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The Art of Discounting: Assessing Past and Future Economic Loss

Daniel Peebles (the Plaintiff) worked as a truck driver. He injured his back during the course of his employment, and at the end of 2014, he became permanently unable to work because of the injury.

The Plaintiff sued his employer for damages.

The Plaintiff's case was heard by the Supreme Court of Queensland, and he was awarded damages of $764,345.12. In making his assessment of damages, the trial judge awarded economic loss damages as follows:

  • Past economic loss damages were awarded at a net weekly rate of $1,300.00, and then discounted by 50%, totaling $174,200.00;
  • Future economic loss damages were awarded at a net weekly rate of $1,200.00, and then discounted by 50%, totaling $486,000.00.

The Plaintiff appealed against the trial judge's calculation of economic loss damages on the basis that:

  1. the trial judge made an error when applying a 50% discount to both past and future economic loss, on the basis that such a discount was unreasonable, and
  2. the trial judge made an error by applying a multiplicand of $1,200.00 net per week for future economic loss.

These were the primary issues to be determined by the Court of Appeal.

During the trial before the Supreme Court of Queensland, evidence was accepted that the Plaintiff suffered a pre-existing symptomatic degenerative disease in his lumbar spine. The main point of contention between the parties was whether, absent the work injury taking place, the Plaintiff would have suffered a similar disabling back condition in any event.

The trial judge accepted it was as likely as not that the Plaintiff would have suffered a similar disabling back condition absent the employer's negligence, and saw fit to apply a 50% discount to both past and future economic loss damages.

Past economic loss

With respect to past economic loss, the Court of Appeal found the application of a 50% discount was in fact an error. The Court said the Plaintiff's health and circumstances over the pre-trial period were known, and many of the contingencies to which the 50% discount accounted for, did not occur. Secondly, given the pre-trial period of loss was no more than 5 years, the possibility the Plaintiff would have suffered a disabling back condition absent the work injury was likely to be small. The Court of Appeal found a reduced discount rate of 10% should be applied instead.

Future economic loss

With respect to future economic loss, the Court of Appeal did not agree the trial judge made an error when applying the 50% discount, as it was open for the trial judge to do so. However, the Court of Appeal accepted the trial judge made an error by applying a multiplicand of $1,200.00 net per week, in circumstances where the multiplicand used to assess past economic loss was $1,300.00 net per week. Therefore, the Court of Appeal assessed future economic loss damages at a rate of $1,300.00 net per week, but maintained the 50% discount.

Overall, the Court of Appeal's re-assessment of the Plaintiff's economic loss damages resulted in an increase to the overall damages amount by $202,707.80, to total $967,052.92.

This case provides useful guidance on the assessment of economic loss damages, in cases where a work injury has caused a quantifiable loss of income. In such cases, discounts to past economic loss damages are more often than not relatively modest, given the Plaintiff's pre-trial circumstances are always known to the parties, and there also needs to be some consistency with the calculation of earning capacity into the future.

Article written by Cameron Seymour (Partner) and Rachel Coleman (Senior Associate).

"The content of this publication is for reference purposes only. It is current at the date of publication. This content does not constitute legal advice and should not be relied upon as such. Legal advice about your specific circumstances should always be obtained before taking any action based on this publication."