SUPREME COURT OF QUEENSLAND

Transcription

1 SUPREME COURT OF QUEENSLAND CITATION: PARTIES: Reardon-Smith v Allianz Australia Insurance Ltd [2007] QCA 211 DAVID HARRY REARDON-SMITH (plaintiff/appellant) v ELMER SEBASTIAN TORRES-FARR (first defendant/not party to appeal) ALLIANZ AUSTRALIA INSURANCE LIMITED ACN (second defendant/respondent) FILE NO/S: Appeal No 842 of 2007 SC No 803 of 2006 DIVISION: PROCEEDING: ORIGINATING COURT: Court of Appeal General Civil Appeal DELIVERED ON: 27 June 2007 DELIVERED AT: Supreme Court at Brisbane Brisbane HEARING DATE: 14 June 2007 JUDGES: ORDER: Williams and Keane JJA and Atkinson J Separate reasons for judgment of each member of the Court, each concurring as to the orders made 1. Appeal dismissed 2. Appellant to pay respondent's costs of the appeal CATCHWORDS: DAMAGES MEASURE AND REMOTENESS OF DAMAGES IN ACTIONS FOR TORT MEASURE OF DAMAGES PERSONAL INJURIES METHOD OF ASSESSMENT GENERALLY where appellant was professional surfer where appellant suffered personal injury in motor vehicle accident where appellant awarded $35,000 for past and future economic loss whether future economic loss should be assessed on basis that he was precluded from pursuing career in lucrative surfing competition whether assessment should have included lost prize money whether assessment was manifestly inadequate whether explanation of assessment conformed with s 55(3) Civil Liability Act 2003 (Qld) Civil Liability Act 2003 (Qld), s 55(3) Ballesteros v Chilow & Anor [2006] QCA 323; Appeal No 9344 of 2005, 30 August 2006, cited

2 2 COUNSEL: SOLICITORS: Malec v J C Hutton Pty Ltd (1990) 169 CLR 638, applied Norris v Blake (No 2) (1997) 41 NSWLR 49, distinguished State of New South Wales v Zerafa [2005] NSWCA 187, applied M Grant-Taylor SC for the appellant S C Williams QC, with K S Howe, for the respondent Schultz Toomey O'Brien Lawyers for the appellant McInnes Wilson for the respondent [1] WILLIAMS JA: In this appeal the appellant, the plaintiff at first instance, challenged the assessment of damages for past and future economic loss. As the reasons of Keane JA demonstrate that assessment had to be made adopting the method of assessment approved by the High Court in Malec v J C Hutton Pty Ltd (1990) 169 CLR 638. [2] In the circumstances the court had to assess the degree of probability of the appellant succeeding on the international surfing circuit given his past performances and taking into account other circumstances impacting on the chance of the appellant attaining what he claimed was his ultimate goal. [3] As the reasoning of Keane JA demonstrates, the findings of fact made by the trial judge (which findings were clearly open on the evidence) lead to the conclusion that the injuries sustained by the appellant in the accident had little or no impact on his capacity to earn income from competing in surfing events. [4] For the reasons given by Keane JA the appeal should be dismissed with costs. [5] KEANE JA: The appellant sued for damages for personal injuries suffered in a motor vehicle accident which occurred on 10 March At the trial of the action, the only issue for determination by the court concerned the amount of compensation to be awarded for economic loss suffered as a result of these injuries: the other heads of compensation were agreed. The learned trial judge awarded the appellant $35,000 for economic loss, both past and future. [6] The appellant contends that this award was: (a) manifestly inadequate; (b) assessed on a wrong basis; and (c) not expressed so as to conform with s 55(3) of the Civil Liability Act 2003 (Qld) ("the Act"). [7] I will discuss the appellant's contentions in more detail after first summarising the findings of fact and conclusions of the learned trial judge. The judgment [8] The appellant was 25 years of age when he was injured. He suffered musculoligamentous injuries to his neck and lower back, and contusions to the right hip and knee. 1 [9] The appellant is a professional surfer. He had started surfing professionally when he was aged 19 or Before his injury, he had enjoyed considerable success as an 1 2 Reardon-Smith v Torres-Farr & Anor [2006] QSC 246 at [1]. Reardon-Smith v Torres-Farr & Anor [2006] QSC 246 at [11].

