Chen by her tutor Huang v Kmart Australia Ltd

1. [1]

   WHITE JA: This is a Summons for leave to appeal and for leave to cross-appeal from an award of damages to a young child for personal injury (Cecilia Si Chen v Kmart Australia Limited [2022] NSWDC 519 (Montgomery DCJ)).

2. [2]

   The applicant was the plaintiff below. She suffered her injury on 8 January 2020. She had then just turned six years old. She was eight at the time of trial. The injury occurred when the applicant ran into a clothing rack at a Kmart store in Chatswood. She suffered a severe injury to her right eyelid. It was almost torn off. The hospital record on her admission records that her eyelid was hanging by a small piece of skin on the outermost side of her eye. Her eyelid was expertly repaired and she was left with what one doctor (Dr Michael Delaney, ophthalmic surgeon) described as a “very mild impairment due to the small amount of ptosis and the very small scar on the right eyelid”. She did not suffer any ongoing damage to her vision. (Ptosis refers to a droopy eye.)

3. [3]

   Liability was admitted.

4. [4]

   The primary judge found that between two operations (the first being on the evening of the injury on 8 January 2020 and the second on 15 June 2020 when a stent was removed) the plaintiff was at home in pain and taking pain killers (at [6]).

5. [5]

   The primary judge described the scarring as follows:

6. [6]

   The plaintiff’s mother gave evidence as to how the injury had affected the plaintiff’s behaviour and demeanour. The primary judge accepted the plaintiff’s mother’s evidence. His Honour summarised her observations as follows:

7. [7]

   A psychiatrist, Dr Lee, gave evidence which the primary judge summarised as follows:

8. [8]

   Notwithstanding the finding at [38(4)] quoted above, his Honour found that the effect of Dr Lee’s evidence was that there is a significant possibility that the plaintiff will present for psychological counselling in adolescence to early adulthood as a result of the residual scarring to her right eyelid (at [41]). The photographic evidence of the scarring suggests that her right eyelid has a slight but visible scar and a slight droop.

9. [9]

   The primary judge accepted the plaintiff’s mother’s evidence that the plaintiff, before her injury, displayed a self-focus on her appearance and she has become more stressed after her injury. His Honour said:

10. [10]

    The primary judge assessed damages in the sum of $59,929.36. That sum included $929.36 for agreed past out of pocket expenses, and $8,000 for future medical treatment anticipated to be in the nature of elective plastic surgery to reduce the extent of the plaintiff’s ptosis and cognitive behavioural therapy (at [58] and [59]-[61]). The appeal raises no issues about the allowance of those sums.

Non-Economic Loss

1. [11]

   The primary judge assessed the applicant’s non-economic loss at 25% of a most extreme case (Civil Liability Act 2002 (NSW) s 16). Although not spelled out in his Honour’s reasons, this led to an award of $45,825 for non-economic loss. The applicant challenges this assessment as being too low. In the applicant’s summary of argument, the applicant contends that the physical effects of the injury and (alleged) “persistent pain”, in addition to psychological sequelae, were such that the injury should have been assessed at between 28% and 30% of a most extreme case.

2. [12]

   In White v Redding (2019) 99 NSWLR 605; [2019] NSWCA 152, Gleeson JA and I held that the standard of appellate review from a determination under s 16 is that set out in House v The King (1936) 55 CLR 499 at 505; [1936] HCA 40 and not that in Warren v Coombes (1979) 142 CLR 531 at 551-2; [1979] HCA 9.

3. [13]

   In her written summary of argument, the applicant contended that this standard of review was satisfied in the present case because, so it was submitted, the primary judge failed to take into account the trauma of the accident itself; neither in consideration of the applicant’s psychological harm, nor in recognising her prolonged physical pain from the day of the accident (8 January 2020) to surgery (the second operation was on 15 June 2020). It was said that the primary judge did not refer to these for the purposes of s 16.

