Amaca Pty Ltd v Latz
[2017] SASCFC 145
•30 October 2017
SUPREME COURT OF SOUTH AUSTRALIA
(Full Court: Civil)
AMACA PTY LTD v LATZ
[2017] SASCFC 145
Judgment of The Full Court
(The Honourable Justice Blue, The Honourable Justice Stanley and The Honourable Justice Hinton)
30 October 2017
DAMAGES - MEASURE AND REMOTENESS OF DAMAGES IN ACTIONS FOR TORT - MEASURE OF DAMAGES - PERSONAL INJURIES - GENERAL PRINCIPLES
WORKERS' COMPENSATION - WORKERS' COMPENSATION LEGISLATION FOR PARTICULAR INDUSTRIES AND DISEASES - DUST DISEASES - DAMAGES
Appeal against award of damages for personal injury.
The respondent sued the appellant for negligence causing mesothelioma reducing his life expectancy from January 2034 to October 2017. The Judge assessed damages at $1,062,000 including $500,000 for future economic loss, $100,000 for loss of capacity to perform domestic services and $30,000 for exemplary damages.
The award for future economic loss was for loss of a superannuation pension and of the age pension without deduction on account of the value of a reversionary superannuation pension payable to the respondent’s putative spouse but after deduction of an amount assessed as the cost of the respondent’s basic living costs during the lost years.
The appellant appeals against the award of $500,000 on the ground that loss of a pension is not a recoverable head of loss and in the alternative the Judge should have deducted the value of the reversionary pension.
The respondent cross-appeals against the award of $500,000 on the ground that the Judge erred in his assessment of the cost of maintenance; against the award of $100,000 on the grounds that the Judge erred in excluding work performed for the respondent’s daughter and son-in-law at their house, home improvement work and certain time spent with his grandchildren; and against the award of $30,000 on the grounds that the Judge erred in his approach to the assessment and the award is manifestly inadequate.
Held:
1. By Blue J and Hinton J. The Judge did not err in principle in awarding damages for loss of the pensions (at [105] and [253]).
By Stanley J (dissenting). Loss of the pensions is not a recognised recoverable head of loss (at [173]).
2. By Blue J and Hinton J. The Judge erred in not deducting the net present value of the reversionary pension (at [116] and [262]).
By Stanley J (dissenting). If loss of the pensions comprised a recoverable head of loss, the Judge did not err in not deducting the net present value of the reversionary pension (at [179]).
3. By Blue J and Hinton J. The Judge erred in the assessment of the cost of maintenance and should have adopted the figure of $185 per week (at [123]-[124]) and ([239]).
By Stanley J (dissenting). The Judge did not err in his assessment of the cost of maintenance (at [208]).
4. By Stanley J (Blue and Hinton JJ agreeing). No appellable error has been demonstrated by the Judge in his assessment of damages for loss of capacity to perform domestic services (at [203]).
5. By Stanley J (Blue and Hinton JJ agreeing). The Judge’s award of $30,000 for exemplary damages was manifestly inadequate. Exemplary damages re-assessed at $250,000 (at [226]-[228]).
6. Appeal allowed. Damages award reduced by $432,915 (at [131]).
7. Cross-appeal allowed. Damages award increased by $15,089 in respect of future economic loss and $220,000 in respect of exemplary damages (at [131]).
Superannuation Act 1974 (SA) ss 4, 43, 44, 45, 47, 51, 64, 67, 69, 71, 72, 73, 75, 79, 82, 85, 86, 87, 98 and Sch 12; Social Security Act 1991 (Cth) Part 2.2, ss 7, 23(5A), 23(5B), 23(5C), 23(5D), 43, 55 and 1064; Superannuation Act 1988 (SA) ss 4, 4A, 23, 34, 35, 37, 38, 39, 40 and 47 ; Superannuation Regulations 2001 (SA) Regs 17, 18, 19, 20, 21, 22 and 23; Dust Diseases Act 2005 (SA) s 9(3), referred to.
Adsett v West [1983] 1 QB 826; Phipps v Brooks Dry Cleaning Service Ltd [1996] P.I.Q.R. Q 100, distinguished.
Butler v Egg & Egg Pulp Marketing Board (1966) 114 CLR 185; Coulton v Holcombe (1986) 162 CLR 1; CSR Limited v Eddy (2005) 226 CLR 1; Dabinett v Whittaker [1989] 2 Qd R 228; Dib v Amaca Pty Ltd [2017] NSWDDT 6; Fitch v Hyde-Cates (1982) 150 CLR 482; Gammel v Wilson [1982] AC 27; Graham v Baker (1961) 106 CLR 340; Griffiths v Kirkemeyer (1977) 139 CLR 161; Haines v Bendall (1991) 172 CLR 60; Jones v Gleeson (1965) 39 ALJR 258; Livingstone v Rawyards Coal Co (1880) 5 App Cas 25; Lynch v Amaca Pty Ltd [2004] NSWDDT 1; National Insurance Co of New Zealand Ltd v Espagne (1961) 105 CLR 569; Neal v Bingle [1998] QB 466; Oliver v Ashman [1962] 2 QB 21; Pickett v British Rail Engineering Ltd [1980] AC 136; Redding v Lee (1983) 151 CLR 117; Roberts v Amaca Pty Ltd [2009] NSWDDT 28; Skelton v Collins (1966) 115 CLR 94; Sullivan v Gordon (1999) 47 NSWLR 319; Todorovic v Waller (1981) 150 CLR 402; Water Board v Moustakas (1988) 180 CLR 491; Harriton v Stephens (2006) 226 CLR 52; South Australia Asset Management Corporation v York Montague Ltd [1997] AC 191; Sharman v Evans (1977) 138 CLR 563; Teubner v Humble (1963) 108 CLR 491; Farah Constructions v Say-Dee (2007) 230 CLR 89; Manser v Spry (1994) 181 CLR 428; Dionisatos v Acrow FormWork and Scaffolding Pty Ltd (2015) 91 NSWLR 34; Nguyen v Nguyen (1990) 169 CLR 245; Van Gervan v Fenton (1992) 175 CLR 327; BHP Billiton v Parker (2012) 113 SASR 206; Lincoln v Gravil (1954) 94 CLR 430; Parry v Cleaver [1970] AC 1; Zheng v Cai (2009) 239 CLR 446; Harris v Commercial Minerals Ltd (1996) 186 CLR 1; Manser v Spry (1994) 181 CLR 428; Paff v Speed (1961) 105 CLR 549; CGU Workers Compensation (NSW) Ltd v Garcia [2007] NSWCA 193; Auty v National Coal Board [1985] 1 All ER 930, discussed.
Cullen v Trappell (1980) 146 CLR 1; Johnson v Perez (1988) 166 CLR 351; Nominal Defendant v Gardikiotis (1996) 186 CLR 49; XL Petroleum (NSW) Pty Ltd v Caltex Oil (Australia) Pty Ltd (1985) 155 CLR 448; Husher v Husher (1999) 197 CLR 138; Kars v Kars (1996) 187 CLR 354; Metropolitan Water Board v London, Brighton, and South Coast Railway Co [1910] 1 KB 804; Metropolitan Water Board v Colley's Patents Ltd [1911] 2 KB 38; Lamb v Cotogno (1987) 164 CLR 1; Uren v John Fairfax and Sons Pty Ltd (1966) 117 CLR 118, considered.
WORDS AND PHRASES CONSIDERED/DEFINED
""Domestic", "Domestic Services""
AMACA PTY LTD v LATZ
[2017] SASCFC 145Full Court: Blue, Stanley and Hinton JJ
BLUE J:
This is an appeal and cross appeal against an award of damages for personal injury.
The respondent Anthony Latz developed malignant mesothelioma in 2016 as a result of inhaling asbestos dust and fibre in 1976 when cutting and installing asbestos fencing manufactured by the appellant Amaca Pty Ltd.
