Norris v Routley

1. [1]

   HIS HONOUR: Three issues remain for determination following publication of my principal judgment on 7 July 2015: Norris v Routley [2015] NSWSC 883. They are as follows:

   1. (1)

      Whether the amount of $84,370 for certain anti-viral pharmaceutical costs associated with the deceased’s anticipated liver transplant ought to be included as a probable out-of-pocket expense.

   2. (2)

      Whether anything, and if so what, ought to be allowed by way of discount for the vicissitudes of life upon the deceased’s income and domestic services provided by him.

   3. (3)

      Whether anything, and if so what, ought to be allowed by way of discount for the vicissitudes of life upon Dr Norris’s income.

2. [2]

   I note that the third issue was originally framed as an inquiry into what were described as “the deceased’s consumption and care costs”. However, in the manner in which the argument before me proceeded, it became clear that the issue was concerned with the discount, if any, that should apply to Dr Norris’s income predictions to take account of vicissitudes. The incomes of the deceased and of Dr Norris together combine in a calculation to arrive at a final figure for consumption costs. This has already been referred to in the principal judgment and is once again referred to briefly below.

Issue one

1. [3]

   My initial understanding was that the sum of $84,370 referred to by the defendant in his original submissions was the cost of the deceased’s anticipated liver transplant surgery: principal judgment at [112]. That was incorrect. The sum of $84,370 in fact refers to the cost that Dr Routley contends would have been incurred by the deceased as (predominantly) pharmaceutical expenses and travel costs associated with his condition as a liver transplant recipient infected with the Hepatitis C virus. The figure is produced by the calculations set forth in the following table:

2. [4]

   The drugs Sofobuvir and Daclavasir are touted as being capable of curing Hepatitis C infections. Dr Routley contends that the sum of $300,000 would more probably than not have been expended by the deceased. He submitted that in all likelihood the drugs will, or would have, become available by somewhere between 1 December 2015 and 1 April 2016 and that there is a one in three chance that the deceased would have paid the unsubsidised amount of $300,000 in an attempt to cure his Hepatitis C infection. This is said to be so because, if left untreated, that viral infection would have continued to imperil the continuing viability of the deceased’s transplanted liver with potentially fatal consequences. As will be apparent, the total cost of the drugs has been discounted in Dr Routley’s calculation first by two thirds to account for the chance or possibility that the deceased would not have undertaken the expensive treatment in accordance with Malec v J C Hutton Pty Ltd [1990] HCA 20; (1990) 169 CLR 638 at 643 and secondly by a further 30 percent for vicissitudes.

3. [5]

   Dr Norris submits that the sum of $84,370, or any lesser fraction of it, should be completely ignored as a cost that would have been incurred. There are a number of reasons for this.

4. [6]

   First, she submitted that there is no evidence that the drugs would have been necessary or appropriate for someone in the deceased’s position who had undergone a liver transplant in November 2010. She also contended that the “unchallenged evidence” is that the anti-viral drugs would not have been available for use in Australia until at least 27 April 2015.

5. [7]

   Associate Professor Gow’s opinions regarding these matters were as follows:

6. [8]

   Dr Vickers commented upon Associate Professor Gow’s opinions in these terms:

7. [9]

   Clearly the costs associated with pharmaceuticals would be minimal unless Dr Routley can demonstrate that the unsubsidised cost of these new drug treatments would have been incurred. The medical evidence referred to above is the only evidence in the proceedings about the availability, cost or efficacy of these drugs. Dr Norris submitted that it did not address the questions of whether:

8. [10]

   Secondly, Dr Norris submitted that, even if the anti-viral drugs had been available for purchase from the date of the deceased’s anticipated liver transplant, there is no evidence that there would have been any urgency for that medication to be used. She and the deceased may in fact have waited until the drugs were listed on the Pharmaceutical Benefits Scheme.

9. [11]

   Dr Norris contended that her evidence on this issue does not in any event support the likelihood that the treatment would have been undertaken. She was cross-examined on this topic on 22 June 2015 as follows:

10. [12]

    In summary, Dr Norris contended that the evidence simply does not permit me to draw an inference that these drugs can be accessed in Australia. She submitted that there was no direct or specific technical medical evidence that the drugs are now available, or any reliable evidence of when they might become available. Dr Norris submitted that Dr Routley is simply asking me impermissibly to infer that the drugs will become available when there is no evidence upon which to base any such inference. Moreover, Dr Norris’s own evidence raises considerable doubt about whether the treatment would have been utilised having regard to the very high costs involved. The medically supported suitability or advisability of undertaking the treatment, assuming that it became available, has also not been established.

