Overview

For well over 100 years, common law courts have denied workers a right to recover damages for psychiatric injury suffered as a result of wrongful dismissal from employment[1] – a rule which has persevered despite exceptional cases succeeding. But with changed community expectations around rights to psychological safety at work and the destigmatisation of psychological injury, it would seem that the scene is well and truly set for the High Court to recognise the existence of an employer’s duty of care to avoid foreseeable risks to psychological health in the course of investigative and disciplinary processes.

Barring settlement, sometime in the next year the High Court will deliver its decision in Elisha v Vision Australia Limited[2]– a case involving a psychiatric injury suffered by an employee whose employment was unfairly terminated without regard to proper process. Despite finding that there had a been a breach of duty, the trial judge found that damages for psychiatric injury were not available because they were too remote, citing the principle in Addis [3]. On appeal to the Victorian Court of Appeal, the decision was upheld and from there, the plaintiff sought, and was granted, special leave – by 5 judges – to appeal to the High Court.

For the reasons outlined below, it is submitted that the High Court will – and ought – recognise the existence of a duty of care to avoid risks of psychiatric harm on the part of employers in their management of investigative and disciplinary processes – because otherwise, there will be no congruence between community standards, legislated obligations (at least in Queensland) and common law principles.

A bit of history

In State of New South Wales v Paige[4]it was found that an employer does not owe an employee a duty of care to take reasonable care to avoid psychiatric harm in the conduct of workplace investigations. In Paige[5], the Court decided that the allegations related to the employer’s right under contract to investigate an alleged incident and to make decisions about the plaintiff’s contract of employment. The court found that as a result of this contractual entitlement, it was outside of the scope of the duty owed by the employer to provide a safe system of work to avoid psychological injury.

Some years later, the Queensland Court of Appeal considered a broadly analogous set of circumstances in Govier v The Uniting Church in Australia Property Trust.[6]There, the appellant had suffered psychiatric injury which she alleged was caused by two letters being issued by her employer, when the employer had been given a medical certificate saying she was unfit for work (she had been hospitalised because of an injury suffered in a workplace assault). Initially the worker had been stood down on full pay pending an investigation, but some two weeks later, the second letter indicated that the plaintiff had refused to attend an interview and called upon her to show cause why she should not have her employment terminated. She psychologically decompensated as a result. In the District Court, the plaintiff was unsuccessful, and this decision was upheld in the Court of Appeal, following the rationale in Paige.[7]The plaintiff was successful in obtaining a grant of special leave to the High Court – showing the court’s interest in the issue – but this grant of leave was subsequently revoked when the court realised that the contract of employment had not been put into evidence and it was thought that this case was no longer the right vehicle for the issue to be considered.

Superimposed on this decision was the High Court’s later decision in Koehler v Cerebos[8] – where the court found that an employer does not owe an employee a duty of care to take reasonable care to avoid psychiatric injury where it wasn’t foreseeable that an employee may decompensate due to their workload. The court found that as the appellant had agreed to complete the tasks specified under the contract of employment, was being paid to do so, and had declined to have their duties modified, the employer could not have breached its duty of care – despite complaints by the employee about an excessive workload and an inability to cope.

In more recent times however, there have been some developments. In Kozarov v State of Victoria[9] the High Court found the employer was obliged to exercise reasonable care to protect employees against psychological injury, where an employee’s mental state is known to the employer. The court found that the State of Victoria had been placed on notice that the plaintiff was at risk of suffering psychiatric injury due to the work that she was performing. The court overturned the Court of Appeal of Victoria’s findings on causation and found that expert evidence led at trial and the plaintiff’s prior conduct showed that with appropriate advice and rotation of duties, the plaintiff would have transferred out of the Specialist Sexual Offences Unit and her injury would have been avoided.

On the broader issue of duty of care to prevent psychological injury, the Queensland Court of Appeal recently recognised in AAI Limited v Caffrey[10]  that a duty of care is owed to first responders. The court found that it is reasonably foreseeable that a first responder, such as a police officer, may suffer psychiatric and/or physical injury while performing the duties of their employment, such as attending the scene of a crash caused by a negligent driver. This was arguably just another incremental step in aligning the common law with community expectations around mental health.

