Court of Appeal Supreme Court New South Wales

• Medium Neutral Citation: Welsh v Carnival PLC trading as Carnival Australia [2014] NSWCA 430
• Hearing dates: 2 December 2014
• Decision date: 12 December 2014
• Before: McColl JA at [1]; Sackville AJA at [11]; Adamson J at [12]

Decision

(1) Appeal allowed.

(2) Set aside the orders made in the District Court on 27 September 2013.

(3) Order that the matter be remitted to the District Court for a new trial limited to damages.

(4) Order that the costs of the new trial be in the discretion of the trial judge presiding at the second trial.

(5) Order the respondent to pay the appellant's costs of the appeal and to have a certificate under the Suitor's Fund 1951 (NSW) if otherwise qualified.

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

• Catchwords: TORTS - damages - plaintiff injured when ceiling panel fell on his head while on a cruise ship - whether primary judge's reasons engaged with the plaintiff's medical case - whether reasons sufficient; APPEAL - new trial - whether substantial miscarriage of justice
• Legislation Cited: Civil Liability Act 2002 (NSW), s 15; Civil Procedure Act 2005 (NSW), s 56; Supreme Court Act 1970 (NSW), s 75A; Uniform Civil Procedure Rules 2005 (NSW), r 51.53
• Cases Cited: Beale v Government Insurance Office (NSW) (1997) 48 NSWLR 430; Demirok v The Queen (1977) 137 CLR 20; Director of Public Prosecutions (NSW) v Illawarra Cashmart Pty Limited [2006] NSWSC 343; Lu v Heinrich [2014] NSWCA 349; Mastronardi v New South Wales [2007] NSWCA 54; Mifsud v Campbell (1991) 21 NSWLR 725; Pollard v RRR Corporation Pty Ltd [2009] NSWCA 110; Scoway Pty Limited v Faxon Pty Limited [2004] FCA 249; Waterways Authority v Fitzgibbon [2005] HCA 57; 79 ALJR 1816
• Category: Principal judgment
• Parties: Graham Welsh (Appellant); Carnival PLC trading as Carnival Australia (ABN 23 107 998 443) (Respondent)
• Representation: Counsel: Dr AS Morrison SC/R Royle (Appellant); M McCulloch SC/V O'Halloran (Respondent); Solicitors: Slater & Gordon Lawyers (Appellant); HWL Ebsworth Lawyers (Respondent)
• File Number(s): 2013/320008
• Publication restriction: Nil

Decision under appeal

• Date of Decision: 2013-09-27 00:00:00
• Before: Sorby DCJ
• File Number(s): 2012/198495

Judgment

1 McCOLL JA: I have had the benefit of reading Adamson J's reasons in draft. I agree generally with her Honour's reasons and the orders her Honour proposes. I would add the following observations.

2 As Adamson J's account of the primary judgment reveals, the primary judgment largely consisted of lengthy passages extracted from the evidence of the respective parties' medical experts, but made little, or no, attempt to explain if, or why, he accepted any part or the whole of that person's evidence. For example, his Honour did not explain why he apparently rejected Professor Dennerstein's evidence, even though it was, as Adamson J has said (at [37]), "the principal basis on which the appellant's claim for substantial damages rested".

3 The primary judge also did not explain why, with one limited exception insofar as Mr McMahon was concerned, he did not mention, or in any way deal with, the evidence of the appellant's work colleagues and his son as to their observations of changes in his ability and personality after the accident. Rather, his Honour preferred to rely upon his own observation of the appellant in the witness box, that "[t]here did not appear to me...to be any loss of sharpness of thought or concentration": primary judgment (at [49]). In my view that approach was not open to his Honour. The evidence with which he was dealing entailed a comparison between the appellant's pre and post-accident abilities. The primary judge had no pre-accident experience of the appellant. Accordingly, his Honour was in no position to judge whether he had changed in the manner to which these witnesses deposed. The appellant was clearly a person who had functioned at a high level pre-accident and the fact that, on his case, the accident had diminished his capacity, albeit that, relatively speaking it remained high as his Honour apparently concluded, did not mean the evidence of those witnesses could be dismissed without a cogent explanation.

4 By the time the reader reached the end of the judgment he or she was effectively left in ignorance as to why the primary judge had resolved the case in the manner he did. His Honour manifestly failed to discharge the judicial obligation to give reasons.

5 As has frequently and long been said, adequacy of reasons lies at the heart of the judicial process. There is no optimal template as to how to discharge the judicial obligation to give reasons: Lu v Heinrich [2014] NSWCA 349 per McColl JA (at [79]), Sackville AJA agreeing). However a judge is bound to expose his or her reasoning in sufficient detail to enable a losing party to understand why he or she lost, or as in the present case, substantially lost.