3 3 aerial surfer, and, in this aspect of the discipline, was ranked in the top three exponents in Australia in 2001 to It was common ground that aerial surfing competition from which money could be made concluded at the end of The appellant had also enjoyed success in conventional surfing in the Queensland Championship Circuit ("the QCC"). In 2003 he was ranked first in the QCC and he won all four QCC events in which he competed at the beginning of [10] The appellant said in his evidence at trial that in the six to nine months prior to his accident he had decided to pursue his career in conventional surfing, but the accident interrupted his plans. He returned to surfing in 2004 competing in three or four events, whereas, if he had not been injured, he would have competed in about 30 events. He did not identify these events with any particularity or seek to suggest that it was likely that he would have earned any particular prize money from any particular event. He did not entirely shake off all the ill-effects of his accident until the end of By the end of 2005 he was, he said, surfing as well as he ever had. [11] In the appellant's statement of claim, his claim for past economic loss was formulated on the basis that he suffered a loss of a weekly average of $750 nett. The appellant also sought to recover for future economic loss calculated on the basis of a nett weekly loss of $1,250 to the end of 2007 and $750 thereafter until [12] The appellant's case was that the injuries suffered on 10 March 2004 meant that he was not then, and now would never be, able to pursue the prospect of participating in the lucrative surfing World Championship Tour ("WCT"). 5 This case depended upon the contention that the appellant could have, in 2004, joined the 192 highest ranked surfers in the World Qualifying Series ("WQS") from which group the 48 members of the WCT were chosen. [13] According to the appellant, because of changes in the arrangements for the selection of surfers for the WCT, this window of opportunity was closed to him in As a result, the appellant contended, his injury caused him major economic loss. The learned trial judge summarised the elements of the appellant's case as follows: "The plaintiff maintains that, when injured, his ambition was to compete that year on the WQS circuit, eventually qualifying for the WCT. He contends that a rule change in 2005 has permanently deprived him of the opportunity of joining the 192 highest ranked surfers in the WQS competition the group from which the WCT squad is drawn. The case appears to be founded on these propositions: In 2004, had the injury not supervened, the plaintiff would have competed in several WQS events, in Australia and abroad. Those events would have included 5 and 6 star events, mainly overseas. In 2004, any surfer was eligible to compete in them. His success would have seen him rank in the top 192, leading to his ultimate goal of joining the WCT 48. That level of achievement would largely have been attributable to success in 5 and 6 star events, where a higher placing earns more points than equivalent positioning in 1, 2, 3, or 4 star events Reardon-Smith v Torres-Farr & Anor [2006] QSC 246 at [12]. Reardon-Smith v Torres-Farr & Anor [2006] QSC 246 at [13]. Reardon-Smith v Torres-Farr & Anor [2006] QSC 246 at [2].

4 4 In 2005, a new rule restricted participation in 5 and 6 star events to surfers ranked in the WQS top 192. Not having ranked in that 192, the plaintiff is no longer eligible to compete in 5 and 6 star events. No matter what his success in 1-4 star competitions in future, he will not break into the 192. So he will now never graduate to the WCT." 6 [14] Before his injury, the appellant had not been successful in WQS competition. At the end of 2003 his WQS ranking was "up towards" 1, The learned trial judge summarised the reasons to doubt that the appellant would have been successful in pursuing a top 192 ranking in the WQS in 2004: "In 2004, before 10 March, there were four WQS events in Hawaii and Brazil: a 1 star, and three 4 star events. The plaintiff did not enter any. He remained in Australia, competing in QCC and other events. Shortly before the accident, he competed at the Gold Coast to qualify for a WCT event. He procured this marvellous opportunity for wildcard entry to the WCT by winning the 2003 QCC competition. This was his chance to go directly to the WCT, bypassing the many financial and performance-related challenges of struggling through the WQS, competing against hundreds of other WCT aspirants. But he did not reach the final. So, to reach the WCT, he had to do well in WQS events. The least expensive way of succeeding was through WQS events in Australia. There were three such events in 2004: a 5 star event at Maroubra starting on 15 March, a 4 star event at Newcastle starting on 22 March, and a 6 star event at Margaret River starting on 29 March. The plaintiff did not enrol in any of them. The plaintiff would have liked to have competed in WQS events in His participation in the WCT qualifying event at the Gold Coast shortly before his accident shows that he wanted to get to the WCT if he could. But desire and intention do not always coincide. And in 2004 the plaintiff still had the same substantial reasons to adhere to a course that would not have taken him overseas to compete in 5 and 6 star WQS events. Evidence of the sports lawyer and entrepreneur, Mr Callinan, establishes that the WQS is 'very expensive to get to'. To 'tour effectively', as Mr Callinan puts it, a professional surfer needs an annual travel budget of at least $30,000. The money is not easily found. Attracting Australian sponsorship for WQS participants has its difficulties. Mr Callinan explains that Australian sponsors are reticent about supporting surfers on the WQS circuit. Those who succeed in WQS events more often than not do so overseas, where most WQS events take place. Such success may well not generate publicity in Australia. So, many sponsors do not expect to derive much product coverage from a placing in some 4 star event in Ecuador, as Mr Callinan illustrated his point. Mr Callinan knows many talented surfers who prefer to remain in Australia, participating in local competitions, without putting time 6 7 Reardon-Smith v Torres-Farr & Anor [2006] QSC 246 at [4]. Reardon-Smith v Torres-Farr & Anor [2006] QSC 246 at [14].