Other cases in which the court has recognised a duty of care being owed by an employer, because they were on notice of a psychiatric injury being reasonably foreseeable include Bersee v State of Victoria (Department of Education and Training).[11]There, the trial judge found that the duty of care became engaged when there were “evident signs warning of the possibility of psychiatric injury”. [12] On appeal, the Court of Appeal found that psychiatric injury was reasonably foreseeable from the start of 2014, but agreed with the view of the trial judge that the respondent took reasonable steps to avoid psychiatric injury being sustained.

More recently, in Gairns v Pro Music Pty Ltd[13] Rosengren DCJ in the Queensland District Court distinguished Govier[14]in finding for a plaintiff who suffered psychiatric injury which was suffered following a meeting with the managing director and which resulted in a summary demotion. The court found that it was foreseeable that the plaintiff might decompensate because the defendant was aware that the plaintiff was “an emotional person and that his personality was such that he could quite easily become stressed and anxious”.[15] In the circumstances of that case, the court found:

Whether or not a duty of care arises is a question of fact. There can be an overlap with facts informing the nature and scope of duty and whether there has been a breach. That is because the nature and scope of an employer’s duty may itself vary depending upon what the employer knows or should reasonably have foreseen regarding the employee in question. The nature and extent of steps an employer is required to take in exercising reasonable care to avoid injuries to employees may be broader in respect of a particular employee, where circumstances raise the foreseeability of psychiatric injury to that employee. [16]

Contemporary Standards

In an employment context, psychological injury is undeniably on the rise. It is an issue not just for employers but also for their insurers. According to WorkCover Queensland’s 2022-2023 Annual Report, the number of psychological injury claims increased both in number and cost. Psychiatric injury claims accounted for 6.8% of claims (up from 6.1% in the previous year) and represented about 12.3% of total statutory payments. This is significant because the total cost of $173.6million meant that psychological injury claims cost more than double the average time loss for physical injuries. In the 2022/23 year, the average cost of a psychological claim was $68,136.00. Perhaps alarmingly, psychological and psychiatric injury claims represented 13.9% of all common law claims made – despite representing only 6.8% of statutory claims. The rate of common law claims for pure psychiatric injury has also increased – from 391 in 2021/2022 to 486 in 2022/2023 year.

In what could be seen as a significant departure from the environment at the time that the High Court considered Koehler v Cerebos,[17]employers in Queensland now have a legislated obligation to manage psychosocial hazards in the workplace[18]. When the High Court handed down its decision in Koehler[19] in 2005, it was acknowledged that stress can bring about psychological injury and that workplaces can of course be stressful, but the law didn’t then impose an overarching obligation on employers to recognise that their employees could be at risk of psychiatric injury caused by workload related stress. Now, the Worksafe Code of Practice[20] imposes a duty on a person conducting a business or undertaking, to manage psychosocial risks. By definition, a “psychosocial hazard” is a hazard that:

• Arises from or relates to –

1. The design or management of work; or
2. A work environment; or
3. Plant at a workplace; or
4. Workplace interactions or behaviours; and

• May cause psychological harm, whether or not the hazard may also cause physical harm. [21]

Significantly, the Code of Practice requires control measures to be implemented, having regard to workplace interactions or behaviours and the information, training, instruction and supervision provided to workers. Against this statutory background, how is it possible to deny the existence of the common law duty of care to manage the same risks, at least in in Queensland? The provision likely won’t be found to provide a cause of action for breach of statutory duty, but it certainly makes it plain that psychosocial hazards exist in workplaces and that employers are obliged to manage them.

The Elisha Arguments

In Elisha[22], the appellant has argued that the decision in Paige[23] iseither is not of such broad application or should be overruled. In written submissions, it was said:

The Court of Appeal treated the decision of the New South Wales Court of Appeal in Paige[24] as authority for denying the extension of the ordinary duty of an employer to its employees to encompass a safe system of investigation and decision-making with respect to discipline and termination of employment. Every step in the reasoning of the Court of Appeal below was predicated on the application and correctness of Paige: CA [245]-[246] (CAB 241-4). This involved error in two respects. First, Paige is not authority for such a wide proposition. Secondly, to the extent that it is, it is wrong and should be overruled. This Court should reject the artificial and incoherent preclusion: it should – consistently with other statements of this Court – hold that the duty can extend in particular case, subject to the ordinary brakes on liability. [25]     

Further, it was submitted:

