Australia: Application of discounts for contingencies for vicissitudes vary widely between different state jurisdictions
Curwoods Case Note

Silvester v Husler & Suncorp Metway Insurance Limited [2013] QSC 26

In Brief

• Court applies contingency discount to future care.
• Contingency discounts vary between future economic loss and future care.
• Precise calculations used to calculate to future economic loss when earnings cannot be precisely calculated.
• Surveillance footage showed plaintiff's different demeanour from pain behaviour in witness box.

Background

On 11 May 2010, the plaintiff, who was then a 48-year-old married medical receptionist, was injured in a motor vehicle accident. She was driving to work on a northbound road in Mackay when, at an intersection, the insured's motor vehicle turned right against the path of the plaintiff's vehicle. The collision caused extensive damage, particularly on the driver's side.

The plaintiff's GP noted immediate symptoms such as violent headaches with burning pain across the seatbelt line on her chest.

The insurer admitted liability. The matter was heard in the Supreme Court at Mackay before Justice North. The injuries alleged and supported by evidence were:

• soft tissue injuries to the cervical and lumbar spine regions;
• constant headaches;
• neurological symptoms affecting the left upper limb.

The plaintiff gave extensive evidence regarding her "good and bad days". She alleged that on her "good days" she still suffered a constant headache described at a level of around 5 out of 10. She complained of the left side of her neck going into spasm when she sat for any prolonged periods without head support, and pins and needles/a burning sensation up the left hand side of her neck. Her left arm also felt numb.

The plaintiff alleged that, as a result of her condition, she was unable to work, restricted in her social life, in her capacity for travel and in her ability to maintain her home. As she gave her evidence she behaved as if she was constantly in pain.

Evidence was also given that, but for the accident, the plaintiff would have been promoted to practice manager of her current work place. The position paid $360 more than the receptionist's position.

Her husband gave evidence that he was providing between 9 to 10 hours a week gratuitous assistance.

The insurer tendered surveillance footage where the plaintiff could be seen, at different times and places to be sitting and moving for reasonably lengthy periods without demonstrating that she was in significant pain or discomfort.

The plaintiff could be seen entering and leaving motor vehicles and walking some distance freely and reasonably quickly. She moved about without any discomfort after 5 hours in the car from Mackay to Charters Towers. Other surveillance provided views of the plaintiff jumping down steps on a grandstand and sitting without head support for substantial periods.

Judgment

Justice North noted the dispute in relation to whether or not the lumbar spine continued to trouble the plaintiff or was connected with the motor vehicle accident. His Honour accepted that the plaintiff had suffered that injury despite the surveillance video persuading him that he should be cautious regarding the plaintiff's account of her pain, suffering and disabilities.

However, his Honour did accept that the plaintiff had suffered significant pain and suffering that restricted her in her work and activities of daily life for a lengthy period after the accident. He accepted that the plaintiff's friends' evidence regarding the plaintiff's behaviour and demeanour was credible.

Economic Loss

His Honour found that the plaintiff's loss of earnings could not be precisely calculated. As such, s 55 of the Civil Liability Act 2003 (Qld) (the Act) was applicable. Section 55, subs (2) provides:

The following subsection requires that a court must state the assumptions on which the award is based and the methodology.

Referring to authorities, Justice North stated that the reasoning to be exercised calculating economic loss relies on 2 distinct but related requirements: the establishment of a plaintiff's earning capacity being diminished; and that the diminution will or may cause financial loss.

Justice North eventually came to the conclusion that the plaintiff could have taken a better paying position such as a Medical Centre Practice Manager. He also found that she retained a residual earning capacity of 60%.

Of note, his Honour found that the appropriate discount for vicissitudes was 12.5%. His Honour gave no reasons for departing from the usual 15%, but referred to some of the evidence regarding the plaintiff's pre-existing progressive degenerative condition in her cervical spine.

Although s 55 of the Act refers to not being able to calculate loss of economic capacity precisely, it seems to discourage the award of a global figure. Where the economic loss is more speculative, a formulaic approach to calculating loss of economic capacity will be offered, his Honour calculating the loss at $359.20 per week.

Care

Justice North accepted that the plaintiff required 7.5 hours per week care for up to 2 years after the accident. Having reached the threshold set under s 59(1)(c) of the Act at 6 hours per week for 6 months, the plaintiff was entitled to continuing care after the 2 years at 1.25 hours per week.

Curiously, his Honour applied a 25% discount for vicissitudes to the future care calculations, despite the loss being allowed for the balance of the plaintiff's medium life expectancy and the life expectancy tables having already accounted for the vicissitudes of life.

Implications

• The application of a discount to any allowance for future care provides a strong contrast between the NSW and Queensland approaches.
• Further, this and another Supreme Court case confirm that Queensland Courts will apply different discounts for contingencies to different heads of damages.²
• Insurers operating across different States need to take the methodology for calculating future losses across different jurisdictions into account when calculating reserves.

Footnotes

¹ Justice David North
² Hooper v King [2011] QSC, 21 November 2011, McMeekin J

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