11. [13]

    According to Dr Norris, the Malec v Hutton approach for which Dr Routley contends requires a court to “assess the degree of probability that an event would have occurred, or might occur, and adjust its award of damages to reflect the degree of probability.” Dr Norris submitted that the “evidentiary vacuum” to which she has referred means that there is no context in which, or by reference to which, that decision can operate. For example, Dr Norris submitted that there is no evidence upon which I could proceed to find that the new drug treatments would either be necessary or appropriate for a person of the deceased’s particular clinical circumstances. There is also no evidence to suggest that the deceased could not safely have delayed his use of the new drugs until they were available at a reasonable cost, presumably but not certainly between 1 December 2015 and 1 April 2016, as subsidised medicine under the Pharmaceutical Benefits Scheme.

12. [14]

    Dr Norris also correctly observes that the deceased has been found to have had a 17 year life expectancy at the date of the notional transplant procedure. My finding to that effect was made by adopting Associate Professor Gow’s median figure for a patient who had not been prescribed the new drugs now being considered. Dr Norris therefore argues that it would be inconsistent if I were now to consider, far less conclude, that there was even a possibility that these drugs would have been prescribed to the deceased where his life expectancy has already been calculated without reference to them. In other words, Dr Routley cannot simultaneously embrace the limited 17 year life expectancy calculated for a patient with a continuing Hepatitis C infection without the anti-viral drugs and yet also attempt somehow to utilise an inconsistent assumption that if established would in all probability have extended his life well beyond that estimate.

13. [15]

    In my opinion, Dr Norris’s contentions are to be preferred. The likely availability of the new anti-viral drugs remains undecided and effectively unknown. I can safely assume, as there has been no attempt to suggest otherwise, that they are not available yet, despite having been approved for use. Even if they were I am not possessed of an expert opinion that says anything specific about their use or suitability for the deceased, having regard to his particular age and circumstances, had he survived. The unsubsidised cost would certainly have caused both Dr Norris and the deceased to think carefully about expending such a large sum with uncertain prospects of success, especially having regard to the ever present risk of an early death at any time, and the need for Dr Norris and the deceased to evaluate the continuing future needs of their two sons. There is nothing in Dr Norris’s evidence that impels me with confidence to the view that she or the deceased would necessarily have taken up the use of these drugs had they only been available at very high cost.

14. [16]

    More fundamentally, however, Dr Routley’s arguments fail to take account of the life expectancy calculation, and the unavoidable fact that it was arrived at upon a combination of expert opinions and factual assumptions that did not include the prospect that the deceased’s Hepatitis C infection could or would have been arrested at some time by the use of these drugs. Life expectancy predictions rely upon a mix of certainties and uncertainties to produce a final estimate. The likelihood of the deceased’s continuing exposure to his virus must undoubtedly have been one of them. Correspondingly, one might have expected that the successful eradication of his infection, and its consequent effects upon a newly transplanted liver, would have assumed some prominence in those calculations and assumptions if it were significant. I have no way of knowing whether a liver transplanted into an infected person would not in any event have sustained some damage that would or could not have been eradicated by the subsequent arrest of the infection.

15. [17]

    The approach proffered by Dr Routley raises procedural concerns as well. The new drug regime would appear never to have been factored into the life expectancy calculations. I have now decided that issue. Dr Routley’s argument raises the spectre of that issue being revisited, which in the particular circumstances of this case could hardly be considered to be a realistic prospect. The calculations associated with my 17 year life expectancy finding would necessarily also have to be revisited with forensic considerations and consequences to which I have not been alerted.

16. [18]

    The probability that the costs associated with the administration of these new drugs would have been incurred by the deceased had he survived is something that Dr Routley must establish. I am not satisfied that he has done so. I am also not satisfied that it would be fair to permit him to do so in the circumstances.

Issue two

1. [19]

   I found in my principal judgment that, absent the facts giving rise to these proceedings:

   1. (1)

      The deceased would have survived until the date of Dr Norris’s retirement at the age of 65 in 2026;

   2. (2)

      The deceased would have continued to work as his wife’s practice manager until she retired at the age of 65 in 2026;

   3. (3)

      The deceased would have provided domestic services until at least the date of his wife’s retirement in 2026.