That incoherence is only compounded in that the common law of Australia has long recognised that the duty extends to psychiatric, not only physical, injury. The law may be traced from the seminal reasons of Windeyer J in Mount Isa Mines Ltd v Pusey, through the authoritative decision of this Court in Koehler v Cerebos (Australia) Ltd and to the more recent observations of this court in Kozarov v Victoria. That the employer’s duty to provide a safe system of work extends to foreseeable psychiatric injury appears to have been common ground at all stages of the litigation leading to this Court’s decision in New South Wales v Fahy. It was even common ground in Paige itself, albeit it was not common ground that it extended to “duty of a character relevant to the [claim].[26]

The appellant also points to the Queensland Court of Appeal’s decision in Hayes & Ors v State of Queensland[27] as a case where the plaintiff succeeded on the basis of a failure on the part of the employer to provide adequate support during a disciplinary investigation. The appellant submits:

…it is highly artificial to draw a distinction between the employer’s responsibility within the investigation and the employer’s responsibility in the workplace as a consequence of the investigation. Indeed, it is incoherent to say that an employer has a responsibility to ensure an employee has adequate support in the workplace to “cope” with an investigation but no responsibility in the conduct of the very investigation which gives rise to the need for the employee to “cope”. [28]

On the other hand, the respondent in Elisha[29] submits that it was clear that the employer had no knowledge of any vulnerability on the part of the plaintiff and no basis to be concerned about the impact on the plaintiff’s psychological wellbeing of a disciplinary process. The respondent makes the point that despite having the opportunity to reconsider the correctness of Addis in Baltic Shipping[30], the High Court declined to do so.

Conclusion

Given the incremental steps taken by the High Court in Kozarov,[31] it seems to us likely that the High Court will take the Addis opportunity to expand the extent of the employer’s obligation to manage psychosocial risks in the workplace. Given developments in the law with respect to psychosocial hazards in the workplace, is difficult to see how Addis can remain good law against contemporary standards and expectations. In Kozarov,[32] Edelman J equated psychological injury with physical injury saying:

In this sense, it is no different from the employer’s duty to protect an employee’s physical integrity from the unreasonable infliction of harm. It has long been recognised that psychiatric injury “is just as really damage to the sufferer as a broken limb … [and] equally ascertainable by the physician.”[33]

As the appellant points out in Elisha,[34] “equating psychiatric with physical injury for the purposes of recovery also coheres with the approach of this court in other contexts” [35]

As Bob Dylan wrote, and then sang, in 1964, “the times they are a-changin’”: Come writers and critics who prophesise with their pen, and keep your eyes wide, the chance won’t come again.

[1] Addis v Gramophone [1909] AC 488.

[2] [2023] VSCA 288.

[3] [1909] AC 488.

[4] [2002] NSWCA 235.

[5] [2023] VSCA 288.

[6] [2017] QCA 12.

[7] [2002] NSWCA 235.

[8] (2005) 222 CLR 44.

[9] [2022] HCA 12.

[10] [2019] QCA 293.

[11] [2022] VSCA 31.

[12] Ibid.

[13] [2024] QDC 118

[14] [2017] QCA 12.

[15] Gairns v Pro Music Pty Ltd [2024] QDC 118 at [2].  

[16] Ibid at [53].

[17] (2005) 222 CLR 44.

[18] Managing the risks of psychosocial hazards at work Code of Practice 2022 (Qld).

[19] (2005) 222 CLR 44.

[20] Managing the risks of psychosocial hazards at work Code of Practice 2022.

[21] Work Health and Safety (Psychological Risks) Amendment Regulation, 2022 (Qld) s 55.  

[22] [2023] VSCA 288.

[23] [2002] NSWCA 235.

[24] Ibid.

[25] Elisha, ‘Appellant’s Submissions’, Submission in Elisha v Vision Australia Limited, M22/2024, 22 April 2024, [43]. 

[26] Ibid at [45]. 

[27] [2016] QCA 191.

[28] Elisha, ‘Appellant’s Submissions’, Submission in Elisha v Vision Australia Limited, M22/2024, 22 April 2024, [47].  

[29] [2023] VSCA 288.

[30] Baltic Shipping Company v Dillon (1993) 176 CLR 344.

[31] [2022] HCA 12.

[32] Ibid.

[33] Ibid at [103].

[34] [2023] VSCA 288.

