ALTERNATIVE APPROACHES TO CALCULATING FUTURE ECONOMIC LOSS: CLOSED FIXED PERIOD V RETIREMENT AGE

Legal Directions

Utting v Clark [2017] ACTCA 22

Introduction

The ACT Court of Appeal has considered whether, in awarding damages for the future, assessment should be made based on a fixed period, or for the whole of the appellant’s working life and then discounted for chance of early recovery. The decision specifically explored the implications of the decision in Malec v J C Hutton Pty Ltd [1990] HCA 20 (Malec).

Background

On 19 May 2013, Ms Carmen Utting was involved in a motor vehicle accident and sustained soft tissue injuries to her back and neck. Ms Utting commenced proceedings against Mr Ben Clarke and his CTP insurer in the Supreme Court of the ACT.

The insurer admitted liability but challenged the nature and extent of the injuries suffered by Ms Utting.

On 14 July 2016, Justice Elkaim gave judgment in favour of Ms Utting in the sum of $220,610.60, plus costs as agreed or assessed.

With respect to Ms Utting’s claim for the future special damages, her position was that her injuries and disabilities were likely to be life-long. The insurer submitted that any future losses should be assessed based on a period of five years on the basis that was the likely period by which Ms Utting would recover.

His Honour undertook an assessment of the medical expert evidence and concluded that Ms Utting’s spinal problems were causally related to the motor vehicle accident, and would likely affect her for some years into the future. However, Judge Elkaim concluded that the medical evidence did not support a finding that the symptoms would be life-long. His Honour held that Ms Utting should be provided with funds for rehabilitation, and on the basis that rehabilitation was likely to be successful, Ms Utting would recover from her injuries over a period of approximately 10 years.

Appeal

Ms Utting appealed against Justice Elkaim’s judgment on the following grounds:

  • His Honour had erred in assessing damages on the basis that she would recover from her injuries over a period of about 10 years; and
  • His Honour should have assessed damages on the basis that her injuries and disabilities were likely to be life-long, subject to a discount to address the chance of an early recovery.

Counsel for Ms Utting relied on the High Court’s decision in Malec. In Malec, the High Court recognised that in relation to future events relevant to the assessment of damages, a court must make its assessment in terms of the degree of probability of those events occurring. Unless the chance of a future event is so low as to be regarded as speculative or so high as to be certain, then it is necessary to assess the entitlement by reference to the chance that the loss will be sustained.

Counsel for Ms Utting submitted that the approach adopted by Justice Elkaim was inconsistent with the High Court’s decision in Malec, as His Honour’s conclusion did not take into account the significant risk of the back injury not occurring within the 10 year period. Consequently, damages should be reassessed on the basis that the injuries and disabilities would continue until retirement age, with a discount of 25% to take into account both vicissitudes of life and the possibility of an early recovery. Ms Utting argued that it was not open to His Honour to conclude that she would recover within 10 years.

The Court of Appeal reconsidered all of the medical evidence, and concluded that none of the evidence expressly supported that Ms Utting’s condition would continue for the rest of her working life. In those circumstances, accepting the necessity to assess possibilities required by Malec, it was appropriate to take into account the possibility that Ms Utting might recover within a relatively short period of under five years or a longer period, up to and including the possibility that she might never recover. Given the imprecision of the evidence about the history of Ms Utting’s pain condition, and in the absence of a clear prognosis, it was not appropriate to adopt, as a starting point, disability continuing until retirement age and then subject that figure to a discount to take account of the prospect of early recovery. The Court of Appeal assessed Justice Elkaim’s finding to be understood as involving an assessment on the basis that the period of 10 years took into account all of the possibilities.

Accordingly, the Court of Appeal dismissed Ms Utting’s appeal.

Comment

Many contested assessments of damages turn upon whether to adopt, as a starting point, disability continuing until retirement age, and then subject that figure to a discount to take account of the prospect of an early recovery, or to award damages for a limited period. Plaintiffs will often contend for the former and defendants for the latter.

This decision provides an example that the courts will not readily adopt the disability until retirement age approach without medical evidence in support, and in the absence of compelling evidence of that fact, it is appropriate for the assessment to be undertaken on a ‘limited period’ approach to take into account any contingencies. Further, the case serves as a reminder that it is crucial to obtain clear medical expert evidence as to prognosis of the specific loss and the likely duration of recovery, if possible, for the purpose of assessing future losses.

Authored by Angel Li, Associate and Shivika Chandra, Graduate-at-Law, Canberra.


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