5 5 and money into pursuing WQS ranking in the hope of reaching the WCT eventually. His testimony reveals that, unless a surfer seems destined for elite status on the WCT, it will often make more economic sense to stay in Australia, winning local events and sponsorship, just as the plaintiff had told the television interviewer he intended to do. In 2004, the plaintiff was no better situated financially than in 2003 to afford the considerable expense that would necessarily have been incurred in competing overseas in the number of events that a surfer of his level of prowess would probably have needed for a reasonable chance of ranking in the select 192. In testifying, the plaintiff accepted as much. In early 2004, he appreciated that he would not have been able to compete in enough overseas WQS events to reach the 192 in that year without attracting 'bigger and better sponsorships so I could compete on the world circuit'. He says that he competed in his Australian events in the 10 weeks or so before his accident to 'build up' his profile so as to garner the more rewarding sponsorships that were essential to venturing overseas to WQS events. By 2003, neither the plaintiff's number one QCC ranking nor his ongoing successes as an aerial surfer had generated the sponsorship required to sustain overseas travel for the times needed for effective WQS participation. Despite his number one ranking early on in the 2004 QCC circuit, there is no evidence of a change in the plaintiff's sponsorship or prize money fortunes in 2004: nothing to indicate that his pre-accident successes in 2004 had interested an existing sponsor in increasing the level of support or that he looked like attracting a new sponsor. Nor is there a word of evidence proposing anyone who might have been approached later in the year for new or enhanced financial support." 8 [15] The appellant's professional performance after returning from injury did not afford any basis for thinking that the appellant would have been likely to succeed in the WQS had he pursued that competition in The learned trial judge summarised the evidence in this regard in the following passage: "After months of convalescence, the plaintiff returned to surfing towards the end of He did not want to 'drop down the ratings too far'. He was anxious to preserve his QCC seeding to avoid having to compete against more surfers in the 2005 local competitions. In 2004, after the accident, he also competed in one international event: in Ecuador, in the 'World Amateur Titles', as he described the competition. In 2005, in Queensland, he competed in 'just the smaller competitions', and was ranked third on the QCC. By the end of 2005, the plaintiff was surfing as proficiently as he had before the accident. Even so, his success in WQS events has remained limited. At the end of last year, he competed in two WQS 2 star events in the United States. In California, he reached the quarter finals, earning 'a few hundred points' towards a WQS ranking. In North Carolina, he finished at the round before the quarter finals. 8 Reardon-Smith v Torres-Farr & Anor [2006] QSC 246 at [19] [26].