Mr Latz sued Amaca in the District Court for damages for negligence. The trial Judge found that Amaca was negligent in failing to warn of the dangers of asbestos and the inhalation of asbestos fibres from the fencing caused Mr Latz to develop mesothelioma. This finding on liability is not challenged on appeal.
The Judge assessed damages at $1,062,000 which included $500,000 for future economic loss, $100,000 for loss of capacity to perform domestic services and $30,000 for exemplary damages.[1]
[1] Latz v Amaca Pty Ltd [2017] SADC 56.
The award for future economic loss was for the loss of an employment-based superannuation pension and of the Centrelink age pension that would have been payable to Mr Latz were he not destined to die prematurely as a result of the mesothelioma. In calculating the present value of the future loss of the superannuation pension, the Judge made no deduction on account of the two thirds reversionary pension that will be payable to Mr Latz’ de facto spouse after his death.
Amaca appeals against the award of $500,000 for future economic loss. Amaca contends that loss of a pension is not a recoverable head of loss and in the alternative the Judge should have made a deduction on account of the reversionary superannuation pension that will be payable to Mr Latz’ de facto spouse after his death.
Mr Latz cross appeals against:
1the award of $500,000 for future economic loss on the ground that the Judge erred in his assessment of basic living costs in the lost years at $210 per week;
2the award of $100,000 for loss of capacity to perform domestic services on the grounds that the Judge erred in excluding from the assessment of “domestic services” work performed for his daughter and son in law at their house, home improvement work and certain time spent with his grandchildren;
3the award of $30,000 for exemplary damages on the grounds that the Judge erred in his approach to the assessment and the award is manifestly inadequate.
Background
Mr Latz was born on 26 April 1947. In 1966 he commenced working for the State Public Buildings Department, qualifying as a survey draftsman. After resigning in 1970 and working in private enterprise, he returned to the Public Buildings Department in 1974. He married and had three daughters.
In 1976 Mr Latz bought a block of land and had a house constructed on it. He personally erected a fence on the side boundary constructed of Super Six corrugated asbestos sheets and asbestos capping.
In 1977 shortly before his 30th birthday, Mr Latz applied pursuant to section 43 of the Superannuation Act 1974 (SA) (the Previous Act) to the South Australian Superannuation Fund Board (the Board) to become a contributor to the South Australian Superannuation Fund (the Fund). His application was accepted and he became a “new contributor” within the meaning of that Act. He made fortnightly contributions of six per cent of his salary. Mr Latz subsequently transferred to the Department of Lands but this did not affect his superannuation.
On 1 July 1988 the Previous Act was replaced by the Superannuation Act 1988 (SA) (the Act). Section 23 provided that generally contributors were to contribute at the standard contribution rate of 6 per cent. Mr Latz continued to contribute to the Fund under the Act. Mr Latz subsequently transferred to the Department of Environment but this did not affect his superannuation.
Mr Latz subsequently separated from his wife and they divorced. In 1999 he began a relationship with Joan Taplin and since 2001 they have lived together in a de facto relationship. Ms Taplin was born on 8 August 1951.
On 26 April 2007 when he turned 60, Mr Latz retired from the public service and commenced to receive a superannuation pension under the Act (the superannuation pension).
On or after 26 April 2012 when he turned 65, Mr Latz commenced to receive a partial age pension from Centrelink (the age pension).[2]
[2] In May 2012 Mr Latz purchased for a capital sum an income stream by way of an accumulation type superannuation product. This income stream is irrelevant to the claim against Amaca and can be ignored.
In October 2016 Mr Latz was diagnosed with terminal malignant mesothelioma.
On 26 October 2016 Mr Latz instituted the action against AMACA. At that time his superannuation and age pension entitlements were:
· Superannuation pension $51,162 per year[3]
[3] All dollar figures are rounded to the nearest whole dollar.
· Age pension $5,106 per year.
The superannuation pension regime
The Former Act came into force on 1 July 1974. It distinguished between contributors who had been accepted by the Board under predecessor legislation on or before 31 March 1974 (other contributors) and contributors accepted by the Board on or after 1 April 1974 (new contributors). Mr Latz was a new contributor and the provisions relating to other contributors can be ignored.
It was optional for persons to become contributors. A person could only become a contributor by making application to the Board and satisfying the Board, if and to the extent necessary, that the person was in sound health.
Section 43 of the Previous Act provided:
43. Acceptance of employees as contributors
(1)Subject to this section, the Board may on application by an employee, accept that employee as a contributor to the Fund.
(2)Before determining an application by an employee under subsection (1) of this section the Board may require the applicant to submit such evidence as it requires as to his soundness of health and where such a requirement has been made the Board shall not accept the application until it is satisfied as to the soundness of health of the applicant.
The Act came into force on 1 July 1988. It distinguished between contributors accepted by the Board under predecessor legislation on or before 31 May 1986 (old scheme contributors) and contributors accepted by the Board on or after 1 June 1986 (new scheme contributors). Mr Latz was an old scheme contributor and the provisions relating to new scheme contributors and those relating to persons accepted as contributors before 1 April 1974 can be ignored. The provisions of the Former Act and the Act insofar as they applied to persons (such as Mr Latz) accepted as contributors between 1 April 1974 and 31 May 1986 were substantially the same. Those provisions for those persons are summarised below.
A contributor was required to make fortnightly contributions from acceptance by the Board until attaining the age of retirement or having made contributions for 30 years (whichever occurred last).[4] The relevant age of retirement was 60 years.[5]
[4] Superannuation Act 1974 (SA) sections 47 and 51. Superannuation Act 1988 (SA) section 23.
[5] Superannuation Act 1974 (SA) section 4 definition of “age of retirement”. Superannuation Act 1988 (SA) section 4 definition of “age of retirement”.
The standard contribution rate for a contributor 29 years old or more[6] was six per cent of salary.[7] A contributor could elect to contribute at a lower or higher rate in certain circumstances.[8]
[6] Under the Superannuation Act 1974 (SA) the percentage scaled up from five per cent to six per cent for those under 29: see Schedule 12.
[7] Superannuation Act 1974 (SA) definition of standard percentage for a higher benefit contributor in section 4 and Schedule 12. Superannuation Act 1988 (SA) section 23, definition of standard contribution rate in section 4.
[8] Superannuation Act 1974 (SA) section 44 allowed a contributor to elect to contribute at three per cent (a lower benefit contributor) in which case the pension would be half the amount otherwise payable (see section 69). Sections 45 and 64 enabled contributors to make additional contributions in certain circumstances. Superannuation Act 1988 (SA) section 23 allowed a contributor to elect to contribute at 1.5 per cent, 3 per cent, 4.5 per cent, 7.5 per cent or 9 per cent.
A contributor became entitled to receive a pension upon retiring from employment by the State on or after attaining the age of retirement (relevantly 60 years old) (a retirement pension).[9] In the paradigm case (such as Mr Latz) of an employee who had been contributing at six per cent for 30 years prior to retirement, the pension was equal to two thirds of the contributor’s final salary.[10] The pension was adjusted downwards or upwards in the case of employees contributing for less or more than 30 years (or its equivalent) respectively.[11]
[9] Superannuation Act 1974 (SA) section 67(1)(a). Superannuation Act 1988 (SA) section 34(1) and (2).
[10] Superannuation Act 1974 (SA) section 69(1)(a). Superannuation Act 1988 (SA) section 34(1).
[11] Superannuation Act 1974 (SA) section 69(1) and (2). Superannuation Act 1988 (SA) section 34(1) and (2).
A contributor became entitled to receive a lesser pension upon retiring from employment by the State on or after attaining 55 years old (an early retirement pension).[12]
[12] Superannuation Act 1974 (SA) section 71. Superannuation Act 1988 (SA) section 34(3).
