AAA v Backwell

[1996] HCATrans 202

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Melbourne  No M25 of 1996

B e t w e e n -

AAA

Applicant

and

J. BACKWELL

Respondent

Application for special leave to appeal

DAWSON J

McHUGH J
KIRBY J

TRANSCRIPT OF PROCEEDINGS

AT MELBOURNE ON MONDAY, 5 AUGUST 1996, AT 12.27 PM

Copyright in the High Court of Australia

MR J.T. RUSH, QC:   May it please the Court, I appear with MS D. WEYBURY, on behalf of the applicant.  (instructed by Holding Redlich)

MR D.E. CURTAIN, QC:   May it please the Court, I appear with my learned friend, MR D.F.R. BEACH, on behalf of the respondent.  (instructed by John W. Ball & Sons)

DAWSON J:   Mr Rush?

MR RUSH:   Your Honours, the fundamental question we submit in relation to this application is the manner of assessment of exemplary damages where there has been an award of compensatory damages in a personal injuries case.  In the case of AAA for pain and suffering, loss and enjoyment of life, past, present and future, the jury awarded the applicant $60,000.  It was $60,000, we submit, by way of compensation for her injuries; the effect of her injuries in the past and the impact of her injuries into the future.

It was the attempt of the law to restore, as best the law can by a pecuniary award of damages, the plaintiff to the position she would have been in if the injuries had not occurred.  We submit, your Honour, in relation to any such award of damages in the context of a negligence case for personal injuries, that the conduct of a defendant is going to be irrelevant to such an award.  We would submit that Justice McHugh in Carson’s Case put the matter very squarely at page 112, and without taking the Court to it, his Honour clearly indicated that no element of punishment can creep into an award of compensatory damages in a personal injuries case, nor should the award be inflated in any way by circumstances brought about by the defendant in relation to the conduct of the defendant.

DAWSON J:   I may be wrong, but is not the degree of punishment affected, to some extent, by the amount of compensation?

MR RUSH:   I will come to that, with respect, but we would submit, your Honour, it is not affected by the amount of compensation, that damages in a case of compensatory damages in personal injuries could not be impacted by the conduct of the defendant and they should not be seen as punishment.

DAWSON J:   There are suggestions to the contrary, are there not?

MR RUSH:   Well, your Honour, in a case of purely compensatory damages, that is, to restore a plaintiff to the position the plaintiff would have been in but for the injury, we would submit that there is no ‑ ‑ ‑

DAWSON J:   No, it is not a question of whether punishment comes within compensation but whether compensation affects the amount required for punishment.

MR RUSH:   Your Honour, the cases, certainly that we have found, are dealing with damages generally, we would submit, in different tortious circumstances to damages that arise out of personal injuries cases.  For instance, your Honour, we would submit that the two Canadian decisions of the Court of Appeal in the majority judgment referred to, were libel and slander cases and in such cases an award of general damages would have account of the conduct of the defendant from the time of the libel and slander right through to the court case itself.

So, in that situation the compensatory damages must be impacted by the conduct of the defendant.  It is not the case, we would submit, in a situation that presents in a negligence case where the only element of compensatory damages is to restore, as best money can, the plaintiff to a position that the plaintiff would have been in but for the circumstances of injury.

KIRBY J:   I agree that there may be nuances in different torts, but having to dig into your pocket and pay it out, albeit for compensation, does have some effect as punishment, does it not?  It is not pleasant to have to do it and, therefore, it is to some extent something you do not like to happen to you.  So, it has a punitive consequence even though that is not its purpose.

MR RUSH:   Well, certainly we agree with your Honour that it is not its purpose.  Whether it has a hurt or not, we say, is irrelevant to an award of punitive damages in the manner in which a court or a tribunal should look at the awarding of exemplary damages but we would submit that in the context, your Honour, that exemplary damages are completely different, if one is to accept that exemplary damages can be awarded in our common law, before one can properly answer the question that you pose we have to go to the reason that the common law says that exemplary damages are capable of being awarded.

DAWSON J:   Where do you say the Court of Appeal went wrong?

MR RUSH:   In accepting the Rookes v Barnard approach, your Honour, of saying you will only award exemplary damages if, but only if, the sum awarded in compensatory damages is not enough to punish the respondent.

DAWSON J:   That is the only point you make.

MR RUSH:   That is, in essence, the point, your Honour.  In these cases that is not the manner or the proper manner in which exemplary damages should be assessed.

McHUGH J:   But the problem about this case is that it is not a suitable vehicle.  We would have to go on and determine the damages ourselves, would we not, and how are we going to do that?  I mean, I must say I would have thought the dissenting judgement of Justice Tadgell was absolutely right on the point, that there should have been a general new trial ordered in this action.

MR RUSH:   Well, your Honour, we would submit there are two ways of doing it.  The Court of Appeal in the majority judgment found firstly, that the compensatory damages awarded, the $60,000, were damages which fell within the general range of damages that one could expect in relation to the injuries that the applicant had sustained.  The Court of Appeal by majority judgment also went on to find that the $125,000 for exemplary damages, if looked at as the total award in relation to punishment or the total sum in relation to punishment, would be a sum that was fitting or appropriate in the circumstances of this case to punish the defendant.