6 Whilst it is unnecessary to refer to the relevant evidence in detail, especially in circumstances where it is clear that the evidence has been considered, where such evidence is not referred to by the trial judge in a manner demonstrating a considered analysis of how it supports or otherwise a party's case then, contrary to Mr McCulloch's submission (see Adamson J (at [68])), an appellate court may infer that the trial judge overlooked the evidence or failed to give consideration to it: see generally Beale v Government Insurance Office (NSW) (1997) 48 NSWLR 430 (at 443) per Meagher JA.

7 Failure to provide sufficient reasons denies "both the fact and the appearance of justice having been done", thus working a miscarriage of justice. For a judge "to ignore evidence critical to an issue in a case and contrary to an assertion of fact made by one party and accepted by the judge ... may promote a sense of grievance in the adversary and create a litigant who is not only 'disappointed' but 'disturbed'": Mifsud v Campbell (1991) 21 NSWLR 725 (at 728).

8 Mr McCulloch of Senior Counsel who appeared for the respondent at trial and on appeal, struggled valiantly, but unsuccessfully, to explain how the primary judge had reached his conclusions. He emphasised that the primary judge had delivered his reasons within three weeks of the trial. While alacrity of decision making is to be encouraged and admired especially for those presiding over trials in the high volume environment of the District Court, nevertheless "[t]he requirement to provide reasons can operate prophylactically on the judicial mind, guarding against the birth of an unconsidered or impulsive decision [and hence] ... enhances judicial accountability": Beale v Government Insurance Office (NSW) (at 442) per Meagher JA.

9 In this respect, I would repeat what I said in Pollard v RRR Corporation Pty Ltd [2009] NSWCA 110 with Ipp JA and Bryson AJA's agreement:

"[56] The court is conscious of not picking over an ex tempore judgment and, too, of giving due allowance for the pressures under which judges of the District Court are placed by the volume of cases coming before them (Maviglia v Maviglia [1999] NSWCA 188 (at [1]) per Mason P). However a trial judge's reasons must, 'as a minimum ... be adequate for the exercise of a facility of appeal': Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247 (at 260) per Kirby P; (at 268-269) per Mahoney JA; Beale v Government Insurance Office (NSW) (1997) 48 NSWLR 430 (at 444) per Meagher JA. A superior court, 'considering the decision of an inferior tribunal, should not be left to speculate from collateral observations as to the basis of a particular finding': Soulemezis (at 280) per McHugh JA applying Wright v Australian Broadcasting Commission [1977] 1 NSWLR 697 (at 701, 713)."

10 Finally, "provision of adequate reasons will save time for appeal courts both in reducing the number of appeals and in reducing the time taken in considering any appeals": Beale v Government Insurance Office (NSW) (at 442). The desirability of this outcome is self-evident. The parties are now in the invidious position of facing a new trial and the attendant costs which, despite costs orders in favour of the appellant and access for the respondent to the Suitors' Fund, can never completely be recovered.

11 SACKVILLE AJA: I agree with the orders proposed by Adamson J and with her Honour's reasons. I also agree with the additional observations of McColl JA. The outcome of this appeal is unsatisfactory and was avoidable had the primary Judge provided adequate reasons for his decision.

12 ADAMSON J: The appellant, Graham Welsh, was injured when part of the ceiling fell on top of his head on a cruise ship operated by the respondent. He sustained a head injury that led to concussion. He also cut his hand where he had raised it to protect his head. He commenced proceedings against the respondent in the District Court in which he claimed damages for negligence alleged to have been suffered as a result of the accident. His case, as opened at trial, was that he had sustained a serious head injury which had resulted in depression consequent on his loss of functioning which caused a substantial loss of earning capacity and led to the loss of his position at Simonds Homes Melbourne Pty Limited (Simonds), the construction company of which he was then building manager for Victoria.

13 As the respondent admitted liability, the matter proceeded as an assessment of damages. After a five-day trial conducted before Sorby DCJ, his Honour delivered reasons for decision and assessed damages as follows:

Head of damage	Amount
Non-economic loss (20%)	$18,500
Past out of pocket expenses (agreed)	$2,130.14
Future out of pocket expenses	$1,000
Economic loss	Nil
Total	$21,630.14

The relief sought on appeal

14 The grounds of appeal principally related to the alleged inadequacy of the reasons given by the primary judge. In substance, the appellant submitted that the primary judge's reasons did not indicate the basis on which the appellant's claim for substantial damages was, effectively, rejected and that evidence that arguably supported his claim had not been considered. Dr Morrison SC, who appeared with Mr Royle on behalf of the appellant, contended that a substantial miscarriage of justice had occurred and that this Court ought order a retrial. Mr McCulloch SC, who appeared with Ms O'Halloran for the respondent, contended that the reasons were adequate and no ground of appeal had been made out. In the alternative he submitted that there was no substantial wrong or miscarriage and accordingly this Court ought not order a retrial. He did not, however, submit that this Court could make findings to determine the matter itself.