A contributor became entitled to a pension upon his or her employment being terminated on the ground of invalidity (an invalidity pension) at the same rate or calculated largely in the same manner as a retirement pension.[13] A contributor became entitled to a pension upon his or her employment being terminated by way of retrenchment after at least five years service and at least at the age of 45 (a retrenchment pension) at the same rate or calculated largely in the same manner as a retirement pension.[14]
[13] Superannuation Act 1974 (SA) section 72. Superannuation Act 1988 (SA) section 37.
[14] Superannuation Act 1974 (SA) section 73. Superannuation Act 1988 (SA) section 35.
A contributor whose employment terminated in circumstances in which he or she was not entitled to a pension was entitled to a lump sum payment equal to the total contributions made to the Fund together with the return earned on those contributions to the Fund.[15]
[15] Superannuation Act 1974 (SA) section 79. Superannuation Act 1988 (SA) section 39. The return under the Former Act was calculated under a formula giving a return of three per cent for every year of employment in excess of five years. The return under the Act was based on the investment earnings of the Fund in respect of the contributions over time.
A pensioner who became entitled to a pension could elect within three months to commute all or part of the pension into a lump sum.[16]
[16] Superannuation Act 1974 (SA) section 75. Superannuation Act 1988 (SA) section 40 and Superannuation Regulations 2001 (SA) regulations 17 to 23. The amount that could be computed under the Former Act was limited to 30 per cent of the value of the pension. There is no such limit under the Act.
A pension was adjusted, initially annually with effect in October and then biannually with effect in October and April, by reference to the movement in the consumer price index.[17]
[17] Superannuation Act 1974 (SA) section 98. Superannuation Act 1988 (SA) section 47.
Upon the death of a pensioner, the pensioner’s spouse (if any) became entitled to a lifetime pension equal to two thirds of the notional pension of the pensioner (provided that the spouse did not become a spouse after termination of the pensioner’s employment and less than five years before his or her death).[18] A spouse was defined to include a putative spouse.[19] A putative spouse is defined under the Act to mean:
[18] Superannuation Act 1974 (SA) section 82. Superannuation Act 1988 (SA) section 38(1)(a).
[19] Superannuation Act 1988 (SA) section 4.
· a person cohabiting with the pensioner as his or her wife or husband de facto either within three of the previous four years or both persons being of different sex and the parents of a child; or
· a person with whom the pensioner is in a relationship as a couple registered under the Relationships Registration Act 2016 (SA).[20]
[20] Superannuation Act 1988 (SA) section 4A.
Upon the death of a pensioner, the pensioner’s eligible child or children (if any) became entitled to a pension while remaining an eligible child equal to a percentage of the notional pension of the pensioner.[21] An eligible child was defined to mean a child of the pensioner under the age of 16 years or under the age of 25 years in full-time attendance at a recognised educational institution.[22] The percentage depended on whether a pension was payable to the pensioner’s spouse and upon the number of eligible children.[23]
[21] Superannuation Act 1974 (SA) sections 85-87. Superannuation Act 1988 (SA) section 38.
[22] Superannuation Act 1974 (SA) section 4. Superannuation Act 1988 (SA) section 4.
[23] Superannuation Act 1974 (SA) sections 85-87. Superannuation Act 1988 (SA) section 38.
It can be seen that prospective entitlement to a superannuation pension was an important and valuable component of the remuneration package of State government employees such as Mr Latz. It gave to Mr Latz a bundle of rights including the very substantial benefit of payment of the full pension on retirement after 30 years service, on invalidity or on retrenchment if the retrenchment conditions were met. It also gave to him the very substantial benefit of payment of two thirds of the full pension to his current spouse and defined proportions of the full pension to his dependent children. Having the assurance that his spouse and any dependent children would receive a reversionary pension for the duration of their lives was obviously an important component of the total superannuation pension package. While these matters are self-evident from the legislation, Mr Thompson gave evidence that the superannuation pension was regarded as an important aspect of the remuneration package of such employees.
The age pension regime
Part 2.2 of the Social Security Act 1991 (Cth) provides for the payment of age pensions. A person is qualified for an age pension if the person has reached pension age and one of several additional criteria is satisfied.[24] Pension age is defined by reference to a person’s year of birth. For males born before on or before 30 June 1952 pension age is 65 years (and pension age progressively increases to 67 years for males born on or after 1 January 1957).[25] For females born between 1 January 1949 and 30 June 1952 pension age is 65 years (and pension age progressively increases to 67 years for females born on or after 1 January 1957).[26]
[24] Social Security Act 1991 (Cth) section 43.
[25] Social Security Act 1991 (Cth) section 23(5A).
[26] Social Security Act 1991 (Cth) section 23(5D). For females born before 1 January 1949, pension age ranges from 60 years to 64 years six months depending on year of birth: see section 23(5B) and (5C).
The main additional criterion required to be satisfied is that the person has 10 years qualifying Australian residence.[27] This means ordinarily that the person has resided in Australia as an Australian citizen or permanent visa holder for ten years continuously or at least five years continuously and ten years in aggregate.[28]
[27] Social Security Act 1991 (Cth) section 43(1)(a). For alternative criteria, see section 43(1)(b) to (d) and (2)(a) to (d).
[28] Social Security Act 1991 (Cth) section 7.
The rate of pension payable is fixed for non-blind persons by the rate calculator in section 1064. For a mainstream case, the maximum basic pension payable as at 1991 was $6,768 per annum for a person who is partnered and $8,115 per annum for other persons.[29] These rates are adjusted six monthly by reference to the movement in the consumer price index since 1991.[30] The rates that were current in May 2017 (see below) were $15,834 per annum for a person who is partnered and $21,008 per annum for other persons. In addition certain pensioners are entitled to smaller supplements and/or energy supplements.
[29] Social Security Act 1991 (Cth) sections 55 and1064 Modules A and B.
[30] Social Secruity Act 1991 (Cth) sections 1191-1198A.
The pension payable is subject to deduction by reference to a means tested comprising a combination of an income test and an asset test (the test providing the greater reduction being the operative test).[31] For the purpose of the income test, as at 1993 the first $1,820 per annum of ordinary income of a person who is partnered (ie half the couple’s combined income) and the first $2,080 per annum of ordinary income of a person who is not partnered were ignored.[32] These rates are adjusted annually by reference to the movement in the consumer price index since 1993.[33] The rates that were current in May 2017 (see below) were $3,796 per annum for a person who is partnered and $4,264 per annum for other persons. Subject to this, the pension payable is reduced by 50 cents for each dollar of a person’s ordinary income.[34]
[31] Social Security Act 1991 (Cth) section 1064 Modules A and E and G.
[32] Social Security Act 1991 (Cth) section 1064 Module E.
[33] Social Security Act 1991 (Cth) sections 1191-1194.
[34] Social Security Act 1991 (Cth) section 1064E.10.
Age pensions are paid out of Commonwealth general revenue. Qualification for an age pension does not depend on a person having paid taxes contributing to general revenue. However the vast majority of age pension recipients will have paid taxes before retirement. At a macro and general level, income taxes paid by employees and the self-employed over their productive lives can be seen as funding payment of the age pension to retirees.
The evidence as to pension value
Mr Latz retained a chartered accountant, Mark Thompson, to calculate the present value of his future pension entitlements. Mr Thompson’s reports dated 21 November 2016 and 31 March 2017 were received into evidence and he also gave oral evidence.
Amaca retained a chartered accountant, Tamara Lindsay, for the same purpose. Ms Lindsay’s reports dated 21 March 2017 and 7 April 2017 were received into evidence.