4. [14]

   I do not accept that submission. The primary judge said:

5. [15]

   In oral submissions, Mr Sheldon SC, who appeared with Ms Welsh for the applicant, submitted that, in assessing non-economic loss, the primary judge failed to have regard to the prospective trauma which the applicant faced of further surgery to address presently visible scarring of her right upper eyelid. Dr McGlynn reported that the applicant’s present scarring is unlikely to deteriorate, but, if she becomes more conscious of her appearance during her teenage years, it might cause her significant concern. He did not recommend any further treatment or medication at the present time but said that when the applicant was older and became more conscious of the scarring, she might seek further treatment. The primary judge’s allowance for future treatment included an allowance for the cost of further surgery and the cost of future psychological therapy, discounted for the chances that such treatments might not be required ([60]). Mr Sheldon SC submitted that the primary judge did not take this prospect of further surgery into account in reaching his assessment of non-economic loss. He also submitted that the primary judge failed to take into account the pain the applicant suffered from the time of her injury up to her admission to hospital.

6. [16]

   As to the first of the matters addressed in oral submissions, the primary judge expressly had regard to it at [45], where he referred to the possibility that the applicant would seek further surgical improvement. As to the second, it was addressed at [6], [50] and [51] referred to above.

7. [17]

   Nor does the primary judge’s assessment of non-economic loss at 25% of a most extreme case suggest some other form of undisclosed error. Indeed, I would regard the assessment of 25% of a most extreme case as being somewhat generous to the applicant.

Loss of Earning Capacity – Future Economic Loss

1. [18]

   The other component of damages that is the subject of challenge was the primary judge’s award of $5,000 as a buffer sum for loss of future earning capacity. The applicant challenges this as too low. The respondent sought leave to cross-appeal. In its written summary of argument, the respondent contended that the primary judge erred in allowing any sum for loss of earning capacity because the evidence did not establish that it was “likely” (meaning more probable than not) that the plaintiff would suffer any economic loss as a result of the scarring to or drooping of her right eye.

2. [19]

   At the time of trial, the plaintiff was eight and a half years old. The primary judge observed that there was no evidence of ambition or otherwise of a choice of a career path that she might follow (at [53]).

3. [20]

   In dealing with the claim for damages for future economic loss, the primary judge said:

4. [21]

   The applicant’s school reports up to the date of trial show a level of academic achievement described as “beyond expectations” (being the second highest of five levels) in most subjects and a creator of impressive works of art.

5. [22]

   As Mr Walsh for the respondent submitted, the major issue at trial concerned the potential for the applicant to suffer psychological consequences from her injury as she grew older.

6. [23]

   Dr Lee provided four reports in relation to the psychological sequelae of the injury. He also gave oral evidence that, because of the COVID pandemic, he did not have the opportunity of talking to the applicant face to face, but assessed her by video conference and had regard to photographs and videos provided to him of the plaintiff’s injury. He also had regard to information provided to him by the applicant’s mother.

7. [24]

   In his first report of 26 April 2022, Dr Lee reported that, on examination, the applicant:

8. [25]

   Dr Lee opined that the applicant suffered from an adjustment disorder with sleep disturbance and possible functional abdominal pain (if an organic cause for her gastrointestinal pain were excluded) or knee pain (noting that she did not currently complain of knee pain). He opined that the applicant may have been slightly insecure before the accident, given her inability to sleep alone and her self-confidence and social skills had been slightly more affected by injuries sustained from the accident. He opined that the applicant may become more self-conscious as she deals with the issues of puberty due to her residual scar and if she were to become self-conscious in the future she would require cognitive behavioural therapy.

9. [26]

   An organic cause for the applicant’s abdominal pain was not excluded. She suffered a pre-existing helicobacter pylori infection. The applicant’s particulars of injuries due to the accident included an aggravation of pre-existing gastrointestinal tract symptoms, but the primary judge made no such finding, and it was not a ground of appeal that his Honour should have so found.