The case at trial

The appellant's case at trial

15 The appellant's case at trial was that he had sustained a head injury in the accident which had changed his behaviour and mental processes such that he could no longer perform his work to the previous standard. This caused him to suffer major depression. He was moved sidewards to a self-limiting position and was, in effect, required to leave Simonds by about June 2011. He did, in fact, resign his employment by letter dated 17 June 2011. He started his own business, as a way of obtaining a job and an income. The preparatory steps that pre-dated his resignation had been done in the knowledge that his days at Simonds were numbered so that he would be ready to start the business as soon as he resigned. His business reached a turnover of $4.5m for the year ended 2013 but, as at the time of the proceedings, was yet to yield an income for the plaintiff.

The respondent's case at trial

16 The case the respondent ran at trial was that the head injury caused no more than mild concussion and, although there was some reduction in the speed of his reasoning processes after the accident, he recovered to premorbid levels within a relatively short period. To the extent to which the appellant displayed psychological difficulties, including increased aggression, the respondent submitted that these constituted an emotional reaction to the way he was treated on the ship by the respondent after the accident, to which he took great umbrage. The respondent submitted that he did not meet the threshold for an award of damages for non-economic loss. It contended further that he ought not be awarded any amount for loss of earning capacity as there had been no reduction in his remuneration during the limited time before he recovered and that, as he had left Simonds of his own accord, there was no reduction in his future earning capacity.

The evidence at trial

17 The appellant gave evidence that he had been employed by Simonds since 2005 and had been promoted in 2008 to Building Manager. He belonged to a group of five senior executives, who referred to themselves as "the Knights". The group included Paul McMahon, who met the appellant on 1 July 2007 when he started working for Simonds. Mr McMahon became the Chief Executive Officer of Simonds in 2010.

18 In June 2009 the appellant decided to take a friend, Peter Hodges, whose wife had recently died of cancer, on a cruise in the South Pacific conducted by the respondent. The cruise left from Sydney on 22 June 2009. On 26 June 2009 the appellant and Mr Hodges were talking to one of the respondent's staff when the ceiling fell on top of the appellant's head. The appellant filled in by hand and signed and dated a medical registration form in which he set out his name, date of birth, and a description of his "chief complaint" in the following terms:

"lighting and ceiling panels fell on my head, neck, hand"

19 The appellant consulted Dr Bunyan, who ran the infirmary on the ship. The appellant vomited once during the day and there was some dry retching at night. He slept. He returned to Dr Bunyan on the following day as he was still feeling unwell. Dr Bunyan suggested a CT scan as a precaution and referred him to a hospital at Suva, one of the ports on the voyage. Her letter of referral dated 27 June 2009 read:

Mr Welsh was unfortunately struck on the head yesterday by a falling ceiling tile and light fitting. There was no loss of consciousness and no amnesia. Whilst he has only a small abrasion to his left forehead, and no haematoma, he has had some other head injury symptoms in the last 24 hrs.

He reports having vomited once yesterday, and having had episodes of dry-retching through the evening and this morning. He also has a headache which has not been relieved with paracetamol and ibuprofen. He describes felling tired and generally unwell, with an inability to walk properly.

On examination this morning fundoscopy is normal, and there is no demonstrable neurology.

I would be most grateful if you could exclude a brain injury with a CT head scan. If appropriate investigations are normal, I am more than happy for Mr Welsh to reboard the ship prior to sailing this evening at 17.00.

20 The appellant went by taxi from the ship to the hospital in Suva, where he had a CT scan which was normal. By the time he returned to the port, the ship had already sailed. In order to re-join the ship, the appellant caught a taxi to the nearest airport, then a plane to the airport nearest to Port Denaru and then a taxi to the port itself where the ship was moored. As he had little cash and a credit card with a low limit on him, he bartered his camera to raise the necessary funds to undertake this journey. On his return to the ship, he was, at first, debarred from boarding as he did not have the correct documentation. However, he was so insistent that he was eventually allowed to board the ship.

21 The appellant regarded the attempts that were made by the respondent to ameliorate the situation, which included expressions of regret and the gift of two bottles of wine, as manifestly insufficient to redress the wrongs which he considered had been done to him. Although the appellant felt people were sorry about what had happened he did not receive what he considered amounted to an apology. He was not, however, critical of the treatment he had received from Dr Bunyan. Indeed, he went to see her on 3 July 2009 and told her that, although he intended to make a complaint about the incident and the way he had been treated, he had no complaint about her or her medical team.

22 The ship docked in Sydney on 5 July 2009. The final indignity, as far as the appellant was concerned, occurred when he was settling up his account before final disembarkation and issues arose concerning his credit card and whether it had sufficient credit to pay for the $14,000 worth of art which he had purchased on the cruise. The cruise was an upsetting and humiliating experience for the appellant in the course of which he felt "devalued" and that he had been treated like "an imbecile".

23 The appellant admitted that he saw a solicitor, Mr Rodriguez, shortly after the end of the cruise and that his primary motivation at the time had been to obtain compensation for the way he was treated by the respondent, rather than to obtain damages for the head injury. He did not, however, commence proceedings until after he had left Simonds.