Ultimately Mr Thompson and Ms Lindsay agreed on or at least did not dispute the present value calculation, subject to the three issues of principle addressed at [40] to [45] below. The parties explicitly agree on appeal that the Court should proceed on the basis that:
· the calculation was made as at 1 May 2017;
· Mr Latz’ reduced life expectancy as a result of developing mesothelioma was six months giving a notional date of death of 31 October 2017;
· Mr Latz’ current superannuation pension was $51,162 per year ($981 per week);
· Mr Latz’ current age pension was $5,106 per year ($98 per week);
· Mr Latz’ current tax on his pension income was $4,669 per year ($90 per week);
· Mr Latz’ net (after tax) income from both pensions was $51,599 per year ($989 per week);
· the future value of the net pensions was to be discounted to present value at 3% per annum;
· the average life expectancy of a 70 year old male (Mr Latz’ age as at 1 May 2017) according to the current Australian Bureau of Statistics (ABS) prospective life expectancy table was 16.71 years translating to a notional expected date of death absent mesothelioma of 15 January 2034;
· the appropriate multiplier was 672.03 (16.21 years times 52.14 weeks discounted at 3% pa) times 0.985 for deferral of loss by six months giving a net multiplier of 661.9496.
Mr Thompson in his second report calculated the net present value of $989 per week on the above basis at $654,871.[35] Ms Lindsay was not instructed to consider this figure in her third report and she did not give oral evidence. The figure of $654,871 was accepted by the Judge.
[35] $989 multiplied by 661.95.
Personal expenditure
There was a difference between the experts concerning the expenditure that Mr Latz would have incurred during the lost years on his personal maintenance. Ms Lindsay estimated that expenditure at $201 per week based on the ABS Household Expenditure Survey 2009/2010 adjusted by reference to consumer price index movements to December 2016.
Mr Thompson was initially instructed not to make any allowance for such personal expenditure. In his second report, he expressed the opinion that such expenditure would have been $185 per week based on data from the same ABS Survey but using instead tables for house owners without a mortgage and tables for South Australia. Ms Lindsay was not instructed to consider this figure in her third report and she did not give oral evidence.
Mr Thompson calculated the present value of future expenditure of $185 per week at $122,499. The parties agree for the purposes of the appeal that the present value of future expenditure of $185 per week is $122,461 (a small difference due to rounding).
Contingencies
Ms Lindsay was instructed to make calculations based on alternative assumptions that it was appropriate to deduct 5% or 15% on account of contingencies and vicissitudes. Mr Thompson in his second report was instructed to make calculations based on alternative assumptions that it was appropriate to add 5% or 15% on account of positive contingencies.
On appeal, neither party now challenges the Judge’s approach to negative or positive contingencies in the last paragraph of the passage extracted at [49] below.
Reversionary pension
Ms Lindsay was instructed to make a calculation of the present value of the reversionary (two thirds) pension payable to Ms Taplin between 31 October 2017 and Mr Latz’ notional date of death in the absence of mesothelioma. In her second report she calculated the present value of $654 per week (two thirds of $989 per week) up to 16 November 2033 at $428,126. The parties agree for the purposes of the appeal that, if a deduction should be made on account of the reversionary pension, the amount should be $432,915.
The reasons of the Judge as to the pensions
At trial, Amaca conceded that damages were recoverable for the loss of the superannuation pension. Amaca contended that the loss should be assessed net of the value of the reversionary pension and damages were not recoverable for the loss of the age pension.
Given the concession as to the superannuation pension, the Judge considered that there was no good reason to distinguish the position in respect of the age pension. The Judge said:
Conceptually I can see no reason why Mr Latz’s entitlement to an Aged pension should be treated any differently to his State pension. But for James Hardie’s tort, Mr Latz would have potentially continued to receive an Aged pension for the rest of his expected life. That life has been considerably shortened by its tort. Mr Latz is entitled to be compensated for the loss of that pension in the lost years.
The Judge rejected Amaca’s contention that the loss of the superannuation pension should be assessed net of the reversionary pension. The Judge said:
Thus [Ms Taplin] will be entitled to a pension that she may not have been entitled to or if she was, she will be entitled to it earlier and, on balance, for a longer period than would otherwise have been the case.
In considering the significance of this potential benefit, it is important not to lose sight of the fact that this is not Ms Taplin’s claim. It is Mr Latz’s. That then begs the question as to why as a matter of fairness and policy, his damages should be reduced because his spouse is likely to receive a benefit from his death. If he has life insurance and she is named as his nominated beneficiary, no question of any reduction of his entitlement to damages would arise because of her potential receipt of the fruits of that insurance. As a matter of fairness and policy should this potential benefit be treated any differently?
The State will potentially provide benefits to Ms Taplin because Mr Latz paid for her financial protection through his contributions to the pension scheme. If that protection was in the form of an agreed lump sum it would be seen as life insurance. The fact that it can be paid as a fortnightly benefit for the duration of her life does not, to my mind, alter its character.
When viewed in this way, the authorities make it clear what then follows. As Mason and Dawson JJ explained in Redding v Lee:
It would be unjust and unreasonable to reduce the damages of the prudent plaintiff who insures himself against accident by allowing the premiums which he paid and the proceeds of the policy to enure for the benefit of the tortfeasor and make the existence of the insurance the occasion for giving the plaintiff a lesser award of damages than he would have obtained had he not been insured.
In my view Ms Taplin’s potential entitlement to a pension from the State must be disregarded in the assessment of Mr Latz’s claim for economic loss.
The Judge made a reduction from the award for Mr Latz’s maintenance expenses of $137,550 based on a cost of $210 per week. The Judge said:
The receipt of that pension is contingent on him continuing to live. My survey of the relevant case law suggests that basic maintenance expenses must be deducted to reflect this. Amaca suggest an amount of $150 a week. That appears to me to be a bit modest. I would have thought that $30 a day was a more realistic assessment of the basic cost of keeping oneself alive. I also need to factor the fact that had he not had mesothelioma and had lived a much longer life, as he became much older, it is likely that he would have required more medical and like services to continue to sustain himself such that the weekly amount would eventually have increased, and towards the end of his life, potentially quite significantly.
…
Mr Latz’s entitlement to the State pension is enshrined in legislation. In contrast to this, his entitlement to the Aged pension is inextricably linked to his personal circumstances, i.e. his relationship with Ms Taplin, and the policies of the Government. I think that warrants some caution being exercised in assessing its lost value.
I allow $500,000 for this head of loss. I reach that figure by starting with the figure of $654,871 and reducing it by $137,550, based on an assumed cost of maintaining Mr Latz of $210 per week. I have then reduced that balance to take into account that it is likely that towards the end of his life the cost of his maintenance will increase and to reflect some caution in assessing the value of the loss of the Aged pension. I have then made a further adjustment upwards to reflect my expectation that if there is any contingency in respect of the duration of the lost years, given Mr Latz’s otherwise good health and seemingly good genes, it might be a bit longer than the average for a man of his age.
Loss of pension as recoverable loss
Amaca contends that the common law recognises only three types of compensable loss for tortiously inflicted personal injury, namely non-pecuniary loss, loss of earning capacity and financial expenses. Loss of a pension does not fall within any of these heads. It is therefore not recoverable. Amaca cites as authority for its major premise the judgment of Gleeson CJ, Gummow and Heydon JJ in CSR Limited v Eddy.[36]
[36] [2005] HCA 64, (2005) 226 CLR 1 at [28]-[31].
Mr Latz contends that the cardinal principle is that damages are to be awarded so as to place the plaintiff as far as possible in the same position as if the defendant had not committed the actionable wrong (the compensatory principle). Mr Latz contends that recoverable financial loss may be comprised of lower income or higher expenses or both and that loss of income is not confined to loss of earning capacity.
Amaca accepts in turn that the compensatory principle is the starting point, but contends that this principle is subject to various qualifications, one of which is a special rule applying only to damages for personal injury confining heads of damage to the three heads referred to above.