[35] Elisha, ‘Appellant’s Submissions’, Submission in Elisha v Vision Australia Limited, M22/2024, 22 April 2024, [36]; See, eg, Moore v Scenic Tours Pty Ltd (2020) 268 CLR 326 at [55]–[57] (Kiefel CJ, Bell, Gageler, Keane, Nettle and Gordon JJ).

The work-from-home and flexible work dilemma has seemingly divided employers and workers over the last couple of years. Social media headlines have been dominated by stories of large employers trying to convince (perhaps even “coerce”) their employees to return to the workplace, while workers who have benefitted from the work life balance of telecommuting are clinging on to the arrangements by their fingernails. But there are evidentiary conflicts aplenty, and some studies have found that work-from-homers have been perfectly effective and improved worker’s quality of life, while others have found that not only has productivity decreased, but that culture has also suffered. So, who do we believe? Or does it simply depend on your perspective? Or have they all got it wrong?I was intrigued to read that in 2023, articles on flexible and remote work – and its impact on culture – dominated the list of “most engaged” stories on the LinkedIn platform. It’s clearly an issue of great concern to both employers and employees alike. In our so-called “post pandemic” period, the future of work is being debated like never before. From a 4-day work week to work-from-home, telecommuting and flexibility, opinions are as polarised as the Republicans and Democrats in the race to the Whitehouse. And while we must respect all sides of the debate, I struggle to see why we look to measure time, clicks and keystrokes when at the end of the day, all that both sides should be concerned with, is value creation.

There are at least a couple of truisms when it comes to remote work; it greatly enhances work life balance, but it also negatively impacts culture (and on one view, productivity). A 2023 OECD report has seen a “decoupling” of wages and productivity, perhaps due to the confluence of labour market shortages driving up wages while enforced and unplanned work-from-home brought with it productivity declines. But with the labour market pendulum beginning to swing back in favour of employers, do we risk seeing real wages erode as SME’s takes steps to tighten the expense line and balance the budget? 

The most immediate price paid by home-based employees was their privacy, as paranoid employers engaged with technology to monitor metrics such as activity on a keyboard and even mandated that cameras be left on so that managers could “watch” their pyjama-wearing workers in all their diligent and compliant glory. But if the OECD study is right, this surveillance by stealth did little to improve productivity. A period of “quiet quitting” was then the high-water mark of a labour market cycle in which workers held all the Aces – a phenomenon which did little to enhance national GDP.

So, what does the near future hold for remote workers? My guesses:

1. Organisations who want to emphasize collaborative practices will adopt policies of paying more to staff who work full time in the office
2. Most professional service employers will develop policies that enable a balance of remote and office-based work, by adopting technology-based measures of productivity
3. KPI’s will shift to focus on metrics of value creation, rather than tasks or time on the keyboard
4. Employees will make career decisions based on their personal circumstances and will sacrifice income or career progression if they value flexibility or family time more highly than their short-term career aspirations

At the end of the day, fairness is the key consideration. Employees know that they need to deliver a fair contribution judged by their role, responsibilities and remuneration. But employers need to be prepared to be malleable where the requested flexibility has little or no impact on organisational performance. To my mind, time and energy spent formulating and complying with rigorous policies and then arguing about exceptions would be much better spent on creating value for stakeholders of the organisation. And time at the desk doesn’t of itself, equate to productivity!

What “value creation” looks like will vary from one business to another, and measuring it isn’t always easy, but organisations that make it their strategic focus will inevitably outperform their time-focussed competitors.

To me, technology, training and balance are the keys to releasing the remote work tension and ensuring sustainable businesses. Just as total flexibility has too high a price on performance and culture, so too does stubborn inflexibility come at a cost too high for organisations to bear. If my guess is right, within 5 years, most professional services firms will forget measurements of units of time, clicks or keystrokes, but rather will have invested heavily in tech, systems, processes and policies that enable flexible but part-time work-from-homers to deliver measurable value, while providing employment conditions that respect a new post-Covid normal.

Introduction

Although not regularly a feature in personal injuries litigation, circumstances arise from time to time in which high income-earning plaintiffs own businesses, and a negligently caused injury causes significant financial loss. When it applies, the Civil Liability Act[1] seeks to cap the past and future loss that can be awarded to the present value of three times average weekly earnings – but will that statutory cap apply to prevent a claim to loss of capital where the value of a business has diminished significantly as a result of the inability of the ‘key player’ to continue to work in it due to accident related injuries?