6 6 This year, after four QCC events, he is in first place again. His current WQS ranking is, he testified, 300. This year, in the WQS he reached the last 32 in a 1 star event in New South Wales, winning about 150 points. He also entered two 4 star events from which he had to withdraw because of an ankle injury. Overseas, he has competed in a 3 star event in Japan, and a 4 star event in the Maldives. In both, he finished about 44 th. The rest of this year, he intends to compete in only three WQS events, all of them in the Canary Islands: 2, 3 and 4 star competitions." 9 [16] The learned trial judge regarded the hypothesis that the appellant would have participated in the necessary several five and six star events in 2004 as "highly improbable". 10 He went on to find that the appellant's prospects of success in such events would have been poor. His Honour said: "The plaintiff has competed in eight WQS events. His best performance was in reaching the quarter finals in a 2 star event. Commonly, 5 and 6 star events are more competitive than the lower graded events. Accordingly, the plaintiff seems unlikely regularly to have improved in 5 or 6 star events on the limited success enjoyed in 1-4 star competitions. But maybe his admirers are right, and it is just that he is yet to realize his potential. That possibility cannot be ignored. He has, after all, beaten WCT surfers. On the other hand, by 2004, the plaintiff had not attained the kind of WQS 'good seed' that is important to the prospects of reaching the 192 some day. There is, in short, a slim possibility that the plaintiff would have reached the 192 in 2004 if money were no object and he had participated that year in many WQS events, including 5 and 6 star competitions. Few surfers want to stay on the WQS circuit for long. Overseas travel is costly; and the financial rewards are rarely substantial. As Mr Callinan explains, no surfer is interested in a career in 5 and 6 star events. He participates in the WQS 'to get to the WCT That's all they do it for as a stepping stone No-one's interested in being a WQS athlete. That's peanuts. Who wants to do that the rest of your life? They want to get to the WCT and make millions'. But the WCT remains forever elusive for most. Mr Lynch sees the leap from the WQS top 192 to the WCT as being extremely difficult. Mr Callinan's evidence is to the same effect. Most WCT surfers have had major successes in world junior titles. The plaintiff did not." 11 [17] His Honour held that, even if the appellant had reached a top 192 ranking, it was "unlikely" that he would ever have been admitted to the WCT. 12 His Honour recognised, however, that if the appellant "had progressed to the WCT, he stood to make a lot of money". 13 The financial rewards which would have flowed from success in the WCT are substantial: the best surfers in the WCT earn $1,000,000 or Reardon-Smith v Torres-Farr & Anor [2006] QSC 246 at [35] [40]. Reardon-Smith v Torres-Farr & Anor [2006] QSC 246 at [44]. Reardon-Smith v Torres-Farr & Anor [2006] QSC 246 at [51] [54]. Reardon-Smith v Torres-Farr & Anor [2006] QSC 246 at [52], [60]. Reardon-Smith v Torres-Farr & Anor [2006] QSC 246 at [60].

7 7 more annually, while those ranked in the top 50 of WQS rankings earn $60,000 per annum from sponsorships. 14 [18] The learned trial judge concluded: "My impression (Cf Wynn v NSW Insurance Ministerial Corporation (1995) 184 CLR 485, 499) is that $35,000 adequately compensates for economic loss (The methodology employed (see s 55(2) of the Civil Liability Act 2003) is, put shortly, the application of the principles stated in Malec v J C Hutton Pty Ltd (1990) 169 CLR 638)." 15 [19] It was common ground that the figure of $35,000 was equally attributable to past and future loss. [20] The learned trial judge proceeded to his conclusion in this regard on the footing that: "It is no part of the plaintiff's case that his injuries have impacted adversely on his earning capacity except to the extent to which they are said to have denied him the top 192 ranking in There is, for example, no claim for lost prize money for the months during which the plaintiff could not surf, at all or as well as before the accident." 16 [21] In this Court, on the appellant's behalf, it was said in written submissions that "the learned trial judge treated the appellant's case with considerable scepticism". That observation is quite accurate. But the learned trial judge's scepticism was amply justified. In the course of the appellant's cross-examination, he acknowledged that, in an interview given by him in the year before his injury, he stated that the WQS competition was not his "thing". In fact, in 2004, the appellant had not even entered the WQS events held in Australia in the months before his accident. He had not attended any overseas WQS events in After returning from his accident, the appellant entered some WQS events and, although he admitted that, by the end of 2005, he was surfing as well as he ever had, he achieved limited success in those competitions. [22] In the upshot (and for obviously good reason) the appellant does not challenge the findings of primary fact which reflect the learned trial judge's deep scepticism as to the appellant's prospects of success in WQS competition or of attaining a place in the WCT. On that basis, I turn to consider the arguments advanced on the appeal on behalf of the appellant. The arguments on appeal Manifestly inadequate? [23] The first ground of the appellant's challenge to the learned trial judge's decision is that the assessment of $35,000 for past and future economic loss is manifestly inadequate Reardon-Smith v Torres-Farr & Anor [2006] QSC 246 at [58]. Reardon-Smith v Torres-Farr & Anor [2006] QSC 246 at [61] (citations footnoted in original). Reardon-Smith v Torres-Farr & Anor [2006] QSC 246 at [59].