24 The appellant returned to Melbourne after the cruise concluded and went back to work. He gave evidence that he found it hard to concentrate and work out problems. Although he was prone to aggression, he became even more aggressive. In June 2010 he was transferred from the position of Building Manager to the position of Manager, Strategic Planning and Development, which was not a long-term role. According to the appellant and Mr McMahon, Mr McMahon had told him that he would have to leave Simonds. At the time of the proceedings the appellant was engaged to be married although no wedding date had been set. He had invited Mr McMahon to be his best man.

25 The appellant resigned from Simonds by letter dated 17 June 2011. The letter read, in part:

"I leave, not to work for anyone else, or with any ill feeling to Simonds, rather it is to continue my voyage through our industry, I intend to create a small building company that will convey to my clients and the industry, the best of what I've learned over many years in the industry, and hopefully show some of the leadership qualities you have instilled in me over the last few years."

26 The appellant gave evidence that he started his own business through a company, Graham Welsh Homes Pty Limited, because he did not believe that he could get a job elsewhere. He registered it the year before he left Simonds. He also renewed his builder's licence, although he did not need it while he was at Simonds. He accepted that when he left Simonds he was intending to pursue a successful career as a builder and that that was what he was trying to do: he did not set out to fail. His business employed four full-time and three part-time staff. He also set up another company, known as the Avenger Group, which had a web-site which contained representations about the capacity of the business and his own capacity. The purpose of the Avenger Group was to attract Chinese investment. He accepted that there was additional pressure on him because he was running his own business and no longer had the support of the "Knights" that he had at Simonds.

27 The appellant ultimately accepted in cross-examination that he had had a serious head injury in 1992 as a result of being assaulted by his ex-wife's lover. He suffered nausea, ataxia and headaches. He had denied any previous head injury to all doctors whose evidence was relied upon in the proceedings.

28 The appellant's health pre-accident was compromised by obesity and excessive alcohol consumption. He had been taken by ambulance to hospital for chest pains in 2005.

29 Mr McMahon gave evidence in the appellant's case about the appellant's change in personality after the cruise. He said that the change did not appear to be immediate, although the appellant exhibited some paranoia about being left on the island. Mr McMahon did not notice any difference in the appellant's ability to multi-task, although he did notice changes in the appellant's ability to relate to others. Mr McMahon decided to move the appellant from his position as Manager of Building to Manager of Strategic Planning and Development because he appeared to be losing the respect of his team.

30 Mr McMahon agreed that the appellant was looking to get an agreement in place to protect his entitlements and that this explained the circumstance that the letter that set out the appellant's contractual entitlements bore the same date, 17 June 2011, as his letter of resignation. Mr McMahon said that, as he was the CEO, there was no difficulty getting Simonds to pay the amounts specified in the agreement and that he was happy to pay the money because of the appellant's skills and exertion.

31 Peter Reilly, who had been approached by the appellant to work for Simonds in 2008, gave 'before and after' evidence about the appellant. He said that the appellant had been very knowledgeable about Building Codes and Regulations. He gave evidence that he became very aggressive after the accident. He was upset when his work mates laughed when they heard about the saga of the cruise.

32 Christopher Burkitt, who was the general manager of Operations at Simonds and had met the appellant when he joined the company in August 2007, gave evidence that after the accident the appellant could not remember the Building Codes, although he did not observe any change to his social behaviour.

33 One of the appellant's sons, Christopher, gave evidence as to his father's loss of memory, confusion and inability to remember what he had been told.

34 The appellant agreed that there had not been any suggestion in any CT scan that there was any abnormality caused by any head injury. His solicitor, Mr Rodriguez, had sent him to a neuropsychologist, Dr Carol Burton, who had administered psychometric tests. Dr Burton made an assessment of the appellant's pre-morbid intelligence to assess the effects of the accident. She opined that his processing speed had slowed but that it had improved over time. She was not prepared to say that it had returned to pre-morbid levels. She expressed a view that he was suffering from depression and post-traumatic stress disorder but accepted in cross-examination that she lacked the expertise to make such diagnoses. She noted the appellant's substantial sense of grievance.

35 The appellant had also been referred to Dr Poon, a neurologist, by Dr Reid, his general practitioner. Dr Poon gave evidence that post-concussion syndrome is a trauma where there is loss of consciousness, the consequences of which are determined by the severity of the trauma. He considered the appellant to have suffered a mild post-concussion syndrome. His processing speed had been affected but not his memory. Dr Poon considered that such matters were best determined by neuropsychological testing. He opined that the processing speed would improve as the trauma was mild and there was no major structural brain injury. Dr Poon was informed of the head injury in 1992 but opined that it was not relevant to the appellant's pre-morbid assessment, which he considered should be determined by reference to the period from about 2006, rather than earlier periods. He agreed in cross-examination that it was likely that, as the concussion sustained on the ship was mild and there was no significant brain injury, there would be no long term deficit as far as executive functioning was concerned.