The issue has been considered in New South Wales in circumstances involving a dependency claim but in the context of a claim to future loss of capital growth, rather than a loss of existing value that had been created prior to the relevant accident.

Not yet having been a contentious issue in any claims heard in Queensland, the issue remains a live one and it seems only a matter of time before an appropriate case is the subject of judicial determination.

The legislation

In Queensland, the Civil Liability Act (‘CLA’) was amended following the decision in Doughty v Cassidy[2] where the Court found that (the now repealed) section 51 of the Personal Injuries Proceedings Act 2002 required that the Court assess damages by disregarding assumed earnings which exceeded an amount equal to three times average weekly earnings. The restrictive interpretation taken by the court was addressed by the Civil Liability (Dust Diseases) and Other Legislation Amendment Bill 2005 in the explanatory notes which said that:[3]

The decision of the Supreme Court in Doughty v Cassidy had the effect of limiting the awards of damages that may be made for economic loss in personal injury claims further than what was originally intended by Parliament. The proposed amendment makes Parliament’s original intention clear given the decision.

As it presently stands section 54 of the CLA provides:[4]

54 Damages for loss of earnings

1. In making an award of damages for loss of earnings, including in a dependency claim, the maximum award a court may make is for an amount equal to the limit fixed by subsection (2).
2. The limit is an amount equal to the present value of three times average weekly earnings per week for each week of the period of loss of earnings.
3. In this section—present value means the value when the award is made.

The term ‘average weekly earnings’ is defined in the dictionary in Schedule 2 to the CLA. The relevant definition is:

Average weekly earnings, for a financial year, means the amount of Queensland full-time adult persons ordinary time earnings declared by the Australian Statistician in the original series of the statistician’s average weekly earnings publication most recently published before the start of the financial year.

The dictionary goes on to define ‘loss of earnings’ in the following terms:-

Loss of earnings means—

1. past economic loss due to loss of earnings or the deprivation or impairment of earning capacity; and
2. future economic loss due to loss of prospective earnings or the deprivation or impairment of prospective earning capacity.

Interpreting Section 54 of the CLA

Presumption Against Removing Rights

As a principle of statutory interpretation, it has long been held that legislation should not be interpreted as removing citizen’s rights unless it does so clearly and unambiguously. For example, in Kriz v King and Anor,[5] McMurdo P with whom Gerrard JA and Helman J agreed, said at [18]:

Because s59 restricts a claimant’s previously unfettered common law right to seek damages for gratuitous services, the section should only be regarded as limiting that common law right if it does so clearly and unambiguously: Potter v Minahan; Bropho v Western Australia; Coco v The Queen and Grice. For that reason, s59(1)(c) should be interpreted in the way which least diminishes a claimant’s common law rights to damages for gratuitous services…

Of course, in more recent times, this presumption seems to have been given less weight and it may be a principle of diminishing importance.[6] But it could be argued that section 54 of the CLA should be interpreted from the starting point of a presumption against the removal of common law rights.

Where there is ambiguity, the court may have regard to extrinsic material such as explanatory notes and second reading speeches – as a result of section 14B of the Acts Interpretation Act 1954, which provides that extrinsic material including the explanatory notes may be taken into account in assisting in interpretation.

The explanatory notes to the Civil Liability (Dust Diseases) and Other Legislation Amendment Bill 2005 are silent on the issue of loss of capital but does make it clear that the legislature thought that the interpretation taken in Doughty v Cassidy[7] was too restrictive. Might that influence a court to construe the CLA in a way which preserves existing heads of damage?

Statutory Cap in New South Wales

The New South Wales version of the Civil Liability Act contains a similar provision to that found in the Queensland legislation – though not the same. As a result, reliance on the NSW decisions is not particularly helpful. Section 12 of the Civil Liability Act 2002 provides:[8]

12 Damages for past or future economic loss—maximum for loss of earnings etc

1. This section applies to an award of damages—
   • for past economic loss due to loss of earnings or the deprivation or impairment of earning capacity, or
   • for future economic loss due to the deprivation or impairment of earning capacity, or
   • for the loss of expectation of financial support.
2. In the case of any such award, the court is to disregard the amount (if any) by which the claimant’s gross weekly earnings would (but for the injury or death) have exceeded an amount that is three times the amount of average weekly earnings at the date of the award.