2. [20]

   The question that arises is whether the deceased’s income and the value of his domestic services should be discounted for vicissitudes over the assumed 17 years of life he would have enjoyed and if so at what rate. Dr Norris submitted that these sub-issues should be dealt with differently. With respect to domestic assistance, Dr Norris argues that no discount should apply. However, Dr Norris concedes with respect of the deceased’s income that the position is different and that some discount is appropriate. Dr Routley contends in both respects that all past losses should be discounted by 20 percent and future losses should be discounted by 30 percent. These different approaches reflect the respective positions of the parties about whether Dr Norris can establish, or indeed whether she has established, the existence of a net loss to the household following the death of her husband.

3. [21]

   With respect to the claim for loss of domestic services, the difference between Dr Norris and Dr Routley on this issue can be shortly stated. Dr Norris contends that my finding of a 17 year life expectancy for the deceased forecloses the application of a further discount upon the basis that the deceased may have died sooner. This is said to be so because vicissitudes for the unexpected and unanticipated events in life must necessarily have been assumed and included in the life expectancy calculations and the finding at which I arrived. Dr Norris argued that Dr Routley has not identified any basis upon which the loss of domestic services to be provided by the deceased ought to be reduced for vicissitudes, other than that he might have lived less than the life expectancy determined by me. If that calculation was influenced by his liver pathology and what he would have faced as a surviving transplant patient, it had already been taken into account once and could not be taken into account again. Dr Norris submitted that there should be no discount applied in respect of domestic services.

4. [22]

   With respect to the settled issue of the deceased’s 17 year life expectancy, Dr Routley argued on the contrary that the assessment of life expectancy in this or any case did no more than calibrate the multiplier for damages calculations in accordance with usual practice. The usual process, of applying a discount of 15 percent, should apply in circumstances where the injury which is the subject of the proceedings had no particular influence on the calculation of the discount for vicissitudes. Once the assessment has been made by reference to factors special or particular to the individual in question, according to Dr Routley, factors of general or universal application common to all individuals come into play. For example, the deceased would have been no more and no less likely to be struck down with a fatal illness or to be hit by a bus as a liver transplant recipient than any other person of good health with an ordinary life expectancy.

5. [23]

   However, not content with 15 percent, Dr Routley went further. He contended that discounts could and should in this case be applied “to reflect the significant risk that Mr Norris would not have survived for very long after his hypothetical liver transplant in November 2010.” In support of that contention Dr Routley referred to a number of authorities. For example, in Berkeley Challenge Pty Ltd v Howarth [2013] NSWSC 370 at [23] and [25], Meagher JA indicated that the standard discount should be increased to 25 percent to take account of a pre-existing injury. In Robinson v Ng [2014] ACTSC 227 at [209], reference is made to the discount being increased to 25 percent to take account of the plaintiff’s pre-existing back injury as well as the age of her husband, which may have required her to cease work early. Finally in Urban Transit Authority of New South Wales v Seitis (unreported, New South Wales Court of Appeal, 17 May 1995) the Court increased the vicissitudes discount from 25 percent to 40 percent in circumstances where the plaintiff had cerebral palsy.

6. [24]

   Dr Routley’s contention that it can be appropriate, in a claim made pursuant to the Compensation to Relatives Act 1897, to make adjustments for contingencies is uncontroversial. The question is whether it is appropriate to do so here by particular reference to the possibility that the deceased might not have survived more than a few years after his transplant. Dr Routley contends that it is appropriate.

7. [25]

   The difficulty with that proposition is that I have already dealt with the question of how long the deceased would have survived following that hypothetical procedure. I said this at [64]–[65] of the principal judgment:

8. [26]

   Moreover, Dr Routley does not appear to distinguish the factors that might have led the deceased to die prematurely as a transplant recipient, which have informed his life expectancy calculation, from factors that are removed from that calculation. For example, if the deceased were himself known to suffer from some other medical condition unrelated to his liver problem, such as cerebral palsy or chronic congestive airway disease, then that could be factored into the equation in accordance with the approach adopted in the cases to which Dr Routley has referred. It would however amount to double counting to utilise the deceased’s liver pathology, and any morbidities associated with it, in arriving at a discount for vicissitudes that was exceptional or unusual.

9. [27]

   The present issue is in a sense similar to the first, where the special or particular question of the use of the new drugs bore directly upon the question of life expectancy. In the present context the special or particular vulnerabilities of the deceased as a transplant recipient have already been utilised to inform the same life expectancy calculation. This issue is instead concerned with the general and universal vicissitudes of life that affect everyone. I am, therefore, unattracted to the arguments advanced by Dr Routley that some more significant discount should apply.