Availability of contention on appeal
Mr Latz submits that Amaca is precluded from contending that damages were not recoverable for loss of the superannuation pension because it did not argue this point in the Court below, citing Coulton v Holcombe.[37]
[37] (1986) 162 CLR 1.
In Water Board v Moustakas,[38] Mason CJ, Wilson, Brennan and Dawson JJ said:
[38] (1988) 180 CLR 491.
More than once it has been held by this Court that a point cannot be raised for the first time upon appeal when it could possibly have been met by calling evidence below. Where all the facts have been established beyond controversy or where the point is one of construction or of law, then a court of appeal may find it expedient and in the interests of justice to entertain the point, but otherwise the rule is strictly applied.[39]
[39] At 497.
Mr Latz does not identify any evidence that could possibly have been called if Amaca had at trial taken the point now sought to be raised on appeal. It is not conceivable that any such evidence could have been called. Although an appellate court has a residual discretion not to entertain a point not argued below notwithstanding that it could not have been met by calling evidence, there is no reason to exercise that discretion in the present case.
The compensatory principle
The compensatory principle is that damages are to be awarded so as to place the plaintiff as far as possible in the same position as if the defendant had not committed the actionable wrong.
The compensatory principle applies to the assessment of damages for both tort[40] and contract.[41] In the case of tort, the wrong is the commission of the tort and hence the comparison is with the hypothetical position that would have pertained if the defendant had not committed the tort.[42] In the case of contract, the wrong is the breach of contract and hence the comparison is with the hypothetical position that would have pertained if the defendant had performed the contract.[43]
[40] Butler v Egg & Egg Pulp Marketing Board (1966) 114 CLR 185 at 191 per Taylor and Owen JJ.
[41] Wenham v Ella (1972) 127 CLR 454 at 460 per Barwick CJ and 471 per Gibbs (with whom Walsh J agreed).
[42] Butler v Egg & Egg Pulp Marketing Board (1966) 114 CLR 185 at 191 per Taylor and Owen JJ.
[43] Butler v Egg & Egg Pulp Marketing Board (1966) 114 CLR 185 at 191 per Taylor and Owen JJ.
The compensatory principle was formulated by Lord Blackburn in Livingstone v Rawyards Coal Co[44] in the following terms:
[44] (1880) 5 App Cas 25.
I do not think there is any difference of opinion as to its being a general rule that, where any injury is to be compensated by damages, in settling the sum of money to be given for reparation of damages you should as nearly as possible get at that sum of money which will put the party who has been injured, or who has suffered, in the same position as he would have been in if he had not sustained the wrong for which he is now getting his compensation or reparation.[45]
[45] At 39.
In Butler v Egg & Egg Pulp Marketing Board,[46] Taylor and Owen JJ said:
[46] (1966) 114 CLR 185.
… the general principle upon which compensatory damages are assessed, whether in actions of contract or of tort…is that the injured party should receive compensation in a sum which, so far as money can do so, will put him in the same position as he would have been in if the contract had been performed or the tort had not been committed.[47]
[47] At 191.
In Todorovic v Waller,[48] Gibbs CJ and Wilson J (with whom Aickin J agreed) said:
[48] (1981) 150 CLR 402.
Certain fundamental principles are so well established that it is unnecessary to cite authorities in support of them. In the first place, a plaintiff who has been injured by the negligence of the defendant should be awarded such a sum of money as will, as nearly as possible, put him in the same position as if he had not sustained the injuries.[49]
[49] At 412.
Stephen J (with whom Murphy J agreed) (dissenting as to the outcome but not as to the compensatory principle) said:
In Barrell I cited those authorities which, more than a hundred years ago, established and have ever since affirmed the cardinal principle of such compensation: that a plaintiff is entitled to such compensation as will, as nearly as may be, make good the financial loss which he has suffered and will probably suffer in the future. Once liability has been established and the facts relevant to damages have been found it is then for the courts to give effect to that principle in their assessment of damages for economic loss. While there may be no one exclusive method of assessment appropriate to every circumstance, there is but one criterion by which the adequacy of any particular method may be judged; it is whether or not the result of the assessment fairly makes good the financial loss incurred.[50]
[50] At 427. (Footnote omitted)
Mason J said:
The task of the court is to fairly and adequately compensate the injured plaintiff by awarding him that sum that, so far as is possible, will put him in the position that he would have occupied had he not been injured.[51]
[51] At 442.
Brennan J said:
The principle of law is undoubted and uniform: "the injured party should receive compensation in a sum which, so far as money can do, will put him in the same position as he would have been in if the contract had been performed or the tort had not been committed" (Butler v Egg and Egg Pulp Marketing Board). … The principle requires that the Courts award an injured plaintiff "such a sum as will, so far as possible, make good to him the financial loss which he has suffered and will probably suffer as a result of the wrong done to him for which the defendant is responsible" (per Lord Reid in British Transport Commission v Gourley).[52]
[52] At 462. (Footnote omitted)
In Haines v Bendall,[53] Mason CJ, Dawson, Toohey and Gaudron JJ said:
[53] (1991) 172 CLR 60.
The settled principle governing the assessment of compensatory damages, whether in actions of tort or contract, is that the injured party should receive compensation in a sum which, so far as money can do, will put that party in the same position as he or she would have been in if the contract had been performed or the tort had not been committed. Compensation is the cardinal concept. It is the "one principle that is absolutely firm, and which must control all else": Skelton v Collins per Windeyer J.[54]
[54] At 63. (Citations omitted).
Classifications of damages
Damages are classified into categories for logical and/or practical reasons.
One classification made for practical reasons is the dichotomy between general damages and special damages, although the meaning varies according to the context and purpose of the classification. First “general damages” may mean damages assessed at large without proof of amount whereas “special damages” mean damages that must be the subject of proof of amount.[55] Secondly “general damages” may mean damages the amount of which need not be pleaded whereas the amount of “special damages” must be pleaded.[56] While there is an overlap between general damages under both meanings, there are also differences.
[55] Prehn v Royal Bank of Liverpool (1870) LR 5 Ex 92 at 99-100 per Martin B. See McGregor on Damages 19 ed (2014) [3-003]-[3-004].
[56] The Susquehanna [1926] AC 655 at 661 per Lord Dunedin. See McGregor on Damages 19 ed (2014) [3-003]-[3-005].
Another classification is the dichotomy between economic (or financial) loss and non-economic (or non-financial) loss.[57] Thus in Fitch v Hyde-Cates,[58] Mason J (with whom Gibbs CJ, Stephen, Aickin and Brennan JJ agreed) said:
[57] Phillips v London and South Western Railway Co (1879) 5 CPD 280 at 283 per Groves J (with whom Lopes J agreed), 287-288 per Bramwell LJ and 289 and 292 per Brett LJ; Mundy v Pav (1992) 57 SASR 526 at 531-534 per Legoe J, 540 per Millhouse J and 543 per Olsson J; Fitch v Hyde-Cates (1982) 150 CLR 482 at 492 per Mason J (with whom Gibbs CJ, Stephen, Aickin and Brennan JJ agreed). See McGregor on Damages 19 ed (2014) [2-001].
[58] (1982) 150 CLR 482.
… the majority in the Court of Appeal rightly made the point that bodily injury has traditionally been treated as a head of damage separate from economic loss
…
… courts and lawyers have always drawn a distinction between economic loss and non-economic loss despite the fact that each flows from the shortening of the victim's life.[59]
[59] At 492, 494. See [76] below for the context in which these passages appear.
While the distinction between economic and non-economic loss appears at first sight to be clear, there was a division of opinion in this Court whether Beck v Farrelly damages are properly characterised as economic or non-economic loss.[60]
[60] Mundy v Pav (1992) 57 SASR 526.