The NSW provision has already been found to be problematic in the context of a dependency claim because of the reference to “the claimant’s gross weekly earnings”. The High Court found in Taylor v The Owners – Strata Plan No 11564[9] that the deceased could not be described as “the claimant”. As a result, the High Court thought that the New South Wales provision could not impose a cap based on the deceased’s gross weekly earnings given that they were not the “claimant”. That situation probably doesn’t arise under the Queensland version of the Act because it specifically includes a dependency claim, whereas the New South Wales legislation does not.

Loss of Capital

There have been many cases in which courts have already determined that a loss of capital on the part of a negligently injured plaintiff is foreseeable and subject to other relevant considerations, will be compensable. For example, in Argent Pty Ltd v Huxley,[10] the plaintiff was injured in a car accident and was the operative force behind a group of companies that manufactured and sold footwear. Hoare J found that when the family had to sell the business following his injuries, because it was sold without the benefit of an efficient manager of experience and business acumen, this depressed the price obtained. At first instance, His Honour said at 339:[11]

In my opinion if these companies can establish that their earnings have diminished to the extent of $X due to their having lost the services of the plaintiff Box, then subject to the limitations of foreseeability (The Wagon Mound [1961] A.C 288) prima facie they are entitled to damages for that amount. It does not appear to me that the principle of foreseeability prevents recovery of proved damage in these circumstances.

Similarly, in Raccanello and Ors v Motor Accident Commission,[12] Deuter J was called on to consider circumstances in which injuries to the plaintiff resulted in a decision being made to sell existing water entitlements because of pressure being applied to them by their financier. The plaintiffs felt they had no alternative but to sell assets. Her Honour found that the losses flowing from the sale of the water entitlements were caused by Mr Raccanello’s inability to return to truck driving until later in 2014 – and that this was solely a consequence of the relevant motor vehicle accident. In reaching this view, Her Honour had regard to the scenario in Wilson v Montemaggiori[13]where the Court had found that an injured plaintiff was entitled to recover losses suffered as a result of panicking after a motor vehicle accident and selling a heavily mortgaged property which then triggered additional capital gains tax. The decision to allow the damages for loss caused by the decision to sell was upheld on appeal in Montemaggiori v Wilson.[14] 

Statutory Cap in sec 54 CLA

Whilst it seems uncontroversial that a loss of capital can found the basis for an award of damages where it is reasonably foreseeable and flows from the plaintiff’s injuries, black and white soon develops into shades of grey when a statutory cap such as that imposed by section 54 of the CLA applies. It is beyond the scope of this article to consider the issue in the context of a claim per quod servitium (where the High Court in Barclay v Penberthy[15] has identified other restrictions on the recoverability of damages).

In New South Wales, the Court of Appeal had reason to consider a similar (though not identical) cap in Kaplantzi & Anor v Pascoe.[16] The case involved a dependency claim in which the deceased and his wife had conducted several businesses through two companies in which they each held shares. At trial, the primary judge held that the family had suffered financial loss due to the loss of chance that the value of the business assets would have increased, due to the efforts of the deceased. An award was made to loss of these future profits and value creation in a sum of $500,000. At the time, section 125 of the Motor Accidents Compensation Act 1999 provided:[17]

125 Damages for past or future economic loss— maximum for loss of earnings etc

1. This section applies to an award of damages:
   • for past or future economic loss due to loss of earnings or the deprivation or impairment of earning capacity, or
   • for the loss of expectation of financial support.
2. In the case of any such award, the court is to disregard the amount (if any) by which the injured or deceased person’s net weekly earnings would (but for the injury or death) have exceeded $2,500.

In allowing an appeal and denying the award of $500,000 the Court of Appeal (Hodgson JA with whom McColl JA and Cripps AJA agreed) said:[18]

In my opinion, the Motor Accidents Compensation Act in general, and s.125 in particular, shows a clear legislative intention that there be an effective limit put on claims by dependants of persons whose efforts would have produced very high financial benefits to those dependants, irrespective of how the remuneration or financial gains of those persons is structured or how their wealth-creating capacity is exercised. In my opinion it would be inconsistent with this intention to give a narrow construction to “net weekly earnings”……

The decision isn’t decisive in interpreting sec 54 of the Queensland CLA, as in Kaplantzi, the court was required to apply legislation that was aligned to that considered by the Queensland Court of Appeal in Doughty v Cassidy[19]. In addition, in Kaplantzi, the contentious award was in relation to future events rather than past. The decision is arguably of little assistance in considering a circumstance in which an injured plaintiff has seen a diminution on value of an asset that had already been created and which existed at the time of the relevant accident. 