10. [27]

    In his second report of 26 September 2022, Dr Lee observed that he had diagnosed an adjustment disorder on the basis of the applicant’s mother’s report of the applicant’s sleep disturbance, and feeling tired and having stomach pain, which could have been anxiety related. She had missed ten days of school because of abdominal pain and her teacher was very supportive. Dr Lee observed that he considered these complaints could have been clinically significant and therefore justified a diagnosis. He continued:

11. [28]

    Dr Lee was asked to provide a third report following his receipt of Dr McGlynn’s report of 6 June 2022. He concluded:

12. [29]

    In his fourth report of 17 October 2022, Dr Lee was asked to assume that it was highly unlikely that the complaint of abdominal pain was due to H-pylori bacterial infection. It was common ground that this was not an accurate assumption. Although a report of 15 July 2021 returned a negative result, a subsequent test performed on 11 September 2021 was consistent with current helicobacter pylori infection.

13. [30]

    In reliance on that assumption, Dr Lee opined that the increased frequency of abdominal pain after the accident was an expression of distress, as an organic cause was highly unlikely. He said that the applicant:

14. [31]

    In response to a request that he identify probable and possible psychological or psychiatric disturbances which could affect the applicant as she ages, Dr Lee also opined:

15. [32]

    Dr Lee gave oral evidence. Before his evidence commenced, arrangements were made for him to see and talk to the applicant outside the court. He reported on that interview:

16. [33]

    He was asked whether he remained of the opinion that, on the balance of probabilities, the applicant did not suffer from a diagnosable psychiatric condition. He said:

17. [34]

    It is hard to identify to what extent Dr Lee’s opinions as to the applicant’s future likely or possible psychological disturbance arising from the accident were influenced by his assumption that her complaint of gastrointestinal pain was a functional pain syndrome. Dr Lee accepted that, on the assumption that the breath test for helicobacter pylori was positive in September 2021, and she was receiving treatment for that condition, that it was more likely that her pain was organic and not functional. But that concession did not appear to affect his other opinions.

18. [35]

    Dr Lee accepted that if the applicant suffered emotional disturbance when she was older due to her scar, but that was successfully treated by surgery, it would be less likely that she would suffer any further psychiatric disturbances.

19. [36]

    Prior to Dr Lee speaking with the applicant, the primary judge had also spoken with her in the well of the court. He had disrobed for that purpose and was in his shirt sleeves. The primary judge described that discussion as follows:

20. [37]

    The respondent does not challenge the primary judge’s finding at [56] that, to some extent, the applicant’s capacity to earn income in the future has unquestionably been reduced. That finding must be put in context. Because of the hairline scarring and the slight droop of the right eye, it may readily be accepted that the plaintiff would have difficulty in earning money as a model, or perhaps as an actress (at least in television commercials). She may have greater difficulty in obtaining employment as a receptionist or a shop assistant or in like positions where she must deal with the public, if her prospective employer noticed or was concerned by the slight injury to her eye than if she had not been injured. If the psychological sequelae identified by Dr Lee persisted, her prospects of employment might be affected by loss of self-confidence, and avoidance of personal contact, as the primary judge referred to at [48] quoted at [9] above.

21. [38]

    Although it is accepted that there has been an impairment of the applicant’s earning capacity, that impairment is only compensable in damages to the extent that it is, or “may be”, productive of financial loss (Graham v Baker (1961) 106 CLR 340 at 347; [1961] HCA 48; Husher v Husher (1999) 197 CLR 138; [1999] HCA 47). As an eight and a half year old girl at the time of trial, the applicant had no current earning capacity. Her earning capacity lies in the future, perhaps from the time she is in the middle years of high school, where she might obtain employment during school holidays or even, possibly, after school. (The last possibility is a remote prospect unless her physical circumstances change, because she lives in Chatswood and attends school in Rose Bay (K – 12), which involves significant travel.)

22. [39]

    In support of its proposed cross-appeal, the respondent submitted that, before compensation for loss of earning capacity could be awarded, the applicant must establish on the balance of probabilities that she has suffered some loss of earning capacity (citing Brown v Hewson [2015] NSWCA 393 at [84] per Sackville AJA and Husher v Husher at [7]).