In the non-personal injury context, economic or financial loss often comprises the loss of profit being the result of a comparison between the actual past and future income received less actual expenses incurred and the hypothetical past and future income that would have been received less the hypothetical expenses that would have been incurred but for the wrong. The hypothetical expenses might be higher or lower than the actual expenses. There is no a priori or legal limitation on the nature of the income and expenses to be taken into account: this is determined by the economic analysis.
In the case of a tort resulting in the loss or destruction of goods used in a business or otherwise to produce income, the ultimate measure of loss is the present value of the profit (income less expenses) that would have been received but for the wrong compared to the present value of the profit that will actually be earnt.[61] Prima facie this may be expected to be equal to the market value of the goods. However, if the goods are unique, there is no market in which they are traded, they have a special value to the plaintiff or there are other special circumstances, this prima facie measure will give way to the ultimate measure to ensure that the damages awarded are appropriate to place the plaintiff in the same position as if the defendant had not committed the wrong.[62]
[61] Liesbosch Dredger v SS Edison [1933] AC 449 at 459, 463 per Lord Wright (with whom Lords Buckmaster, Warrington of Clyffe, Tomlin and Russell of Killowen agreed); Hoad v Scone Motors Pty Ltd [1977] 1 NSWLR 88 at 91, 94 per Moffitt P and 99-100 per Samuels JA.
[62] Liesbosch Dredger v SS Edison [1933] AC 449 at 463-465 per Lord Wright (with whom Lords Buckmaster, Warrington of Clyffe, Tomlin and Russell of Killowen agreed); O'Grady v Westminster Scaffolding Ltd [1962] 2 Lloyd's Rep 238 at 240 per Edmund Davies J; Hoad v Scone Motors Pty Ltd [1977] 1 NSWLR 88 at 91, 94 per Moffitt P and 99-100 per Samuels JA.
The existence of particular rules and practices should not be allowed to obscure the compensatory principle which was described as “fundamental” by Gibbs CJ and Wilson J (with whom Aickin J agreed) and “cardinal” by Stephen J (with whom Murphy J agreed) in Todorovic v Waller[63] and “cardinal” and “control[ling]” by Mason CJ, Dawson, Toohey and Gaudron JJ in Haines v Bendall.[64]
[63] (1981) 150 CLR 402.
[64] (1991) 172 CLR 60.
Thus in Butler v Egg & Egg Pulp Marketing Board,[65] Taylor and Owen JJ said immediately after the passage extracted at [59] above:
[65] (1966) 114 CLR 185.
And this principle is as much applicable to actions of conversion as it is to the case of other actionable wrongs. In most cases of conversion it is, of course, obvious that its application will result in the injured plaintiff recovering the full value of the property converted since that will usually represent the loss that he has sustained by the defendant's wrongful act. Hence the statement which appears so often in the books that the general rule is that the plaintiff in an action of conversion is entitled to recover the full value of the goods converted, but this statement should not be allowed to obscure the broad principle that damages are awarded by way of compensation. ... The Board's loss must, in our opinion, be determined by considering what sum of money would be required to place it in the same position as it would have been in if the appellants had performed their statutory obligation.[66]
[66] At 191. (Emphasis added)
In Todorovic v Waller,[67] Stephen J (with whom Murphy J agreed) said:
[67] (1981) 150 CLR 402.
While there may be no one exclusive method of assessment appropriate to every circumstance, there is but one criterion by which the adequacy of any particular method may be judged; it is whether or not the result of the assessment fairly makes good the financial loss incurred.
The law, by insisting upon this principle, has established the proper measure of compensation for pecuniary loss; the actual process of assessment can then only be matter for reasoned estimation and computation. Rules and practices develop in the process of assessment and no doubt tend, by their judicial adoption in a legal system governed by precedent, to become current orthodoxy. But since the medium of compensation is money, whose purchasing power and income-yielding qualities may change over time, a particular process of assessment, attuned to a particular state of the medium, may come to be no longer appropriate. It follows that, since the sole function of the process of assessment is to attain what the law has fixed as the proper measure of compensation, there can be no place in the process for fixed rules of law; instead the process must be capable of adjustment in the face of changes in the quality of the medium of compensation. The current acceptability at any time of a process of assessment will depend, and depend only, upon whether or not its outcome fairly corresponds to what the law has set as the proper measure of compensation.[68]
[68] At 427. (Footnote omitted)
Compensation for economic loss during the lost years
In Oliver v Ashman[69] the English Court of Appeal held that damages for economic loss could only be recovered up to the plaintiff’s actual likely date of death and “no regard should ever be had to financial gains or losses” during the lost years.
[69] [1962] 2 QB 21.
In Skelton v Collins,[70] the High Court (Menzies J dissenting) declined to follow Oliver v Ashman and held that, in assessing damages for economic loss resulting from destroyed earning capacity where a plaintiff’s life has been shortened by the injury, the relevant period is not confined to the period of the plaintiff’s shortened life but encompasses the “lost years”. Taylor J (with whom Kitto J, Owen J and Windeyer J relevantly agreed) distinguished the earlier English authorities relied on by the Court of Appeal in Oliver v Ashman on the basis that they were not addressing “economic loss resulting from a destroyed or diminished earning capacity”. His Honour concluded:
[70] (1966) 115 CLR 94.
I need scarcely mention the anomaly that would arise if Oliver v Ashman is taken to have been correctly decided. An incapacitated plaintiff whose life expectation has not been diminished would be entitled to the full measure of the economic loss arising from his lost or diminished capacity. But an incapacitated plaintiff whose life expectancy has been diminished would not. Yet the recovery by him of damages that does not take into account his full economic loss will operate to prevent his dependants, in the event of his death, from recovering damages under the Fatal Accidents Act. However if he dies without having sued for damages his dependants will be entitled to recover damages assessed upon a consideration of what his economic prospects would have been had he survived for the full period of his pre-accident expectancy.
For the reasons I have given I find myself forced to the conclusion that the recognition which has been accorded to the right of an injured plaintiff to recover damages for "the loss of a measure of prospective happiness" in no way operates to displace or destroy his right to recover damages for economic loss resulting from his diminished earning capacity. Accordingly in my view damages in the present case should have been assessed under this head having regard to the plaintiff's pre-accident expectancy and not only to the expectancy of life remaining to him after the receipt of his injuries.[71]
[71] At 121. (Footnote omitted) (Emphasis added)
Taylor J did not say that the recovery of damages in respect of the lost years was confined to the species of diminished earning capacity and referred more generally to damages for economic loss.
Windeyer J referred to the compensatory principle as a “fundamental consideration”, formulating it in the following terms:
The one principle that is absolutely firm, and which must control all else, is that damages for the consequences of mere negligence are compensatory. They are not punitive. They are given to compensate the injured person for what he has suffered and will suffer in mind, body or estate…
Windeyer J said:
The general principle that damages are compensatory yields what seem to me to be some equally sure, but more particular, doctrines. The first is that a plaintiff is entitled to be recompensed for expenses, such as for medical and nursing attention, that he incurs, or that are incurred on his behalf, as a consequence of his injury.
The next rule that, as I see the matter, flows from the principle of compensation is that anything having a money value which the plaintiff has lost should be made good in money. This applies to that element in damages for personal injuries which is commonly called "loss of earnings". The destruction or diminution of a man's capacity to earn money can be made good in money. … I cannot see that damages that flow from the destruction or diminution of his capacity to do so are any the less when the period during which the capacity might have been exercised is curtailed because the tort cut short his expected span of life. We should not, I think, follow the English decisions in which in assessing loss of earnings the "lost years" are not taken into account. I agree in what my brother Taylor has said about those cases and with his conclusion on this aspect.[72]
[72] At 128-129. (Emphasis added)
Although Windeyer J referred to loss of earnings and earning capacity, this was in the context that the claim in that case involved the prospective loss of wages. Windeyer J expressed the principle more broadly by reference to “anything having a money value which the plaintiff has lost”.