In AAG v IAG Limited,[20] Principal Member Harris adopted the decision in Kaplantzi and found that the loss of capacity which affected an ability to generate assets, fell within the meaning of “loss of earning capacity” and was otherwise subject to the cap imposed by the legislation.[21]

The Member went on to accept that a loss of earning capacity impacting the goodwill and value of a business, might be recoverable as damages, but thought that it would need to be added to the assessment of past economic loss for the purpose of determining whether the statutory cap had been met.[22]

In Fkiaras v Fkiaras,[23] the primary judge had found that section 125(2) of the Motor Accidents Compensation Act 1999 imposed a maximum on the first step in the process of assessing impairment of earning capacity. Her Honour thought that the word “earnings” included wages but also extended to benefits received from capital gains and trusts as well as dividends from companies. On appeal,[24] the Court (Tobias JA, with whom Hodgson JA and Macfarlan JA agreed) observed that it is loss of earning capacity that is to be compensated, rather than loss of earnings, so income received from a business established pre-accident, by a plaintiff who retained no residual earning capacity, was to be ignored in the calculation of loss. Tobias JA, said:-[25]

[46] Once it is accepted, as in my opinion it should be, that the reference in s 125 to the word “earnings” is a reference to income earned by the exercise of the injured person’s earning capacity, it follows that the appellants’ construction of s 125(2) must be rejected. This section is concerned with the awarding of past or future economic loss due, relevantly, to the deprivation of the respondent’s earning capacity as a consequence of his injuries. Post-accident, that earning capacity was nil. But for his injuries he had full earning capacity which if exercised would have earned him in excess of the cap the subject of s 125(2).

Importantly, the Court thought that the reference to “earnings” is a reference to income earned by the exercise of the injured person’s earning capacity (which would support the argument that loss of capital is excluded from the cap).

The applicability of the Kaplantzi logic was, however, distinguished in Barden v Seric[26] where the Court was dealing with a claim for loss of opportunity to expand a farming business because of the compensable injuries.

Existing Capital or Assets

In circumstances in which an injured plaintiff has an existing asset (created through pastendeavours) which is reduced in value because of their injury, it is the writer’s view that it is highly arguable that an award of damages for that loss should be undiminished by the cap imposed by section 54 of the CLA.[27]

The New South Wales authorities referred to above are somewhat unhelpful in construing section 54 of the Queensland CLA given the significant amendments made to the Queensland legislation in 2005, following the Doughty decision.

Insofar as past loss is concerned, the court is required to consider past economic loss due to loss of earnings or the deprivation or impairment of earning capacity. Insofar as future economic loss is concerned, the court is concerned with loss of prospective earnings or the deprivation or impairment of prospective earning capacity.

In the author’s view, where the loss is the inability to realise the value of an existing asset where, but for the tortiously caused injuries, that value would have been realised, then a court might not regard the loss as one of a loss of earning capacity. After all, how could the capital loss be seen as “loss of earnings or the deprivation or impairment of earning capacity”- so as to come within the definition of “loss of earnings”? On the other hand, if a claim were made on the basis that the injury caused a loss of ability to continue to grow the capital value of the asset as well as a loss of income, then in the author’s view, those future losses would both properly be categorised as an impairment of prospective earning capacity such that they would be caught by the section 54 cap.

Further complexities arise in cases where corporate entities are used to hold business assets but as an issue of principle, there must surely remain a live prospect that a section 54 CLA cap will not be applied to loss in value of an existing asset caused by compensable injuries. Perhaps, in Queensland, a past loss of capital avoids the CLA cap?

[1] Civil Liability Act 2003 (Qld).

[2] [2004] QSC 366.

[3] Explanatory Notes, Civil Liability (Dust Diseases) and Other Legislation Amendment Bill 2005 (Qld) 2.

[4] Civil Liability Act 2003 (Qld) s 54.

[5] [2007] 1 Qd R 327.