McHUGH J:   Well, that is one of the problems I have about this case.  The matter was left to the jury in what might be called a global fashion.  What was the specific act or omission which constituted a tort which would give rise to a claim for exemplary damages?

MR RUSH:   Well, your Honour, we would submit that in the context of ‑ this claim is a negligence claim and the breach of duty, we would submit, after the time that it was known that the applicant was pregnant, that the conduct of the respondent at that stage was negligent and negligent in such a way as to holds the rights of the applicant in contumelious disregard.

McHUGH J:   Yes, but obviously the jury found that they were negligent and they obviously found that the defendant acted in contumelious disregard of the plaintiff’s rights, but what rights?  What was the tort?  For example, was it failing to give any proper advice to the plaintiff as to the likelihood of the foetus being Rh positive?  Would that give rise to an award of exemplary damages?  I would take some convincing on that, whereas I could understand that if the jury found that the defendant informed the plaintiff that if she refused to have an abortion she would not be further put on the program, that was also a breach of duty which would attract exemplary damages, but my difficulty is to segregate what were the heads of negligence that were found and therefore, creates problems about assessing exemplary damages, Mr Rush, that is my difficulty.

MR RUSH:   Your Honour, we would submit in relation to that that we have a breach of duty and we have a breach of duty on that date in relation to the respondent’s conduct to the applicant, not only in relation to information about whether the foetus may be Rh positive or not, but that occurred in the context of a patient seeing a doctor and to isolate, we would submit, just one or two aspects of the total conversation, having regard to the nature of the breach, we would submit is not appropriate in relation to the assessment of exemplary damages. 

Rather, we would submit that the total conduct of the defendant gave rise to the breach of duty of the doctor/patient relationship and that conduct in itself, the threats, the failure to properly advise, et cetera, must be seen as a whole or global, as your Honour says, in the context of the breach of duty.  It is on that basis, we submit, that that conduct, as Justice Ormiston says, was - the jury were entitled to award damages to express their severe condemnation of that conduct, the conduct being, we would submit, the conduct which gives rise to the breach of duty between doctor and patient.

DAWSON J:   The point is that one does not know here and you would either be asking this Court to assess the damages, in which case it would not be in a position to know on what basis it should do so or, presumably, you would be asking it to adopt the attitude of Justice Tadgell and send the matter for retrial and that would seem to be most undesirable in litigation of this protracted kind.

KIRBY J:   You do not even ask that.  I think in your orders you ask that it go back to the Court of Appeal to be reassessed if we do not simply restore the earlier orders.

MR RUSH:   That is correct.

DAWSON J:   But we would have to send it back for reassessment with some guidance and that is what we are not in a position, as Justice McHugh points out, to give.

MR RUSH:   With respect, in relation to that, we would submit that the guidance that is called for in the context of the majority decision, the only guidance that is necessary is the manner in which they should look at compensatory damages when assessing exemplary damages.  There were certainly three basic grounds that the Court of Appeal held were faults in relation to the trial judge’s charge to the jury, but when it came to the reassessment of damages, the only ground that was of any consequence was the Rookes v Barnard ground, that is, that we have to take into account the global sum of compensatory damages and exemplary damages.  We have to look at it in the context of a whole and then we will reduce the compensatory damages and that is what was done.

The other two grounds, we say, are irrelevant to the manner in which Justice Ormiston went about refixing the award of exemplary damages.  Now, your Honours, I was submitting to Justice Kirby that one must look at the reason for an award of punitive damages and in that context, we would submit, if this approach is to remain, the approach adopted in charging juries or assessing exemplary damages, it will lead to what we would submit is quite an anomalous situation - I think, Justice Kirby referred to it in the case of Lamb v Cotogno - where one will have great variations in an award of exemplary damages for precisely the same conduct, depending upon the nature of the injury sustained.

Now, in the context of damages that are viewed by Justice Brennan in the XL Petroleum Case as separate and distinct, we would submit that that anomaly is something that, as it presently stands, should be corrected and needs to be corrected.  They are not common cases in the tort of negligence.  There are only two cases that the Court of Appeal could be referred to in Australia where an award of punitive damages had been made relying on the tort of negligence.  There is this one and the case of Rabenalt v Midalco, where part of the charge of his Honour Justice Hampel is before the Court in relation to that, but they are cases, we submit, of enormous significance because they will normally in the tort of negligence involve parties; one being in a position of power or powerful and the other being in a position of reliance.

In that context, we would submit, that the award of punitive damages serves a useful context and a useful purpose but it also is essential, we submit, that in the award of such damages, having regard to the deterrent aspect of such damages, that the court should look at it in terms of what sort of deterrence, the detestation of the court and the public pronouncement of ‑ ‑ ‑

DAWSON J:   One can only deal with those things adequately in a particular factual setting which is not thrown up here.  We do not know what it was that was actually the motivating factor in relation to the exemplary damages.