In Pickett v British Rail Engineering Ltd,[73] the House of Lords followed Skelton v Collins and overruled Oliver v Ashman.
[73] [1980] AC 136.
In Gammel v Wilson,[74] the House of Lords considered section 1(2)(c) of the Law Reform (Miscellaneous Provisions) Act 1934 (UK) (the survival of causes of action legislation of the United Kingdom) which provided that, where the death of the deceased was caused by the wrongful act, damages were to be calculated without reference to any loss or gain to the estate consequential on the deceased’s death. The House of Lords held that this did not apply to any loss or gain capable of being suffered or collected by the deceased before his death. Accordingly, it did not apply to a claim for damages for loss of earnings during the lost years. Lord Scarman (with whom Lord Fraser of Tullybelton agreed) in the course of his Lordship’s reasons observed that damages are recoverable by a living plaintiff for loss of an annuity otherwise payable during the lost years and expressly equated the position in this respect with damages recoverable for loss of earnings during the lost years. Lord Scarman said:
[74] [1982] AC 27.
… in Rose v Ford … Lord Wright … read the subsection as requiring to be excluded from the calculation only those items of loss or gain to the estate which the dead man, had he lived, could neither have experienced nor collected. His instance of a gain – “insurance monies falling due on death” – is a good illustration, even though his instance of a loss – “annuity ceasing on death” – is not: for that loss, like the loss of the earnings of the lost years, is to be attributed to the years lost by reason of the injury sustained and is, therefore, part of the cause of action which vested in the deceased before his death.[75]
[75] At 77.
In Fitch v Hyde-Cates,[76] the High Court followed Gammel v Wilson. The Court held that claims for economic loss were not excluded by section 2(2)(c) of the Law Reform Miscellaneous Provisions Act 1944 (NSW) (the equivalent of the provision considered in Gammel v Wilson) nor by section 2(2)(d) which excluded damages for pain or suffering, bodily or mental harm or curtailment of expectation of life. The Court referred to economic or financial loss as a genus of which loss of earning capacity is a species. Mason J (with whom Gibbs CJ, Stephen, Aickin and Brennan JJ agreed) said:
[76] (1982) 150 CLR 482.
Section 2 cannot be construed in isolation. It needs to be read against a background of related developments. They begin with the old common law rules: (1) that in a civil court "the death of a human being could not be complained of as an injury" … and (2) that a cause of action in tort died with the person in whom it vested and did not survive for the benefit of the estate - actio personalis moritur cum persona.
The harshness of the operation of these rules was alleviated by statute. First, the introduction in England in 1846 of the Fatal Accidents Act … conferred a right of action on the dependants (within the meaning of s 4) of a deceased person whose death resulted from the wrongful act or omission of the defendant to recover compensation for the financial loss which they sustained by reason of the deceased's death…
…
Again, the language of [section 2(2)(d)] is scarcely apposite to cover damages for lost earning capacity in the years of life of which the deceased has been deprived. The paragraph specifically excludes particular heads of damage associated with personal injury, but significantly it makes no reference to economic or pecuniary loss. With reference to the argument that the words "bodily harm" are large enough to comprehend economic loss, the majority in the Court of Appeal rightly made the point that bodily injury has traditionally been treated as a head of damage separate from economic loss … Here the expression is "bodily or mental harm". It naturally refers to physical or mental injury or disability; it does not naturally refer to economic loss and in the context in which it appears the expression seems to bear the narrower meaning. If it has the larger meaning contended for by the appellant so that it includes economic loss it is difficult to perceive any reason for mentioning pain and suffering and curtailment of expectation of life which, like economic loss, are also heads of damage consequential upon bodily injury.
…
It is not suggested that the exclusion of damages "for the curtailment of his expectation of life" excludes economic loss flowing from the shortening of the victim's life. To the layman this may seem surprising. With justification he may ask: "Why is economic loss flowing from curtailment of expectation of life not part of the damages recoverable for curtailment of that expectation?" The lawyer's answer is that courts and lawyers have always drawn a distinction between economic loss and non-economic loss despite the fact that each flows from the shortening of the victim's life. … Lord Atkin and Lord Wright in Rose v Ford thought that damages for loss of expectation of life had always been a usual element in the assessment of damages. In these, as in later cases, the notion was that damages for loss of expectation of life was a head of damage separate from economic loss.
…
In Skelton there are to be found statements which plainly indicate that damages for loss of earning capacity in the lost years are to be classified under the head of economic loss, not as an element in loss of expectation of life. …. And it should be noted that the heresy in Oliver was largely founded on the view, now held in Skelton and Pickett to be erroneous, that loss of future wages in the lost years was an ingredient in loss of expectation of life. The distinction between damages for economic loss (including loss in the lost years) and damages for loss of expectation of life was maintained in Gammell v Wilson …
…
For these reasons s 2(2)(d), like s 2(2)(c), does not in my view exclude recovery by the estate of a deceased person for loss of earning capacity in the lost years.[77]
[77] At 487, 492-493, 494, 495.
Mason J specifically agreed with Lord Scarman that damages are recoverable by a living plaintiff for loss of an annuity otherwise payable during the lost years:
Lord Wright in Rose v Ford instanced insurance moneys falling due on death and annuities ceasing on death as falling within s 1(2)(c) of the English Act. However, in Gammell v Wilson, Lord Scarman correctly observed that annuities ceasing on death is not a good example " . . . for that loss, like the loss of the earnings of the lost years, is to be attributed to the years lost by reason of the injury sustained and is, therefore, part of the cause of action which vested in the deceased before his death . . . ".[78]
[78] At 491.
CSR Limited v Eddy
In CSR Limited v Eddy,[79] the High Court overruled the decision of the New South Wales Court of Appeal in Sullivan v Gordon.[80] The Court held that a plaintiff rendered unable to provide gratuitous domestic services for another as a result of personal injury cannot recover the commercial value of those services (so-called Sullivan v Gordon damages) but loss of the capacity to provide such services is to be assessed as part of general damages. The Court held that the principle under which damages are recoverable for the commercial value of services rendered gratuitously by another to a plaintiff (so-called Griffiths v Kirkemeyer[81] damages) has no application to domestic services provided gratuitously by the plaintiff to another.
[79] (2005) 226 CLR 1.
[80] (1999) 47 NSWLR 319.
[81] (1977) 139 CLR 161.
Gleeson CJ, Gummow and Heydon JJ (with whom Callinan J relevantly agreed) articulated four reasons why no analogy should be drawn between Sullivan v Gordon damages and Griffiths v Kirkemeyer damages. Their Honours said:
The respondent relied on an "analogy with Griffiths v Kerkemeyer". For the following reasons no analogy should be drawn.[82]
[82] At [15].
The second of the four reasons was the anomalous character of Griffiths v Kirkemeyer damages. In the following passage relied upon by Amaca, their Honours said:
[27]Secondly, Griffiths v Kerkemeyer is anomalous in departing from the usual rule that damages other than damages payable for loss not measurable in money are not recoverable for an injury unless the injury produces actual financial loss.
[28]A plaintiff who has suffered negligently caused personal injury is traditionally seen as able to recover three types of loss.
[29]The first covers non-pecuniary losses such as pain and suffering, disfigurement, loss of limbs or organs, loss of the senses – sight, taste, hearing, smell and touch; and loss of the capacity to engage in hobbies, sport, work, marriage and child-bearing. Damages can be recovered in relation to these losses even if no actual financial loss is caused and even if the damage caused by them cannot be measured in money.
[30]The second type of loss is loss of earning capacity both before the trial and after it. Although the damages recoverable in relation to reduced future income are damages for loss of earning capacity, not damages for loss of earnings simpliciter, those damages are awardable only to the extent that the loss has been or may be productive of financial loss. Hence "the valuation of the loss of earning capacity involves the consideration of what moneys could have been produced by the exercise of the [plaintiff's] former earning capacity".