10. [28]

    I am, however, equally unattracted to Dr Norris’s argument that where there has been evidence directed to the question of someone’s life expectancy, there is no remaining justification for considering any discount for the contingencies of life. As I trust I have already made clear, the fact that the deceased has been considered, in the light of his particular clinical condition, to have had a particular life expectancy of specified years does not immunise him from what might be called the usual slings and arrows to which everyone in the community is subjected.

11. [29]

    In summary, Dr Routley has not established any particular factor that should increase the usual discount for vicissitudes above 15 percent. Correspondingly, Dr Norris has not demonstrated why the deceased’s contribution by way of domestic services should be quarantined from such a discount, if factors particularly affecting his position as a vulnerable liver transplant recipient are put aside. It follows in my view that there is no justification for either increasing or reducing the discount for vicissitudes from the rate of 15 percent that would apply in the usual case to the claim for loss of the deceased’s domestic assistance.

12. [30]

    Dr Norris has taken a different approach to the discount to be applied to the deceased’s income because of what she contends in effect are the predominance of favourable vicissitudes. Dr Norris relied upon what I said at [75]–[78] of my principal judgment as follows:

13. [31]

    Dr Norris argued that when one has regard to these conclusions, and to the undoubted tax benefits that would have flowed from the deceased’s position as his wife’s employee, it becomes clear that the many factors that are taken into account in applying the standard discount of 15 percent are not applicable. The deceased’s risk of unemployment was minimal. His employer would undoubtedly have accommodated him in respect of periods of sickness. He would have been immune from industrial disputes or the prospect of dismissal. Dr Norris contended in such circumstances that nothing exceeding a 5 percent discount was appropriate.

14. [32]

    In my view these arguments are persuasive. I have attempted so far to emphasise the need to establish both factors that have not already been taken into account on the one hand, and which are factors that are unique or particular to the individual in question on the other hand, in order to influence a variation either way of the usual vicissitudes discount. It will be recalled that I was not persuaded that either Dr Norris or Dr Routley had done so with respect to the deceased’s domestic assistance. I am also not persuaded that Dr Routley has done so with respect to the deceased’s income. I am however persuaded that Dr Norris has done so with respect to the deceased’s income, by the identification of the series of positive factors that are likely to improve the chances that he would have earned the income that has been projected. I consider that a discount of 7.5 percent should apply in the circumstances to that income calculation.

Issue three

1. [33]

   The deceased’s consumption costs are a function of the interaction between his anticipated income and that of his wife. I have already dealt with the deceased’s income. Dr Norris argues that there should be a very substantial discount on her own income in the order of 50 percent for the purpose of calculating the deceased’s consumption of household income, but nothing exceeding a 5 percent discount in relation to his own income. The former discount is said to reflect such variables as the number of pregnancies she might have expected to receive per month and the associated number of consultations per patient.

2. [34]

   As with several issues in these proceedings, the parties’ respective positions have somewhat opportunistically changed from time to time to accommodate the particular perspective from which the issue was being viewed. The present issue is an exemplar of that fact.

3. [35]

   Dr Norris was examined at the trial by her counsel on the issue of her anticipated income from practising as an obstetrician. That evidence was being led in support of the argument that she was in need of a practice manager, which was the role that she anticipated would be performed by the deceased had he survived. That evidence was in in the following terms:

4. [36]

   On the second day of the hearing, when objection was taken by Dr Routley to the admission of paragraph 2.16 of Mr Gaudian’s 22 August 2014 report, the following discussion took place:

5. [37]

   It will be clear from these transcript extracts that Dr Routley was attempting to limit any evidence that supported the proposition that Dr Norris was, or would become, a successful medical practitioner in her field of specialty, thereby casting doubt upon the deceased’s realistic prospects of working as her practice manager earning what had been predicted. Conversely, Dr Norris was attempting to achieve the opposite result. In the mildly curious events that have now occurred, each party has adopted the other’s original position. Dr Norris submits that her income predictions were “blue sky” predictions, or what I understand using plain English to mean overly optimistic, and Dr Routley now wishes to contend that they were achievable. Dr Norris now contends that her anticipation of 20 pregnancies per month was no more than her hope, whereas Dr Routley disputes that characterisation.

6. [38]

   It is not to be overlooked that I effectively favoured Dr Norris’s original approach at [55], and also at [104] of my principal judgment, when I concluded in these terms:

7. [39]

   Those matters notwithstanding, Dr Norris continued to maintain that the discount to be allowed for vicissitudes on her income “ought to be significantly greater than the standard allowance of 15 percent.” She argued that the standard allowance takes account of matters that would otherwise affect earning capacity, such as sickness, accident, unemployment and industrial disputes: Wynn v NSW Insurance Ministerial Corporation [1995] HCA 53; (1995) 184 CLR 485 at 497. Dr Norris argued that these were matters that could have an impact upon the future earnings of an employed person in a secure job where future earnings can be predicted with some certainty. The standard allowance can of course be adjusted up or down to take account of particular circumstances. In this case Dr Norris argued that the particular circumstances included those which create greater uncertainty as to whether she would proceed to earn the income that I have accepted is likely.