36 In July 2010 Dr Poon referred the appellant to a psychiatrist, Dr Fong, who saw him on 16 and 23 September 2010. The letter of referral read as follows:

"Thank you for seeing this 52 year old manager of a national building company with verbal aggression issues. This problem arose after an incident on a cruise ship which left him stranded. It is causing a lot of problem in the workplace as he has been cautioned several times and asked to take time off work. His son has also mentioned that his concentration span is less than his usual self and be [sic] very short tempered.

It would be a shame if he loses his current job as a consequence of the above. He would appreciate any assistance that you could offer."

37 The appellant was referred by his solicitors to Professor Dennerstein, a psychiatrist, who saw him once for medico-legal assessment on 7 December 2012. He confirmed that he was the source of the detailed history Professor Dennerstein documented in her report, which set out the numerous indignities to which the appellant considered he had been subjected on the cruise. Professor Dennerstein considered that his loss of brain functioning was what caused the depression as opposed to the way he was treated on the cruise by the respondent. Her report and her opinion were the principal basis on which the appellant's claim for substantial damages rested.

38 There were several medical reports tendered in the appellant's case, the authors of which were not cross-examined. The evidence also included a detailed economic loss report and various items of correspondence as well as clinical notes, CT scans and the like. As this evidence did not appear to play a role in the grounds of appeal, I do not propose to address it further.

39 The only expert called by the defendant who was required for cross-examination was Professor Crowe, a neuropsychologist who also conducted psychometric tests on the appellant and who commented on Dr Burton's reports. He considered that, based on his assessment of his pre-morbid functioning, the appellant had returned to his pre-morbid functioning. He considered there to be three possible causes of the slowing of processing speed: first, mild traumatic brain injury; secondly, sleep apnoea, obesity, diabetes and microvascular disease; or thirdly, an emotional response to the injury. Professor Crowe excluded the first reason, which was the only one that was compensable, as explaining any ongoing difficulties.

40 The respondent also relied on medical reports the authors of which were not required for cross-examination. Dr Shan, a psychiatrist, considered the appellant to be intensely preoccupied with the way he had been treated. He opined:

"I think that the patient can be categorised to have some symptoms of Adjustment Disorder with anxiety, but many of the emotions and feelings he describes as difficult to distinguish from normal emotions for any person who has had a disappointing experience that they have become very pre-occupied with and seek redress for."

41 The respondent also tendered an extract from the website for the Avenger Group as well as the appellant's tax returns and the profit and loss statements for the new business.

Final submissions at trial

42 The appellant's counsel confirmed in closing submission that his case was that his condition was a result of the physical injury and not a result of the way he was treated on the ship. He accepted that there was no medical evidence to link his psychiatric condition with his obsession with his treatment on the ship.

43 The respondent confirmed that it contended that the obsession was the cause of his problems and not the head injury. The respondent resisted an award of substantial damages on the basis that the physical injury resolved quickly and that, if there was any ongoing psychiatric injury, this was to do with his obsession with the way he was treated and was not compensable.

The reasons of the primary judge

44 It was accepted that his Honour's judgment was in two distinct parts: the first part ran from [1] to [55] of the reasons; the second part from [56] to the end.

45 The first part contained an introduction ([1]-[6]) followed by a recitation of the appellant's evidence ([7]- [35]). His Honour then turned to the medical evidence and referred to his treatment by his general practitioner on his return and the referral to Dr Poon ([36]-[39]), who in turn referred him to Dr Fong. His Honour set out Dr Fong's examination and diagnosis at [40]- [43]. His Honour referred to Mr McMahon's evidence about the appellant's aggression and lack of concentration ([44]-[45]).

46 His Honour turned to the evidence of Dr Burton and set out the history the appellant had given her of his complaints, which included reduced concentration and memory, loss of sharpness of thought, irritability and stress and anxiety. His Honour at [49], interposed an assessment of the appellant's presentation in the witness box as follows:

"There did not appear to me, on hearing the Plaintiff's evidence and observing him in the witness box, to be any loss of sharpness of thought or concentration. He was very lucid when he wanted to be, although sometimes prolix. Nor did I notice any expressive speech difficulties during the course of his evidence, which unfortunately had to be interrupted on a number of occasions, to interpose witnesses from Melbourne."

47 The primary judge extracted a passage from Dr Burton's report which concluded that the major finding was of chronic post-traumatic stress with depression, reflecting serious psychological disability.

48 His Honour noted that the respondent relied on Dr Shan and Professor Crowe and extracted Professor Crowe's conclusion from his report of 5 February 2012, of which this passage is part:

"As a result I consider that Mr Welsh did indeed suffer a mild traumatic brain injury as a consequence of the injury. This has now almost completely resolved with the exception of the fact that he has been left with a very mild level of slowing of speed of information processing which has been resolving over the serial assessments, but no other cognitive deficit of note."