[6] See for example, Coffey v Queensland [2010] QCA 291, [12]-[13], Daly v Thiering (2013) 249 CLR 381, [32]-[33]; King v Philcox (2015) 255 304, [42].

[7] Doughty v Cassidy [2004] QSC 366.

[8] Civil Liability Act 2002 (NSW) s 12.

[9] [2014] HCA 9.

[10] [1971] Qd R 331.

[11] Ibid, 339.

[12] [2023] SADC 84.

[13] [2010] WADC 55.

[14] [2011] WASA 177.

[15] [2012] HCA 40.

[16] [2003] NSWCA 386.

[17] Motor Accidents Compensation Act 1999 (NSW) s 125.

[18] Kaplantzi & Anor v Pascoe [2003] NSWCA 386, [32].

[19] Doughty v Cassidy [2004] QSC 366.

[20] [2021] NSWPIC 57.

[21] Ibid, [104].

[22] Ibid, [112].

[23] (District Court of New South Wales, Truss DCJ, 28 August 2009).

[24] Fkiaras v Fkiaras [2010] NSWCA 116.

[25] Ibid, [46].

[26] [2012] NSWSC 1480.

[27] It might be different however if the asset was held in a corporate entity – but that situation is beyond the scope of this article.

To me, the two greatest mysteries surrounding the legal profession are why is it that law firms promote lawyers to leadership roles because of proven technical skills rather than leadership attributes, and why is it that law faculties across our universities create pedagogies that overlook the most fundamental of lawyer skills – negotiation? Surely the skill is more pertinent to practice than theoretical subjects that are seldom used in practice. How is Maritime Law or Animal Law more relevant than resolution dialogue strategy? It seems so counter-intuitive to me but it’s 2023 and it’s still happening. 

I recently wrote an in-house training module on negotiation theory and strategies for lawyers, and while doing so, found myself describing attributes of effective negotiators that were largely the same as those I’d described when writing a module on what makes great leaders. And it got me wondering, is it a co-incidence, or do good negotiators naturally make great leaders? And is it the case that the so called “soft skills”, are not so soft in the armoury of talented leaders and effective conciliators? 

In no order of priority, here are ten of the overlapping characteristics and skills described in both leadership and negotiating texts: 

1. They think deeply – as strong strategic planners they have a vision, often one that others can’t see or perceive. 
2. They articulate clearly – and have strong communication, charm, and exude confidence and gravitas. Often their mellifluous tone captures the audience and commands engagement. 
3. They listen to understand – call it active listening or empathetic information gathering, they ask questions and seek a deep understanding before proffering an opinion or making a statement of position. 
4. They build trust – and are credible, reliable and behave in a way that builds confidence that they will do what they say. Trust is the foundation which gives leaders the morale authority to lead, and the platform from which negotiators can gain concessions that work towards a mutually acceptable resolution. 
5. They think big picture – great leaders seem to innately hold a world view despite having a limited sphere of influence, while good negotiators also see the bigger picture – both are mindful of the impact that their actions or decisions can have more widely than the immediate situation. 
6. They admit to mistakes – and are realists. There may be exceptions to this rule in the case of some that force their way into positions of power, but in many organisations, the trusted and effective leaders admit to shortcomings, just as good negotiators admit to their own mistakes in order to build rapport. 
7. They know their impact – in both leadership and negotiation, those with emotional intelligence can take the temperature of the room. Those with these sensory powers have an enormous advantage over others who are tone-deaf to the impact that their words, actions, attitude, or approach are having. 
8. They are quick thinking – their ability to recognise a need for strategic re-direction in real time is invaluable; especially when coupled with visionary skills. 
9. They know patience – both realise that there are times to pause and moments to strike. Impetuous and impulsive behaviours have no place on their CV. 
10. They respect – no-one wants to negotiate with, or be led by, an egomaniac. Being respectful of cultural, personal, situational, and emotional differences is key to building trust, establishing rapport, and solidifying the relationships that are central to the success of both leaders and negotiators. 

Some academics and researchers suggest that a lot of these skills are simply in the DNA of some fortunate folks, but even if it doesn’t come easily, can we help our future leaders and emerging negotiators do better? Perhaps it’s time that our universities included a mandatory subject on negotiation skills and strategy rather than just ADR? And perhaps in law firms, it’s time that those with strong negotiating skills are promoted to leadership roles, rather than the egotists and prima-donnas who have historically billed the most?