Assessing economic loss in historic child abuse claims Assessing economic loss in historic child abuse claims

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Assessing economic loss in historic child abuse claims

2 September 2020 | Public & Product Liability

The case relates to historic sexual abuse committed by a teacher upon a student at Myrtleford Primary School in the 1980’s.    

In Issue

The proceeding involved an assessment of damages, and in particular, a detailed analysis regarding the calculation of past and future economic loss. 

The background

Mr Daniel Perez (plaintiff) issued proceedings at the Supreme Court of Victoria against former teacher, Mr Vincent Reynolds (Mr Reynolds), and the State of Victoria (second defendant). Mr Reynolds was incarcerated following charges relating to indecent assaults perpetrated on the plaintiff and 37 other children. Mr Reynolds did not participate in litigation. The second defendant admitted direct liability however did not admit vicarious liability. 

The plaintiff plead that on six occasions, Mr Reynolds touched his genitals, groin and buttocks at the teacher’s desk and the plaintiff’s desk. On the sixth occasion, the plaintiff swore at and hit Mr Reynolds. The plaintiff was not subject to sexual abuse following this occasion. The plaintiff did not notify anyone of the abuse until a criminal investigation was undertaken in 2017, following which, he first notified his wife of the abuse. 

As a result of the abuse, the plaintiff sustained post-traumatic stress disorder and chronic dysthymic disorder. He became a heavy drinker in his late teens, early twenties and, on occasion, suffered suicidal ideation. In his 30’s, he was diagnosed with major depressive disorder with past diagnosis of polysubstance abuse and pathological gambling. 

The medico-legal psychiatrists agreed the diagnoses were entirely attributable to the sexual abuse suffered and that these psychiatric conditions adversely altered the plaintiff’s life trajectory, resulting in substantial underachievement. Her Honour Judge Forbes accepted the sexual abuse likely had a deep impact on the plaintiff’s life and decisions made. 

Plaintiff’s credibility

The second defendant targeted the reliability of the plaintiff’s evidence due to his inaccuracies which seemingly sought to amplify the effect of abuse on his life. Her Honour formed the view that overall, the plaintiff made the appropriate concessions where his memory was wrong or incomplete regarding factors which impacted upon his life. Targeting the plaintiff’s credibility was ultimately unsuccessful.    

Calculation of economic loss

The plaintiff worked as a sub-contractor for his father’s business as a bricklayer, stonemason or general labourer and handyman.  He was also occasionally self-employed. While on occasion, he had maintained full-time employment, her Honour accepted the plaintiff has been unable to engage in employment reliably and consistently. 

Both the plaintiff’s father and brother are tradesman. Her Honour held that absent any abuse and its sequelae, the plaintiff was likely to obtain a trade qualification based on these family members employment. The failure to obtain a trade qualification was due to the plaintiff feeling that going to TAFE or trade school was not something he wanted to do, presumably in light of the past experiences of classroom sexual abuse. 

In the past, the plaintiff was noted to shy away from any financial assistance, whether that be via Government assistance or reliance on family members. His impressive work ethic persuaded her Honour that his tax returns were a true reflection of the upper limit of his capacity. 

The plaintiff tendered two forensic accountant reports. The plaintiff’s forensic accountant provided two scenarios, one being income calculations based upon a ‘on the tools’ skilled tradesman in the building industry. The second scenario was calculated on an assumed progression to a supervisory role in the construction industry. These two calculations were referred to as ‘bookends’ of a skilled tradesman.

With respect to past loss, neither bookends were considered to ultimately produce a fair assessment of loss. Based on the bookend approach, her Honour calculated the average weekly notional earnings and reduced this figure by the plaintiff’s residual earning capacity from 1990 to date.

For future economic loss, actual loss was calculated at $679 per week, comprising of an averaged nett weekly figure based on the bookend scenarios, less the plaintiff’s actual weekly earnings. The discount rate of 3% was applied. 

With respect to retirement age, her Honour noted the plaintiff’s impressive work ethic and concluded that the plaintiff will work as long as possible at present capacity or to the extent of his capacity. Retirement age was assessed at 67 years, with no allowance for early retirement due to his psychiatric health.     

Her Honour accepted there were no other factors impacting the plaintiff’s ability to work a fully productive career and consequently applied a 15% reduction for vicissitudes.

Assessment of Damages

Damages were assessed at a total of $1,552,725, comprising of:

  • General Damages: $265,000
  • Future medical and other expenses: $18,725
  • Past loss of earning capacity: $640,000
  • Future loss of earning capacity: $416,500
  • Superannuation: $212,500

Implications for you

This decision is likely to lead to higher amounts being claimed by plaintiffs for both past and future economic with smaller discounts for Malec v Hutton principles being accepted.

Perez v Reynolds & Anor [2020] VSC 537

Author

Naomi Ferwerda

Naomi Ferwerda

Solicitor