8 8 [24] In an attempt to make good this submission, the appellant relied upon an exercise in which the earnings actually achieved by the appellant were deducted from notional figures which reflected the earnings achieved by "broadly comparable surfers". This exercise produced a figure of $60,912 as the amount lost by the appellant as at 21 July Discounting the appellant's nett weekly loss of $582 at five per cent over seven years (to take the plaintiff to 35 years of age) would yield $180,000 which, discounted at 15 per cent for the contingencies of life, would result in a figure for the future of $153,060. To that sum, the appellant argued that there should have been added a figure for the lost opportunity of becoming a "surfing superstar". On this basis, so it was said, the inadequacy of the trial judge's award was manifest. [25] The appellant sought, in his written submissions, to rely upon the approach reflected in the decision of the New South Wales Court of Appeal in Norris v Blake (No 2). 17 But, of course, Norris v Blake (No 2) was a case in which the injured plaintiff had already established himself as a screen actor with a bright future. How bright (and lucrative) that future might be was a matter for assessment. In the present case, there was no real prospect of the appellant establishing himself as a member of the WQS or the WCT. [26] The "broadly comparable surfers" used to fix the notional income which the appellant might have earned had he not been injured had apparently achieved some success in the WQS competition. The earnings' history of such surfers did not afford evidence as to the likely earnings of the appellant, so as to provide a reliable indicator of the appellant's likely earnings in the WQS in That must be so bearing in mind the appellant's lack of success in WQS events after returning from injury and the absence of any record of success in WQS events before he was injured. The basis for treating these surfers as reliable points of comparison with the appellant had he not been injured was simply not established. Indeed, on the appeal, Senior Counsel for the appellant did not persist with the suggested comparison. [27] On the hearing of the appeal, Senior Counsel for the appellant pursued another avenue in an endeavour to demonstrate the inadequacy of the learned trial judge's assessment of the appellant's economic loss. Senior Counsel for the appellant sought to extrapolate from the appellant's pre and post accident earnings to demonstrate his economic loss. It is convenient to discuss this aspect of the appellant's approach under the rubric of the second ground of appeal. Did the trial judge misunderstand the appellant's case? [28] The gravamen of the appellant's second argument was that the learned trial judge proceeded on a misunderstanding of the appellant's case. On the appellant's behalf, it was said that his Honour's statements cited at paragraph [20] above were wrong. [29] On the appellant's behalf, it was submitted to this Court that: "it could not have been clearer from the written outline of submissions relied upon by the appellant during counsel's addresses below that loss of prize money over the immediate post-accident period was very much to the fore of the appellant's claim, as footnote 4 to those submissions attests." 17 (1997) 41 NSWLR 49 at 64.

9 9 Footnote 4 to the appellant's trial submissions was in the following terms: "The plaintiff in fact earned $28, in taxable income for The period from to encompassed 254 days. Extrapolated out over 365 days for the full financial year, it is reasonable to assume that the plaintiff's notional taxable income for would have been at least $40,725. This calculation is nonetheless conservative once it is borne in mind that there would inevitably have been varying intervals between the point in time at which the plaintiff won/placed in a surfing event and when he was paid for doing so." (emphasis added in the original) [30] It could hardly be said that a submission to be found only in a footnote was somehow at the forefront of the appellant's case; but in any event, footnote 4 does not identify any events in the WQS competition at which it is said that the appellant was likely to have been the winner. As has been seen, the manner in which the appellant's claim was formulated did not involve any assertion that the appellant would or could have earned prize money from any particular event. The appellant's submission fails to recognise that, in truth, the appellant did not seek to show that he lost any particular opportunity to win prize money during the period after his injury before he was able to return to surfing at his best. [31] The respondent demonstrated from the appellant's income tax records that his taxable income from surfing for the financial years 2001 to 2006 was as follows: 2001 $ 4, $22, $ 9, $28, $28, $28,115 [32] Sponsorship was by far the major component of the appellant's earnings in the financial years 2002 to The amounts derived by the appellant from sponsorship in these years were $25,400, $45,501, $52,493 and $44,658 respectively. That a fall in the value of sponsorship occurred in the financial year 2005 may be taken to reflect a time lag in the effect upon the appellant's sponsorships of his injury in March 2004, but the figures for these years and 2006 indicate that the financial impact in these years of the appellant's injury upon his earning capacity was no more than about $17,000. The strong implication of this tabular comparison of the appellant's annual earnings from surfing is that he would be adequately compensated for any loss between 2003 and 2006 by an award of damages of the order of $17,500. In this regard, it is necessary to bear in mind that the figure for the financial year 2006 reflects the appellant's earning capacity when he was surfing as well as he ever had. [33] In truth, having regard to the very modest income which the appellant has been able to derive from surfing both before and after his injury, it cannot be said that an award of $35,000 for economic loss was inadequate, much less that it was manifestly so. Section 55(3) of the Act [34] The third submission made on the appellant's behalf is that the judgment below must be set aside because of its disconformity with s 55(3) of the Act.