23. [40]

    At trial, the respondent submitted that, before any damages could be awarded for the loss of earning capacity, the applicant had to satisfy the Court both that she had a reduced capacity to work, and that that reduced capacity would be productive of financial loss before a buffer could be awarded (citing Zreika v New South Wales [2009] NSWCA 99 at [39]). At trial, counsel submitted that, unlike the plaintiff in New South Wales v Moss (2000) 54 NSWLR 536; [2000] NSWCA 133, the applicant had not sought to adduce evidence about vocations she would have been likely to achieve but for the accident; there was no expert evidence from a child vocational psychologist or educator about the vocational path she might have taken but for the accident; and the claim did not rise above the level of speculation.

24. [41]

    However, as indicated at [38], it is clear that the injury has, to some extent, reduced the applicant’s earning capacity in some occupations. The causal link between the negligent infliction of injury and the loss of some earning capacity is established on the balance of probability (Sellars v Adelaide Petroleum NL (1994) 179 CLR 332 at 355; [1994] HCA 4). Whether the injury will or may be productive of financial loss is to be determined having regard to the possibilities (Malec v JC Hutton Pty Ltd (1990) 169 CLR 638 at 642-3; [1990] HCA 20; New South Wales v Moss at [87]). In Husher v Husher, the plurality said (at [7]) that it is necessary to identify what economic consequences will “probably” flow from the loss of earning capacity. Their Honours did not indicate any intention to depart from Malec v JC Hutton Pty Ltd. I infer they were using “probably” in the sense in which the plurality in Malec v JC Hutton Pty Ltd at 343 referred to probabilities as encompassing very high to very low probabilities.

25. [42]

    Section 13 of the Civil Liability Act 2002 provides:

26. [43]

    In s 13, the reference to what is “most likely” is a reference to the most likely of possibilities and not a reference to probabilities. In this case, the primary judge observed that the plaintiff proposed that the plaintiff’s most likely future circumstances would have been of earning average weekly earnings (at [54] quoted above at [20]). That approach was not challenged.

27. [44]

    There was no dispute that an award of future economic loss could be made by way of a “buffer” (Penrith City Council v Parks [2004] NSWCA 201 at [5], [10], [58]).

28. [45]

    Mr Sheldon submitted that the award of $5,000 represented less than half of 1% of net average weekly earnings projected over a 50 year working life after deductions for vicissitudes at 15%. The respondent did not challenge the arithmetic. Mr Sheldon submitted that the potential for the applicant’s earning capacity to be diminished by reason of a psychological disorder was significant. In [48] of the primary judge’s reasons quoted at [9] above, his Honour found that the applicant suffers a continuing and significant deprivation of the opportunity to participate in normal activities, including during conversation with people, meeting new people, attending job interviews and so on. It was Dr Lee’s opinion that there was a likelihood of psychological disturbance as the applicant grew older (see [31] above). Mr Sheldon submitted that the buffer of $5,000 awarded by the primary judge failed to have regard to the real chance that such psychological disturbances would affect the applicant’s earning capacity, over and above the physical effects of the scarring and the droop in her right eye.

29. [46]

    The respondent submitted that, although at first sight the award of $5,000 as damages for future economic loss may appear to be low, it was not outside an allowable range, having regard to the multiplicative possibilities that diminished the chance that the applicant would suffer any financial loss in the future because of her injury, including from the psychological effects of the injury. In his report of 26 April 2022, Dr Lee’s opined that the applicant was coping reasonably well at school academically with support from her teachers. Dr Delaney had opined that the small degree of ptosis will gradually improve and was only just detectable cosmetically. Dr Lee stated on 26 September 2022 that the applicant’s mother considered her to be overall confident and did not present as distressed, anxious or depressed, and that her school records were “somewhat inconsistent” with clinically significant distress. Part of the distress that she reported was due to abdominal pain that was not caused by her injury. It was only if the applicant suffered a deterioration in her psychological state, and if psychological treatment were unsuccessful, and if her ptosis did not improve with time, and if revision surgery were unsuccessful, and if the psychological disturbance were productive of loss, that there would be any loss of future earning capacity.