[Emphasis added by primary judge.]

49 The primary judge, at [54], set out extracts from Professor Crowe's later report of 18 August 2013 in which he opined that the appellant's current condition was attributed to other health problems or to an emotional response to the way he was treated, rather than to mild traumatic brain injury. At [55] the primary judge set out Dr Shan's conclusion that the appellant suffered mild Adjustment Disorder related to the incident and that a person of normal fortitude would have suffered such an illness as a result of the incident.

50 The second part of the primary judge's reasons commenced at [56]. His Honour said:

[56] I have reached the conclusion that as a result of a panel in the ceiling of the ship's passage falling on the left hand and head of the Plaintiff whilst the ship was at sea on 26 June 2009 the Plaintiff suffered a mild traumatic brain injury with residual minor sequelae, significantly some slowing of his brain processing speed. This has affected his daily life, although on the basis of his evidence before me there is exaggeration in his complaints, particularly in relation to his work activities and to some extent his social life.

[57] He is the CEO of his own company that turns over $4 million annually and employs up to seven people with subcontractors. His evidence and his histories to doctors record a preoccupation by him of the way he was treated by the shipping line after his accident.

[58] I consider the Plaintiff, as a result of the incident on the ship in 2009 to be 20% of a most extreme case and I award him $18,500 for non-economic loss.

51 The primary judge noted the agreement as to past out-of-pocket expenses of $2,130.14 and allowed this sum. His Honour assessed damages for future out-of-pocket expenses as follows at [60]:

"For the future I consider that the Plaintiff may need some medication to cope with this mild depression from time to time and allow $1,000 to cover that eventuality."

52 The primary judge said, in respect of economic loss, at [61]:

"The Plaintiff claims a diminution in earning capacity that his counsel submitted should result in a substantial sum for past and future economic loss. The Plaintiff does have a residual earning capacity as acknowledged by his counsel in submissions, but at a reduced level when compared to what he was earning in the year prior to his resignation in June 2011 . . ."

[Emphasis added]

53 There followed a summary of the plaintiff's evidence about his new business and what he might otherwise have done. The primary judge concluded his assessment of loss of earning capacity as follows:

[68] The Plaintiff is to be compensated for his loss of earning capacity. I set out earlier in this judgment the relative minor injury the Plaintiff suffered whilst on the ship and the continuing, if minor sequelae, in particular a slight reduction in his brain's processing speed.

[69] The Plaintiff's evidence in the witness box - his lucidity and confidence in dealing with questions generally and about the building industry, in particular, together with the fact that he established (and continues to run) his own building company in a tough environment, convince me that when the Plaintiff left Simonds he took with him an undiminished earning capacity.

[70] His claim for past and future economic loss therefore fails.

[Emphasis added]

The grounds of appeal

Ground 1: alleged error in determination that the only injury suffered was a mild traumatic brain injury

54 Dr Morrrison contended that the primary judge failed to address the psychiatric condition that developed as a result of the physical injury. He submitted that the primary judge failed to address either Professor Dennerstein's evidence or Dr Fong's opinion that he suffered depression as a result of the injury or the lay evidence of Messrs McMahon, Reilly, Burkitt and the appellant's son, Christopher.

Ground 2: alleged error in determination that the appellant had an undiminished earning capacity when he left Simonds in June 2011

55 The appellant relied on the primary's judge's alleged failure to address the evidence referred to in respect of the first ground, as well as the appellant's evidence, which was corroborated by Mr McMahon, that he did not resign from Simonds because he wanted to, but rather because he had to. The appellant contended that the primary judge was in error in finding that the fact that he had set up his own business was evidence of undiminished earning capacity, when the uncontested evidence was that it was trading at a loss. He also contended that the primary judge's use of the appellant's demeanour in giving evidence to infer undiminished earning capacity was erroneous since this was a matter that required some expertise and had been the subject of opinion evidence. The appellant also pointed to the apparent inconsistency between the primary judge's finding that the appellant had a residual earning capacity at a reduced level (at [61]) and the finding that his earning capacity was undiminished (at [69]).

Ground 3: alleged error in not finding accident caused the loss of the job at Simonds

56 The appellant contended that the primary judge had erred in not finding that he had lost his lucrative job because of the injury

Ground 4: alleged assessment of damages for past and future earning capacity

57 The appellant contended that the primary judge erred in the assessment of damages because of his Honour's failure to address the psychiatric evidence.

Reasons

58 Rather than address the grounds of appeal separately, I propose to address the gravamen of the appellant's complaint, of which each ground is a particular manifestation. In substance, the appellant contended that the primary judge's reasons were manifestly inadequate to explain the conclusions reached, such that it was a matter of speculation to determine on what basis the primary judge had largely rejected the appellant's claim for substantial damages.