8. [40]

   In this respect Dr Norris drew attention to what I said in the principal judgment at [51] and [54]:

9. [41]

   It is not in dispute that Dr Norris’s income claim is one to which s 13 of the Civil Liability Act 2002 applies. The calculation of Dr Norris’s own earning capacity involves an “assumption about future earning capacity or other event upon which [it] is to be based”: s 13(1). Accordingly, a discount must be made for the percentage possibility that the events that have been taken into account might not have occurred. Moreover, quite apart from s 13, legal principle mandates that there be a consideration of “the degree of probability that an event would have occurred, or might occur, and adjust its award of damages to reflect the degree of probability”: Malec v Hutton. For presently relevant purposes in this case, Dr Norris contended that this must include the overly optimistic or hopeful predictions she made about her probable future earnings.

10. [42]

    In this respect my attention was drawn to what was said by the High Court in De Sales v Ingrilli [2002] HCA 52; (2002) 212 CLR 338 at [68] as follows:

11. [43]

    Dr Routley contended that the appropriate discount to apply to Dr Norris’s income was 15 percent. He submitted that that was the appropriate rate because it reflected the fact that there were fewer risks attending her income than in the case of the income of the deceased. In particular, Dr Routley submitted that Dr Norris did not face any greater degree of risk of illness or early death than anyone else of her age and attributes.

12. [44]

    I have come to a different view about the rate of discount for vicissitudes that should apply to the deceased’s income. However, that difference of opinion does not also lead me to conclude that the rate of discount for which Dr Routley contends should not be adopted. I accept that the calculation of Dr Norris’s income is attended with the uncertainties to which I referred in my principal judgment, and which for present purposes Dr Norris has enthusiastically embraced. However, those uncertainties attend the calculation of the sum to which the discount currently being considered would apply. For example, the so-called overly optimistic assessments made by Dr Norris about her projected success inform the income calculation in the first place. They also include all of matters of the kind listed by Dr Norris in paragraph 40 of her counsel’s written submissions as follows:

13. [45]

    I take these matters to be specifically concerned with the original calculation, so that they have already been taken into account, and not with the unpredictable and uncertain negative and positive events that the future may produce, which are the type of vicissitudes currently being considered, such as injury, incapacity or early death.

14. [46]

    Dr Norris has not to my mind established any unusual or extraordinary negative factors that would influence or warrant a departure from the usual rate to be applied.

15. [47]

    It makes no difference to the final outcome in arithmetical terms whether the discount for vicissitudes is applied to the income figures of the deceased and Dr Norris in the first place or to the final consumption figure arrived at as a product of each by applying the Luntz percentages in the second place. The result will be the same provided discounts are not applied to both sides of the equation. It was however necessary for me to approach the matter adopting the former method as I have chosen variously to apply a different discount for vicissitudes to the income of the deceased on the one hand and the income of Dr Norris on the other hand.

16. [48]

    Finally Dr Norris conceded that no discount should apply to the sum of $10,000 that I originally allowed for care costs which was an assessment that did not warrant further reduction. That concession is both appropriate and uncontroversial.

Conclusions

1. [49]

   It follows in my opinion, and I find, that:

   1. (1)

      The amount of $84,370 for certain anti-viral pharmaceutical costs associated with the deceased’s anticipated liver transplant ought not to be included as a probable out-of-pocket expense.

   2. (2)

      A discount of 7.5 percent ought to be allowed by way of discount for the vicissitudes of life upon the deceased’s income.

   3. (3)

      A discount of 15 percent ought to be allowed by way of discount for the vicissitudes of life upon the value of the loss of domestic services provided by the deceased.

   4. (4)

      A discount of 15 percent ought to be allowed by way of discount for the vicissitudes of life upon Dr Norris’s income.

Costs

1. [50]

   I have been asked to make no orders with respect to costs in anticipation of further submissions from the parties in due course.

Orders

1. [51]

   The following orders should be made:

   1. (1)

      Direct the parties to bring in short minutes of final order giving effect to my conclusions in [49] of these reasons.

   2. (2)

      List the proceedings before me on a date to be arranged in consultation with my Associate for the purpose of hearing argument on costs.