30. [47]

    These are not necessarily multiplicative possibilities. The residual physical effects of the injury could have an effect on her earning capacity independently of any continuing psychological disturbances. But it must be accepted that, if either the residual physical effects of her injury or continuing psychological disturbances would otherwise affect her earning capacity so as to be productive of financial loss, the chance of such loss would be ameliorated by the prospect of successful surgery and/or psychological treatment. No mathematical calculation of those chances is possible.

31. [48]

    The applicant submitted that an appropriate buffer would be $100,000 rather than the $5,000 allowed by the primary judge. The respondent submitted that this figure equated to 9.2% of a working lifetime’s average earnings but was no more meaningful or based on evidence than the buffer the primary judge awarded of $5,000 (0.4%). The respondent noted that no evidence had been led as to the occupations, attitude to life and work history of the applicant’s parents and other relatives (New South Wales v Moss at [84]). There was evidence that the applicant’s mother conducted her own business and it is clear from the fact that the applicant was sent to a prominent private school in Rose Bay, a considerable distance from where she lived, that her parents were at least reasonably financially successful and ambitious for their daughter’s future. As Heydon JA said in New South Wales v Moss (at [93]), the obligation to value the chance of future lost earnings cannot be shirked by deficiencies in the materials advanced. In any event, I doubt that any further evidence as to the applicant’s parents’ occupations would have advanced the case to any appreciable extent.

32. [49]

    It was extraordinarily difficult, one might say impossible, to estimate what future earnings the applicant would have derived had she not been injured, or how her injury may have affected those earnings (Harold Luntz & Sirko Harder, Assessment of Damages for Personal Injury and Death (5th Ed, 2021, LexisNexis Butterworths) at [6.3.4]). In Loxton v New South Wales [2002] NSWCA 194; (2002) Aust Torts Reports 81-667, the plaintiff was injured at school when a human pyramid of which she was a part collapsed, causing injury to her lower spinal cord. This rendered her incontinent, unable to sleep properly, and gave her a slight gait that was the cause of some embarrassment. She recovered damages, which included a component of $40,000 for reduced earning capacity (at [2]). The plaintiff was 11 at the time of the injury and 16 at the time of the hearing. She had a life expectancy in the order of 60 years (at [37]). Sheller JA, with whose reasons Campbell AJA agreed, said:

33. [50]

    In Pollard v Baulderstone Hornibrook Engineering Pty Ltd [2008] NSWCA 99; (2008) Aust Torts Reports 81-949, McColl JA, with whom Mason P and Beazley JA agreed, said:

34. [51]

    The primary judge did not focus only on the physical effects of the applicant’s injury in assessing her likely future economic loss (at [48]). He acknowledged (at [57]) the possibility of “some limitation of career choices” due to some degree of inhibition or diminished self esteem. He assessed the chance of rejection or disapproval by others in the workforce on account of her scarring as being only slight (at [57]). Neither the primary judge’s assessment nor any alternative figure is capable of reasoned explanation as to why that figure, or some other figure, should be adopted. It is a matter of intuition. No error of reasoning on the part of the primary judge is demonstrated. Being a matter of intuition, or guesswork, the scope for appellate intervention is limited. I do not consider that the judge’s award of $5,000 for future economic loss, low though it is, is outside a reasonable range so as to connote error.

35. [52]

    For these reasons, I would make the following orders:

    1. (1)

       Refuse the respondent’s application for leave to cross-appeal with costs;

    2. (2)

       Grant the applicant leave to appeal from the orders of the District Court of 28 October 2022;

    3. (3)

       Dismiss the appeal with costs.

36. [53]

    GRIFFITHS AJA: I agree with White JA.

37. [54]

    WEINSTEIN J: I agree with White JA.