59 The principles governing a trial judge's obligation to give reasons are well established. They were recently summarised by McColl JA in Lu v Heinrich [2014] NSWCA 349 at [79]-[80] with reference to the principal authorities. The primary judge's obligation to address material evidence and make findings about material issues is of particular relevance to this appeal: Waterways Authority v Fitzgibbon [2005] HCA 57; 79 ALJR 1816 at [130] per Hayne J.

60 Despite Mr McCulloch's attempt to defend the reasons for judgment on the basis of the demands on busy trial judges and the desirability of reasons being delivered while the evidence was still fresh in the judicial mind, I am persuaded that the primary judge fell short of the standard required of trial judges. It is not enough to extract passages from the evidence of particular witnesses without finding facts from which it can be discerned which parts of the evidence are accepted and which parts rejected. Nor is it sufficient to reject a claim for economic loss on the basis of undiminished earning capacity without dealing specifically with the way the claim was put.

61 Primary judges are required to explain to the losing party why he or she lost and to explain the process of reasoning that led to the result. The reasons should be read fairly and as a whole but expressions of preliminary views recorded on transcript in the course of evidence and argument are no substitute for the giving of reasons, which is a fundamental aspect of the judicial task: Director of Public Prosecutions (NSW) v Illawarra Cashmart Pty Limited [2006] NSWSC 343; 67 NSWLR 402 at [19] per Johnson J. It is open to a judge to accept, and incorporate by reference, one party's submissions, as long as it is clear what is being accepted: see, for example: Scoway Pty Limited v Faxon Pty Limited [2004] FCA 249 per Hely J at [10] - [11].

62 The primary judge was obliged to adjudicate between the two cases put by the parties. In particular his Honour was obliged to explain why, if it be the case, he rejected the psychiatric claim. His Honour was also obliged to explain, if he did not accept the evidence of the appellant and Mr McMahon that the appellant had to leave Simonds because of his post-accident behaviour, rather than because he wanted to start a new business, why he did not accept this evidence. His Honour would also have been required to articulate why, if the former had been found, the loss of the Simonds job did not sound in damages. These two issues were fundamental to the difference between the two cases put.

63 There are troubling aspects of the reasons. The primary judge appears to have rejected the appellant's psychiatric case although no reasons are given for rejecting Professor Dennerstein's or Dr Fong's opinion. However, the primary judge, by allowing $1,000 for future out of pocket expenses for treatment for mild depression, appears to have accepted not only that depression, albeit mild, is causally related to the accident, but also that the mild depression is ongoing, since if it were not, there would be no need for any such allowance. To that extent, the primary judge did not accept the respondent's case at trial.

64 The evidence of the appellant and Mr McMahon that he had to leave Simonds was not addressed in such a way that one could discern whether, or why, it was rejected. Mr McCulloch submitted that the terms of the resignation letter amounted to incontrovertible evidence that it was the appellant 's decision to leave. However, I do not consider that the letter is susceptible of only that interpretation. It is a matter of common experience that people who have no choice but to leave their employment may pretend to leave of their own free will in order to preserve their self-esteem and reputation. Employers may collaborate in that fiction, for the sake of appearances, past association and the morale of remaining employees, as well as that of the departing employee. It was open to the primary judge not to accept this evidence, particularly if his Honour did not accept that the preparatory work done for the new business pre-dated the discussion with Mr McMahon. However, the evidence needed to be addressed and reasons given for the finding that the appellant's earning capacity was undiminished.

65 The primary judge did not, in my view, address the appellant's case that the accident caused a substantial loss of earning capacity which ought sound in substantial damages, because it:

(a) resulted in his having to leave secure, stable, well-remunerated employment at a time of his life when he was not, because of his age, generally employable; and

(b) effectively required him to start his own business with all the attendant risks and stresses in order to obtain a job and an income.

66 It is also difficult to reconcile, without reasons, the primary judge's award of 20% of a most extreme case for non-economic loss under s 16 of the Civil Liability Act 2002 (NSW) with his Honour's finding that he suffered only a mild brain injury which did not have any effect on his earning capacity beyond June 2011 (and none before, since his remuneration was not affected). Although a substantial award for non-economic loss is not, of itself, inconsistent with a modest, or no, award for loss of earning capacity, the appellant contended that his psychiatric condition as a result of the accident was the reason he lost his job. In these circumstances, the trial judge was obliged to expose in the reasons why there was an award of that magnitude for non-economic loss and no award for economic loss.

67 Nor is it clear whether the primary judge, when referring to the appellant's residual earning capacity as "reduced" (at [61]), was merely intending to paraphrase the appellant's submissions, or whether it amounted to a finding. If it was the latter, it is inconsistent with the finding of undiminished earning capacity in [69] of his Honour's reasons.

68 Mr McCulloch submitted that, having regard to the short period between the conclusion of the trial and the publication of reasons, this Court ought infer that the primary judge still had in mind all the evidence in the proceedings, including that of Professor Dennerstein and Dr Fong, and ought be taken to have had regard to it, although no mention was made of it in the reasons. This argument has some attraction. I do not regard the obligation of trial judges to give reasons to require a recitation of all the evidence adduced in the proceedings. However, the evidence to which no reference was made was fundamental to the appellant's case. The resolution of the differences between Professor Dennerstein on the one hand and Dr Shan on the other was required for a proper adjudication of the issues to be determined at trial. The primary judge failed in his duty to refer to material evidence and make findings about material issues in the case.