10 10 [35] Section 55 of the Act is in the following terms: "When earnings can not be precisely calculated (1) This section applies if a court is considering making an award of damages for loss of earnings that are unable to be precisely calculated by reference to a defined weekly loss. (2) The court may only award damages if it is satisfied that the person has suffered or will suffer loss having regard to the person's age, work history, actual loss of earnings, any permanent impairment and any other relevant matters. (3) If the court awards damages, the court must state the assumptions on which the award is based and the methodology it used to arrive at the award. " [36] In my respectful opinion, the learned trial judge's reference to the principles stated in Malec's Case cited at paragraph [18] above is a sufficient statement of the learned trial judge's methodology, at least in a case where the very modest nature of the award makes it abundantly clear that the probability of the lost chance of substantial financial benefit was so slight as to be almost negligible. 18 [37] Section 55(3) of the Act is evidently concerned to ensure that the assessment of damages proceeds in a manner which is sufficiently transparent that the basis of the decision is apparent, both to the parties and to an appellate court. To this end, the provision requires that the methodology and assumptions on which the award is based be stated: it is clear, however, that it does not require an explicit statement of a calculation in which a formula is applied to factual findings. [38] The appellant also argues that there are real differences in the approaches taken to the valuation of the loss of a chance by the judges who decided Malec's Case so that it is not sufficient compliance with s 55(3) of the Act simply to refer to the "principles" in Malec's Case. But there is only one ratio decidendi in that case; and it was to the principle which constitutes the ratio decidendi that the learned trial judge referred. In that regard, Deane, Gaudron and McHugh JJ said: "But in the case of an event which it is alleged would or would not have occurred, or might or might not yet occur, the approach of the court is different. The future may be predicted and the hypothetical may be conjectured. But questions as to the future or hypothetical effect of physical injury or degeneration are not commonly susceptible of scientific demonstration or proof. If the law is to take account of future or hypothetical events in assessing damages, it can only do so in terms of the degree of probability of those events occurring. The probability may be very high per cent - or very low per cent. But unless the chance is so low as to be regarded as speculative - say less than 1 per cent - or so high as to be practically certain - say over 99 per cent - the court will take that chance into account in assessing the damages. Where proof is necessarily unattainable, it would be unfair to treat as certain a prediction which has a 51 per cent probability of occurring, but to ignore altogether a prediction which has a 49 per cent probability of occurring. Thus, the court assesses the degree of probability that an 18 Cf Ballesteros v Chidlow & Anor [2006] QCA 323.

