If there was any doubt as to who bears the burden of proof when assessing the residual earning capacity of a plaintiff, the NSW Court of Appeal has made it plain in the case of South Western Sydney Local Health District v Sorbello  NSWCA 201: the onus of establishing that a plaintiff has remaining employment opportunities sits squarely on the shoulders of the defendant.
By way of background, the trial decision from which this appeal arose concerned the circumstances of the birth of Ms Sorbello’s son at the Bankstown Hospital in 2008. Joseph was born with “profound disabilities”  and reduced life expectancy. Ms Sorbello alleged that she had suffered mental harm as a result of the negligence of the South Western Sydney Local Health District (SWSLHD), and damages were awarded to her at trial, including compensation for non-economic loss, past economic loss and future economic loss.
The SWSLHD appealed the trial judge’s decision because although it admitted liability, it took issue with the trial judge’s assessment as to the quantum of loss.
On appeal, the SWSLHD argued that the trial judge ought not to have preferred the evidence of Ms Sorbello’s expert witnesses over that of its own, and that while it accepted that Ms Sorbello had suffered a psychiatric injury, it disputed the findings as to the extent and consequences of that injury. Further, it submitted that the trial judge had erred in casting the onus on the SWSLHD to establish what employment opportunities remained open to Ms Sorbello for the purposes of assessing her residual earning capacity.
The Court of Appeal held that the trial judge had reviewed the expert evidence in some detail, and that in all the circumstances she was entitled to prefer the opinions of two of Ms Sorbello’s expert witnesses (Drs L and A) over that of the psychiatrist called by the SWSLHD (Dr B). (It is relevant to note here that Dr B had opined that Ms Sorbello’s condition would not incapacitate her from returning to work, which contradicted Drs L and A who considered that she suffered at least a partial occupational incapacitation.)
Having found that Her Honour was entitled to prefer the evidence of Drs L and A, the Court of Appeal also held that there was no error in Her Honour’s finding that Ms Sorbello’s “future economic loss should be assessed on the basis that [she] would not be able to exploit any residual earning capacity before retirement age – that is, that notwithstanding a possible working capacity, she had no realistic earning capacity.”
However, the SWSLHD also argued that the trial judge had erred in casting the onus on the SWSLHD to prove that “Ms Sorbello was capable of working, and what work was likely to be available to her” (emphasis added).
In making this submission, the SWSLHD relied on the case of Malec v J C Hutton Pty Ltd (1990) 169 CLR 638, which concerned a plaintiff who had contracted a disease as a result of the defendant’s negligence, following which the plaintiff also developed a spinal condition. The court in that case concluded that it was likely that the plaintiff would have suffered a similar neurotic condition even without exposure to the disease, and the High Court held that:
“If the law is to take account of future or hypothetical events in assessing damages, it can only do so in terms of the degree of probability of those events occurring…the court assesses the degree of probability that an event would have occurred, or might occur, and adjusts its award of damages to reflect the degree of probability. The adjustment may increase or decrease the amount of damages otherwise to be awarded.”
The Court of Appeal dismissed the SWSLHD’s submission, and held that the Malec principle was entirely irrelevant in this case. While Dr B had opined that Ms Sorbello had an “underlying vulnerability”, the SWSLHD had not made a case at trial or on appeal that “there was a chance that Ms Sorbello would, even without the appellant’s negligence, have developed a psychiatric illness that would have disabled her from working”. The Court went on:
“That the appellant’s negligence is the cause of her condition is established. The process required for the assessment of a chance as set out in Malec is entirely irrelevant to the present case. In the ordinary case, the possibility that some cause other than the defendant’s negligence might have affected the plaintiff’s earning capacity is catered for by the conventional allowance that is made for “vicissitudes”. That was the appropriate approach in this case.”
As to the SWSLHD’s complaint regarding the placement of the onus in establishing Ms Sorbello’s residual earning capacity, the Court of Appeal stated firmly that “once a plaintiff has established a loss of earning capacity, the onus of demonstrating a failure to exercise any residual earning capacity lies on the defendant”. The court emphasised this point referencing the case of Mead v Kearney  NSWCA 215:
“…the ultimate onus of proving that the incapacity is due to the defendant’s negligence and not a pre-existing condition rests on the plaintiff. Once this onus is satisfied, it is not necessary for the plaintiff also to satisfy the court of the extent of the loss, in the sense of proving what employment the plaintiff is not incapacitated from performing; a defendant who contends that the plaintiff has a residual capacity has at least an evidentiary onus of adducing evidence of what the plaintiff is capable of performing and what jobs are open to a person with such a residual capacity.”
It considered that the question as to Ms Sorbello’s residual earning capacity was plainly answered by reference to the findings of the trial judge and that while Ms Sorbello may have “retained some capacity for work, her prospects for exploiting that capacity were essentially non-existent”. No submissions were made by the SWSLHD to the contrary.
This case serves as a reminder to defendants in negligence proceedings as to the applicability of the Malec principle when calculating damages, together with the placement of the evidentiary burden when alleging that a plaintiff has failed to exploit residual work opportunities.
This article was written by Principal Nevena Brown and Associate Anna Martin. Please contact us if you have any questions or for further information.
 South Western Sydney Local Health District v Sorbello  NSWCA 201 at .
 Ibid .
 Ibid .
 Ibid .
 Ibid .
 Ibid  citing the High Court in Malec v J C Hutton Pty Ltd (1990) 169 CLR 638 at .
 Ibid .
 Ibid  citing with approval the case of Mead v Kearney  NSWCA 215 at  and .
 Ibid  citing Harold Luntz: Assessment of Damages for Personal Injury and Death, 4th ed 2002, Butterworths) at 118
 Ibid .