plastic and reconstructive surgeon, a hand surgeon, an occupational physician, a human resources consultant and a psychologist.

Regarding economic loss, the court had regard to the plaintiff's below average pre-injury intelligence and disadvantageous social circumstances. It appeared that before his injury, the plaintiff would ultimately have worked in a field involving manual labour. This meant that the plaintiff's hand injuries sounded more significantly in damages than had his pre-injury potential demonstrated aptitude in a non-manual field.

New South Wales v Moss[18]

Conversely, a challenge is presented when a child plaintiff would have been more likely to enter a professional or entrepreneurial field, to which awards and market rates rarely apply, as was the case in Moss.[19] Here, the plaintiff was 14 years old when she sustained severe burns while in the care of her school.[20] She had expressed a desire to become a hairdresser before her injury, and evidence was adduced that she was an above-average student. At first instance, the jury awarded the plaintiff the difference between her actual earnings and the average weekly net wage for full-time adult female workers in NSW. It awarded her an additional $100 per week for the loss of the opportunity to run her own hairdressing salon. On appeal, the state complained about the award of the additional $100 per week on the basis of a lack of comparable earnings evidence. Mason P held as follows:

‘It should be said at the outset that the jury were entitled to conclude that the respondent's prospects were “above-average”. They saw her give evidence. They were entitled to view her prospects favourably, given the drive and resourcefulness which she had demonstrated before and after the accident.‘[21]

This case acts as a reminder that it is particularly helpful to have evidence of the earnings path that the plaintiff would have followed were it not for their injury, together with evidence of their pre-injury vocational interests.

Ren v Mukerjee[22]

In this case, the professions and abilities of family members were of paramount consideration. This plaintiff suffered cerebral palsy which resulted in profound physical injuries but no intellectual disabilities. His father was the recipient of a postgraduate scholarship at the Australian National University. Miles CJ observed:

‘The claim for loss of earning capacity is made based on annual average weekly earnings in Australia of $740 per week gross, with a margin claimed of 20 per cent to allow for the likelihood that Samuel, but for injury, would have earned more than average Australian earnings. This margin ... implies a finding of fact that as a child of obviously intelligent and industrious parents, Samuel was likely to have been a more than average income earner. Although the implication suggests, in my view, a somewhat distasteful assumption rather than a finding, that the lives of children of the clever and affluent are worth more than those of the poor and less distinguished, it is in accord with case law.’[23]

That the court deemed this approach distasteful is a reminder to practitioners to proceed cautiously when making this type of submission, and to have a sound evidentiary basis for the suggestion that their plaintiff is above average.

AGE OF PLAINTIFF

It has been held that the younger the plaintiff, the more speculative an exercise the court must engage in to determine lost earning capacity.[24] The evidentiary options for pre-injury potential discussed above are slimmer still when the child is, for example, an infant. As was done in the abovementioned case of Ren,[25] the court may look to family members for evidence of the path the plaintiff would have travelled.

Fitzgerald v Hill & Suncorp Metway & Ors[26]

In this case, the plaintiff was eight years old when he suffered severe injuries as a result of being struck by a car. However, he was almost 26 when the matter came to trial. By that stage, the plaintiff had engaged in both work and study, each with considerable difficulty. Thus, the court was able to engage in a significantly less speculative exercise in ascertaining the path the plaintiff would follow in the context of his injury.

Of course, the exercise remained one of speculation in regard to the path of the plaintiff had he not suffered the injury. To that end, the court looked at the plaintiff's pre-injury school performance, which was in the average range. Ultimately, the court determined that a mathematical approach was not possible, and instead awarded a global sum for lost earning capacity. Cullinane J held:

‘I do not think that in the circumstances of a case such as this it is possible to confine attention when attempting to calculate damages flowing from loss of income to a single occupation or profession as has been done here, notwithstanding the plaintiff’s expressed desire to enter this field. The imponderables are simply too great and the more appropriate way I think is to look at average weekly earnings... but to take into account the possibility that the plaintiff might have done better than this as well of course as the offsetting contingencies such as injury in some other circumstances, illness or some other adverse circumstance.’[27]

Thomas v Shaw[28]

In this case, the plaintiff was 10 years old when he suffered a brain injury. He was 15 at the time of the trial, had dropped out of high school, and was undertaking a TAFE course. The court found that he was likely to have progressed to tertiary education but for his injury. The age of the plaintiff both at the time of his injury and at the time of his trial enabled the court to have regard to the kind of student he was before his injury, the fact that his studies had been seriously hampered since his injury, and that he was unable to sit his School Certificate or Higher School Certificate. This case is also a good example of the weight a court will give to the achievements of siblings who, in this case, had excellent academic and behavioural records. These were given significant weight in the court's decision.

CONCLUSION

A claim for a child's lost earning capacity is, in law and fact, an inevitably difficult endeavour. This is true for plaintiff and defendant practitioners alike and, of course, for the courts. It requires an initial guessing game, but can be made substantially less onerous with the gathering of ample and well-pitched evidence. Practitioners must recall that the peculiarities of a case could be helpful or harmful, and should adapt their approach to the evidence they seek accordingly. Ultimately, the right evidence can mean that for cases involving this sort of assessment, the unavoidable guess-work required by practitioners and the courts can at least become educated guess-work.

Caryn Ger is a solicitor at Beilby Poulden Costello Lawyers. Caryn's practice focuses on medical negligence claims. PHONE (02) 8280 6900 EMAIL cger@bpclaw.com.au.

Notes


[1] Walshe v Prest [2005] NSWCA 333.

[2] Heath D and Clover P, ‘A Practical Guide to Assessing Economic Loss’, Australian Lawyers Alliance Seminar held in Victoria on 12 November 2008.

[3] Civil Liability Act 2002 (NSW) s13.

[4] See, for example, Walshe v Prest, see above n1; and Tilley (a minor) v Lawless & Ors [2007] VSC 103.

[5] (1990) 169 CLR 638.

[6] Senton By His Litigation Guardian, Public Advocate of Australian Capital Territory v Steen, applying Malec v JC Hutton Pty Ltd (see above n5).

[7] [2000] NSWCA 133; (2000) 54 NSWLR 536.

[8] Ibid at [84].

[9] See, for example, Rosniak v Government Insurance Office [1997] 41 NSWLR 608.

[10] See above n1.

[11] Ibid at [21].

[12] Ibid at [22].

[13] Luntz, Professor H, Assessment of Damages in Personal Injuries and Death, (4th edn) 2002, Chapter 6, Section 4, LexisNexis, Butterworths; Birchall E & Madden B, ‘Vicissitudes: Three basic questions’, Precedent, May/June 2014, Issue 122, 18–21.

[14] (1982) 1 NSWLR 649.

[15] See, for example, Hills v State of Queensland [2006] QSC 244.

[16] Wiltshire J, ‘The seriously injured child plaintiff: How to assess loss of earning capacity’ in Precedent, March/April 2012, Issue 109 at 37.

[17] See above n4.

[18] See above n7.

[19] See above n7.

[20] While it is not the intention of this article to discuss the assessment of non-economic loss, economic loss is often inextricably linked to the psychological sequelae that a physical injury can cause. Moss is a good example of this, see above n7.

[21] See above n7 at [25].

[22] [1996] ACTSC 119.

[23] Ibid, at [79].

[24] See, for example, Beasley v Marshall (1986) 40 SASR 544, per Lunn AJ.

[25] See above n22.

[26] [2007] QSC 228.

[27] Ibid at [129].

[28] [2009] NSWSC 510.


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