11 11 event would have occurred, or might occur, and adjusts its award of damages to reflect the degree of probability. The adjustment may increase or decrease the amount of damages otherwise to be awarded. See Mallett v McMonagle ([1970] AC 166 at 174); Davies v Taylor ([1974] AC 207 at 212, 219); McIntosh v Williams ([1979] 2 NSWLR 543 at ). The approach is the same whether it is alleged that the event would have occurred before or might occur after the assessment of damages takes place." 19 [39] In Malec's Case, Brennan and Dawson JJ agreed in the result, and "with the general thrust of the reasoning" of Deane, Gaudron and McHugh JJ. Their points in relation to which they differed seem to be concerned with matters of emphasis and expression. Brennan and Dawson JJ said: "Hypothetical situations of the past are analogous to future possibilities: in one case the court must form an estimate of the likelihood that the hypothetical situation would have occurred, in the other the court must form an estimate of the likelihood that the possibility will occur. Both are to be distinguished from events which are alleged to have actually occurred in the past. Lord Diplock said in Mallett v McMonagle ([1970] AC 166 at 176): 'The role of the court in making an assessment of damages which depends upon its view as to what will be and what would have been is to be contrasted with its ordinary function in civil actions of determining what was. In determining what did happen in the past a court decides on the balance of probabilities. Anything that is more probable than not it treats as certain. But in assessing damages which depend upon its view as to what will happen in the future or would have happened in the future if something had not happened in the past, the court must make an estimate as to what are the chances that a particular thing will or would have happened and reflect those chances, whether they are more or less than even, in the amount of damages which it awards.' In assessing the plaintiff's earning capacity in the present case, what had to be evaluated was the prospect that the deteriorating back condition would have precluded him from engaging in gainful employment had he not contracted brucellosis. An evaluation of that prospect had to be made. To make a finding on the balance of probabilities as though the prospect were something that had occurred in the past was to misconceive the process of evaluation. Although we agree with the general thrust of the reasoning on this point in the judgment of Deane, Gaudron and McHugh JJ, we think it undesirable for damages to be assessed on the footing of an evaluation expressed as a percentage. Damages need not be assessed by first determining an award on the footing that the hypothetical situation would have occurred and then discounting the award by a selected percentage. Damages founded on hypothetical evaluations defy precise calculation. We should add that we would not favour the 19 (1990) 169 CLR 638 at 643 (citations footnoted in original).

12 12 use of the term 'probability' to describe the possibility of occurrence of a situation when the possibility is minimal." 20 [40] It is apparent from these two passages that all members of the Court were agreed that, in the valuation of the loss of a chance of a benefit, there must be an assessment of the degree of likelihood that a hypothetical event affecting the quantum of recoverable damages would have occurred and the adjustment of the award to reflect that likelihood: in the judgment of Deane, Gaudron and McHugh JJ, there is no strict insistence that the extent of the "probability" of the chance occurring must be expressed as a percentage. True it is that, in the words of Deane, Gaudron and McHugh JJ, the court "must assess the degree of probability that an event would have occurred", but neither their Honours nor s 55(3) require that the "degree of probability" be expressed in mathematical terms as a percentage. In the present case, the learned trial judge has expressed his views of the degree of probability that each step in the series of events necessary to the appellant's claim would have occurred. That is not, in my respectful view, a matter for criticism. An attempt to express the probability of each of these events occurring in percentage terms would be to engage in a vain pretence to a degree of certainty that is simply not attainable. As Aristotle famously said: "It is the mark of an educated man to seek no greater certainty in his conclusions than the nature of the subject matter will allow." 21 As was said by McMurdo P in Ballesteros v Chidlow & Anor, 22 "from the modesty of [the] award and the assumptions and facts stated previously in [the] reasons, [his] Honour's methodology is plain enough." [41] In any event, even if the learned trial judge's terse statement of the methodology he applied were to be regarded as insufficient to comply with the requirements of s 55(3) of the Act, the view of the New South Wales Court of Appeal in State of New South Wales v Zerafa 23 was that such an error should not of itself result in a new trial or reassessment on appeal. In some cases, a failure to comply with s 55(3) may result in a decision which is so opaque that the judgment should be set aside on the basis that the paucity of reasoning amounts to an error of law; but in this case it is sufficiently clear that the likelihood of a substantial financial benefit to the appellant from the successful pursuit of WQS competition was so remote that only a very modest award indeed could be justified by the principles in Malec's Case. Conclusion and orders [42] The appeal should be dismissed. The appellant should pay the respondent's costs of the appeal. [43] ATKINSON J: I agree with the reasons given by Keane JA that the appeal should be dismissed with costs (1990) 169 CLR 638 at (citation footnoted in original). Nicomachean Ethics, Book I. [2006] QCA 323 at [41]. [2005] NSWCA 187 esp at [143]. See also Ballesteros v Chidlow & Anor [2006] QCA 323 at [56].