McHUGH J:   There was only one question left to the jury on liability, was there not?  There were not a series of questions.

MR RUSH:   No, there was one question relating to negligence, your Honour, and then a question after the award of compensatory damages, question 3 from memory, in relation to having regard to the two dates, 12 May and the later date, whether there was conduct capable of giving rise to exemplary damages but in answer to Justice Dawson’s point, we would submit that the factual situation in relation to this is clearly established in the judgment of Justice Ormiston in the context for which the jury, as he points out, accepted the nature of the conduct that gave rise to exemplary damages.  His Honour deals with it at some length and then comes to the conclusion that the points that he has referred to were obviously the points that the jury relied upon to make an award of exemplary damages. 

Now, in that context, we would submit to the Court that it is appropriate for the Court to then have regard to the general question of whether exemplary damages, punitive damages, are going to be diminished or raised, depending upon the size of the compensatory damages.  Again, to refer the Court to the XL Petroleum Case, we would submit that having regard to the conduct in that case, the spiking of tanks, that if the cost of repair of the tanks had been $100,000 instead of $5,000, that it would be an inappropriate direction for the court to be directing, in that case, that the size of the compensatory damages being small, therefore, in relation to exemplary damages they should be adjusted in some way up or down because of the size of the compensatory damages.

KIRBY J:   I did not take that to be what the Court of Appeal said.  It merely said that you must conceptually beware of double counting and of double compensation and that you should take into account, in working out what the punitive damages are, the fact that compensatory damages may have an element of unpleasantness.  It does not seem to me to be wrong.  It seems common sense.

MR RUSH:   Your Honour, at page 471 of that judgment, Justice Brennan, in a passage that was later taken up by the High Court in Lamb v Cotogno, stated, and I quote:

As an award of exemplary damages is intended to punish the defendant for conduct showing a conscious and contumelious disregard for the plaintiff’s right and to deter him from committing like conduct again, the considerations that enter into the assessment of exemplary damages are quite different from the considerations that govern the assessment of compensatory damages.  There is no necessary proportionality between the assessment of the two categories.

KIRBY J:   That is true, but that does not answer the point that it is relevant, when you are calculating the exemplary damages, to take into account that you have already awarded compensatory damages.  They are for different purposes, but you have got to be careful against double counting.

MR RUSH:   Well, they are for different purposes and we would submit that that is the very point.  One is entirely compensatory and in this context they are totally different damages to the libel and slander damages or arguably even trespass or nuisance damages where conduct can be taken into account.  As his Honour said, they are awarded to compensate and the two groups of damages are entirely separate and we would submit that in that context and his Honour’s clear, we would submit, enunciating of the necessity of a separate assessment of exemplary damages at page 468 that, at least in that context and in the context of this case, that the two do not overlap in any way and to have them overlapping leads to problems in relation to the assessment of compensatory damages in personal injuries cases because of elements of punishment or deterrence coming into play in the context of the two, if the two are to be taken together.

McHUGH J:   It is rather strange that you can get exemplary damages in a case like this, though, is it not, because there was a contractual duty of care and a tortious duty of care.  Apart from breach of promise and marriage, you cannot get exemplary damages at common law for breach of contract and you say you could not get exemplary damages for the breach of the contractual duty of care but you have got exemplary damages for the tortious duty which arises out of the contract.

MR RUSH:   Your Honour, under tort law we would submit that there has been a breach of duty of care and negligence and, in appropriate cases - Mr Justice O’Bryan in our court in a reported decision of Koloka, in appropriate cases which, he said in that decision, will be rare - it is appropriate if the conduct is such that it would hold the plaintiff’s rights in contumelious disregard to make an award of exemplary damages for punishment and deterrence and the mere fact, with respect to Justice Kirby, that there is an award of compensatory damages in one lump sum, in our respectful submission, cannot in any way be taken as punishment and deterrence in the sense that those damages are purely restitutionary. 

Indeed, Mr Justice Ormiston, again in his judgment, made that distinction by saying that restitutionary damages will only place a plaintiff in the position that the plaintiff was and even if that award be large, then because it is restitutionary we should not take it into account, but then immediately went on to talk about the quadriplegic in a car accident and $1 million and we would submit the two types of damages are very much the same because both the restitutionary damages and the plaintiff’s damages in the personal injury sense are to restore to the position that the plaintiff would have been in but for the injury.  We respectfully submit that in the context of this case and cases like it that it is a very important point and they are the submissions on behalf of the applicant.

DAWSON J:   Thank you, Mr Rush.  We need not trouble you, Mr Curtain.

The manner in which this matter proceeded at trial and subsequently in the Court of Appeal makes it an inappropriate vehicle for consideration of the principles relating to exemplary damages.  The applicant does not raise any other point and accordingly special leave to appeal must be refused.  Special leave is refused.

MR CURTAIN:   We seek costs, if the Court pleases.

DAWSON J:   Can you say anything about that, Mr Rush?

MR RUSH:   No, your Honour.

DAWSON J:   Refused with costs.

AT 12.50 THE MATTER WAS CONCLUDED