69 I regard the primary judge's reasons as inadequate to fulfil the judicial function of giving reasons. This amounts to an error of law.

Whether a new trial should be ordered

70 Before the court can order a new trial, it must appear to the court that "some substantial wrong or miscarriage has been thereby occasioned": Uniform Civil Procedure Rules 2005 (NSW) (UCPR), r 51.53(1). In the context of the present appeal, this issue requires a determination whether there has been a "failure to provide a trial in which, in a significant respect, the assessment of the evidence was not flawed": Mastronardi v New South Wales [2007] NSWCA 54 at [82] per Basten JA, Ipp and Campbell JJA agreeing.

71 Mr McCulloch submitted that it would be inimical to the overriding purpose provided for by s 56 of the Civil Procedure Act 2005 (NSW) "to facilitate the just, quick and cheap resolution of the real issues in the proceedings", for this Court to order a retrial. He submitted that, on any view, the incident was a minor one; the psychiatric sequelae were compensable only if linked to the physical trauma (there being no evidence to support a conversion disorder) and the primary judge ought be taken to have largely rejected the appellant's claim for damages. Mr McCulloch reminded this Court of the cost and time taken by the first trial and the inevitable duplication that will be involved if there is a re-trial.

72 Although not every failure to give adequate reasons will result in the appearance of a substantial wrong or miscarriage, such failure is a significant error of law. A trial by judge alone is fundamentally different from one by jury in that the former confers a right to reasons. The jury is taken to have considered all the evidence and applied the law correctly as long as the directions are not erroneous: Demirok v The Queen (1977) 137 CLR 20 at 22 per Barwick CJ. A judge is entitled to no such presumption: a judge is to be judged by his or her reasons, which are understood to be the record of the steps in fact taken in arriving at the final result: Waterways Authority v Fitzgibbon at [130] per Hayne J. This is not to say that reasons must be long, but they must address the cases put and the crucial evidence upon which adjudication must be made to determine the issues.

73 Because of the inadequacy of the primary judge's reasons, I am not satisfied that his Honour considered the evidence to which no reference was made. Nor am I satisfied that the primary judge appreciated that, if the appellant established that he had left his job at Simonds because he was required to leave by reason of the difficulties in brain function occasioned as a result of the head injury, he may have an entitlement to be compensated for the loss of such a remunerative job by an award of damages for loss of earning capacity, even though he was still capable of working full time and setting up his own business. The appellant has, accordingly, been deprived of a fair trial of the assessment of his damages: Mastronardi v State of New South Wales at [86] - [87] per Basten J, Ipp and Campbell JJA agreeing.

74 The overriding purpose in s 56 of the Civil Procedure Act is relevant. However, one cannot ignore the adjective "just" in the phrase "just, quick and cheap resolution". Justice demanded that the primary judge consider all the evidence, address the significant evidence, make findings sufficient to adjudicate between the cases put by each party and give reasons that sufficiently recorded these matters. The primary judge's reasons did not fulfil those requirements. Even in so far as the primary judge did give reasons, they do not permit this Court to discern on what basis the award was made. The case did not admit of only one assessment as to the various heads of damages. The extent to which the applicant's injuries sounded in damages involved an assessment of evidence of experts and credibility of witnesses, as well as a consideration of documents, including clinical notes and other business records.

75 I am satisfied that there has been a substantial wrong or miscarriage within the meaning of UCPR r 51.53. Although there is undoubted and substantial prejudice to the respondent in being required to conduct a new trial, including the inevitable disadvantage of having to cross-examine a plaintiff, such as the appellant, who has already been cross-examined, this does not militate against an order for a re-trial in the present case.

76 It has been necessary to address the evidence at trial and the primary judge's reasons in some detail for the purposes of this appeal. For reasons already given, this is not an appeal where this Court can determine the matter for itself, using its powers under s 75A(6) of the Supreme Court Act 1970 (NSW). My reasons ought not be read as expressing any view about the merits of the appellant's claim for substantial damages.

77 Since drafting my reasons I have had the benefit of reading in draft the additional observations of McColl JA and Sackville A-JA, with which I respectfully agree.

Proposed orders

78 I propose the following orders:

(2) Appeal allowed.

(3) Set aside the orders made in the District Court on 27 September 2013.

(4) Order that the matter be remitted to the District Court for a new trial limited to damages.

(5) Order that the costs of the new trial be in the discretion of the trial judge presiding at the second trial.

(6) Order the respondent to pay the appellant's costs of the appeal and to have a certificate under the Suitor's Fund 1951 (NSW) if otherwise qualified.

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Decision last updated: 12 December 2014