Supreme Court dismisses appeal against road traffic accident damages award for general damages and loss of earnings.

THE SUPREME COURT

169/99

Murphy J

McGuinness J

Geoghegan J

Between:

Keith Pethe

Plaintiff/Respondent

AND

Peter McDonagh & Motor Insurers Bureau of Ireland

Defendants/Appellants

Judgment of Mr Justice Francis D Murphy delivered the 25th day of July, 2001

The Plaintiff/Respondent was born on the 20th June, 1972. He was involved in an horrific road traffic accident on the 2nd of

September, 1996, when a car which he was driving on the Tramore Road outside Waterford collided with an oncoming van which

was being driven at high speed. The proceedings instituted by Mr Pethe against the Defendants claiming damages for the

injuries and losses sustained as a result of that accident came before Mr Justice O’Sullivan on the 28th June, 1999, and the

following days. Liability was admitted by the Defendants and, at the hearing, an allegation of contributory negligence was

withdrawn. The learned trial Judge assessed the damages at a sum of £190,000 made up as follows:-

1 £15,000 agreed Special Damages.

2 £30,000 General Damages for the future.

3 £85,000 General Damages to date.

4 £60,000 Loss of Earnings.

It is from the award insofar as it relates to general damages to date and earnings that the Defendants appeal to this Court.

After he left school Mr Pethe attended for some time at a course in accountancy but was unhappy with it. He then secured

employment as a waiter in Waterford and subsequently took up similar employment in Cork. He returned to Waterford as

assistant manager of a restaurant in 1992. He went back briefly to Cork in a similar capacity before returning finally to

Waterford. In December, 1992, he took up the position which he occupied at the date of the accident. That was the position of

manager of a restaurant called Pisa Pizza. It was established in evidence that he had full responsibility for the running of the

business including the ordering of the food and the employment of staff. It is not disputed that he worked long hours. It was

the evidence of Mr Pethe that he was employed on the basis that he would be paid £26.00 per shift of eight hours worked by

him. In addition it was the Plaintiff’s evidence that his employer, Mr Mark Breen, agreed to pay him a bonus at the rate of ten

per cent on sales in excess of £2,000 taken on evening shifts. From the evidence given by Mr Pethe and the analysis made by

Messrs James F Wallace & Co and Messrs Jepfson & Co, the accountants who investigated the available records on behalf of

the Plaintiff and Defendants respectively it would appear that in the year 1995/96 the Plaintiff received the sum of

approximately £11,500 in respect of his basic remuneration and a figure between £8,123 and £6,419 by way of bonus. The

difference between the accountants in relation to the bonus figure arose from a disagreement as to whether the bonus should

be calculated by reference to sales before or after the addition of VAT. The learned trial Judge accepted that the higher of the

two figures was appropriate and recognised that the essential issue between the parties was whether the amount received by

Mr Pethe in the year 1995/96 - which he rounded up to £20,000 - represented the net income of the Plaintiff after deduction of

income tax. It was the Plaintiff himself in his capacity of manager of the business who paid all of the staff including himself. It

was his evidence that the payments he made were “net”. As he explained it, he did not handle the tax situation of any of the

employees. That was a matter for the employer. It was, he said, the employers duty to pay the tax.

Mr Breen was not called as a witness by either party. However, the income tax forms known as “P60s” for the years ended the

5th April 1994 and 5th April 1995 in respect of Mr Pethes earnings, signed apparently by Mr Breen, were put in evidence. The

P60 for the year to April 1995 shows the total earnings of Mr Pethe at £5,902 and tax deducted therefrom at £660.44. It is

impossible to reconcile the gross earnings shown in that document with the evidence of Mr Pethe as to his earnings: the gross

figure is less than one half what appears to be his basic salary in that year. The document does appear to confirm, however,

that Mr Breen recognised that it was his responsibility to deduct tax and remit it to the Revenue authorities.

As the person who had the day to day control of the business, including the payment of wages, Mr Pethe’s position may have

been equivocal and one might have anticipated that some debate would arise between him and his employer as to how the tax

affairs of the business would be or had been dealt with. It is surprising that the P60 itself did not give rise to such debate and

again it would seem extraordinary that the payment to a young man of very limited experience of a net remuneration of some

£20,000 - amounting to approximately £35,000 gross - did not provoke envy from and discussion with the employer. On the

other hand it must be recognised that insofar as the remuneration consisted of a bonus this was obviously calculated in such a

way as to increase the profits of the employer and perhaps enhance the value of his asset. Above all, it is clear that an

employee is entitled to assume that tax has been deducted or provided for by his employer. In my view the learned trial Judge

was correct in his conclusion that the payments made to and received by Mr Pethe were net of tax. It may well be that the

arrangement between the employer and his employee would have been reviewed at some future date. Certainly I would have

been reluctant to accept that the earnings for the years 1993/94, 1994/95 and 1995/96 would have provided an appropriate

basis on which to calculate the earning potential of the Plaintiff in the restaurant business over any extended period. However

that did not arise in the present case. The loss of earnings were confined to the period up to the date of the hearing and some

months thereafter. In my view the appeal insofar as it challenges the award in relation to earnings should be rejected.

The most obvious injury sustained by Mr Pethe in the accident was a comminuted fracture of the proximal shaft of the right

femur and a fracture of the lower shaft of the right tibia with slight comminution. This was described graphically by Mr Pethe in

his evidence when he recalled being put into an ambulance and seeing the femur bone protruding in two places through the

upper leg. He recalled seeing his boot between his knees and his foot still in the boot. Progress in uniting the femur was slow.

Seven operations were required before the hearing of the case in the High Court and one further operation was anticipated. But

it would be wrong to view this simply as a case of a badly broken leg. The collision itself was horrendous. Mr Pethe was trapped

in the car for four hours before he was cut free. He suffered fractures of two fingers of the left hand - which did clear up

relatively quickly - and fractures or serious damage to seven teeth as well as obtaining several cuts and abrasions. Again, it is

common case that the fractured femur resulted in a shortening of his right leg of nearly two centimeters which has and will

affect Mr Pethe’s gait. Again there was evidence from a clinical neuro psychologist, Dr Martina O’Connor, that the accident had

impinged upon Mr Pethe’s personality. She concluded that he was withdrawn at the time of her report and had no energy for

life. The lower and upper limbs of his right leg are heavily scarred on both sides and these scars have caused significant

discomfort in addition to a considerable measure of embarrassment of which Mr Pethe gave evidence.

Mr McCarthy, SC, on behalf of the Appellant did not seek to diminish the seriousness of the injuries or the consequences of

them for Mr Pethe but he did contend that the sum awarded for general damages to date was excessive. He did not suggest

that it was seriously beyond the figure which was regarded as appropriate but he did contend that it was excessive to such a

point that it should be reduced by this Court.

Mr McCarthy may be correct to the extent that the figure awarded for general damages to date is on the generous side but I

would not agree that it is excessive. Moreover, it could well be said that the figure awarded for general damages into the future

is on the modest side. Taking it in the round I am satisfied that the figure of £115,000 awarded for general damages past and

future is reasonable and should not be interfered with. Accordingly I would dismiss the appeal and affirm the order of the

learned High Court Judge.