[31]The third type of recoverable loss is actual financial loss, for example, ambulance charges; charges for medical, hospital and professional nursing services; travel and accommodation expenses incurred in obtaining those services; the costs of rehabilitation needs, special clothing and special equipment; the costs of modifying houses; the costs of funds management; and the costs of professionally supplied home maintenance services. It is not necessary for the costs actually to have been incurred by the time of the trial, but it is necessary that they will be incurred. The traditional view of the law was stated by Dixon CJ in Blundell v Musgrave:
"[B]efore a plaintiff can recover in an action of negligence for personal injuries an item of damages consisting of expenses which he has not yet paid, it must appear that it is an expenditure which he must meet so that at the time the action is brought, though he has not paid it, he is in truth worse off by that amount. Generally speaking the question whether he must meet the expense is to be decided as a matter depending upon his legal liability to pay it."
[32]That principle permits recovery by plaintiffs who, though at the time of the trial they have not made contracts for the provision of future care, will have to do so in future if they are to receive it. Dixon CJ appears to have accepted this in a later statement in the same case:
"[T]he basis on which a plaintiff recovers expenses as special damages is that he will have to pay them whether he obtains the amount from the defendant as damages or not."
[33]Dixon CJ was in dissent, but not on these principles; Fullagar J (also dissenting) agreed with them. The majority (McTiernan, Williams, Webb and Taylor JJ) assumed them to be sound, differing from the dissenters only on whether there was in that case an obligation to pay. So far as Griffiths v Kerkemeyer permits plaintiffs to recover the costs of nursing and home care services which are to be paid for, it accords with these principles. So far as it permits recovery of those costs even though the services may never be supplied or may never be paid for, it is not only exceptional, but anomalous.[83]
[83] At [27]-[33]. (Footnotes omitted)
Amaca contends that this decision is authority for the proposition that the common law recognises only three types of compensable loss for tortiously inflicted personal injury, namely non-pecuniary loss, loss of earning capacity and financial expenses; loss of a pension does not fall within any of these heads of loss; hence loss of a pension is not recoverable. The major premise of Amaca’s contention should be rejected.
In the passage extracted above, the principal distinction drawn by the plurality was between damages for “financial loss” and damages for “loss not measurable in money”, ie non-financial loss, being the distinction articulated in paragraph [27]. The proposition articulated in that paragraph is that normally damages for loss measurable in money (ie not non-financial loss) are only recoverable for “actual” financial loss. Griffiths v Kirkemeyer damages are an exception to that proposition, and thereby anomalous, because they are damages recoverable for loss measurable in money but involve no actual financial loss.
In paragraph [29], the plurality referred to non-pecuniary (ie non-financial) losses and gave examples in words (“such as”) plainly conveying that they were not intended to be exhaustive. In paragraphs [30] and [31], the plurality referred to two types of loss measurable in money and emphasised that both types involve actual financial loss. The first type was loss of earning capacity resulting in actual financial loss. The second type was actual financial loss of which the plurality gave examples in words (“for example”) plainly conveying that they were not intended to be exhaustive. Although each example involved loss by way of expenses incurred rather than income not received, the examples were introduced by the generic description “actual financial losses” rather than a limited description “actual financial expenses”.
Paragraphs [29] to [31] were introduced by paragraph [28] making reference to a plaintiff being traditionally seen as able to recover three types of loss. This stands in contrast with a statement that a plaintiff can only recover those three types of loss.
It is important to have regard to the context in which the plurality made the statements contained in the passage extracted above. The High Court was addressing a claim for damages for loss of the ability to provide gratuitous domestic services for another as a result of personal injury. As the Court pointed out, this loss did not involve any actual financial loss and the Court went on to hold that the loss of that ability was to be encompassed in general damages awarded for non-financial loss. The Court was not called on to consider the recoverability of damages for an actual financial loss such as loss of a pension, nor was it called on to attempt to identify exhaustively different forms of actual financial loss that are recoverable.
Two factors have combined to make claims for loss of a pension due to premature death a relatively recent phenomenon. First, as a result of the combination of the large time lapse (in the order of three to four decades) between exposure to asbestos and the development of mesothelioma, the increase in the scale of use of asbestos in the 1960s, the acquisition of actual or constructive knowledge by manufacturers and employers of the risks of asbestos in the 1960s, the increasing affluence and hence increased damages awards from the 1960s and the lag before plaintiff’s lawyers were in a position to advise plaintiffs to bring actions for damages, actions for personal injury involving mesothelioma are relatively recent. Secondly, as a result of increasing affluence and the increasing scale and amount of defined benefit pension schemes in the 1960s onwards (albeit such defined benefit schemes have since greatly declined), claims for loss of defined benefit pensions in substantial amounts are relatively recent. For this reason, such claims were not included when different types of loss were traditionally described. There was no reason for the High Court in CSR Limited v Eddy to advert to this relatively rare type of loss.
There is no inconsistency between the passage from the reasons of the plurality extracted above and the recoverability of damages for loss of a pension caused by an actionable wrong. Such a loss comprises an “actual financial loss” within the meaning of that term used by the plurality in paragraph [27]. It is capable of falling within the third type of recoverable loss being actual financial loss referred to in paragraph [31]. In any event, it is apparent from the context of the whole passage, the introductory words contained in paragraph [28] and the non-exhaustive words used in paragraphs [29] and [31] that the plurality was not attempting to articulate a comprehensive and exhaustive set of rules determining the recoverability of damages.
In the passage relied upon by Amaca, the plurality did not address the role of the compensatory principle. Nor did the plurality suggest that the statement by Mason J (with whom Gibbs CJ, Stephen, Aickin and Brennan JJ agreed) about the recoverability of a lost annuity in the passage extracted at [77] was wrong. The plurality simply was not addressing this question.
The reliance by Amaca on the passage from the reasons of the plurality affords an illustration of the precept that the words of a judgment should not be treated as if they were words contained in legislation.
This Court is not bound by High Court authority to determine that damages for loss of a pension due to the premature death of the plaintiff caused by the defendant’s tort cannot be recovered.
Authorities on damages for loss of unemployment benefits
In Dabinett v Whittaker,[84] the plaintiff had been in receipt of unemployment benefits for several years before he was injured and it was unlikely that he would have returned to employment even if he had not been injured. As a result of the injury, the Department of Social Security changed his benefit to a sickness benefit and payments of sickness benefit were repayable upon success in the action, whereas payments of unemployment benefit were not repayable. Thomas J (with whom Andrews CJ agreed) in the Full Court of the Supreme Court of Queensland held that the plaintiff was entitled to damages for the financial loss resulting from his loss of non-repayable unemployment benefits.
[84] [1989] 2 Qd R 228.
In Neal v Bingle,[85] the plaintiff had been in receipt of social security benefits before he was injured as a result of a pre-existing disability. He would have continued to receive them and they would not have been repayable if he had not been injured. As a result of the injury, payments of the benefits became repayable by him upon success in his action. Beldam LJ (with whom Simon Brown and Waller LJJ agreed) in the English Court of Appeal held that the plaintiff was entitled to damages for the financial loss resulting from his loss of non-repayable social security benefits.
[85] [1998] QB 466.
Authorities on damages for loss of pension
The parties cite three decisions of the New South Wales Dust Diseases Tribunal which address the recoverability of damages for loss of a pension caused by a defendant’s tort resulting in the premature death of the plaintiff.
In Lynch v Amaca,[86] Mr Lynch was a member of an employer sponsored defined benefit superannuation plan under which upon retiring at age 65 he would have become entitled to an annual pension. He was diagnosed with mesothelioma in August 2003 and retired in November 2003 at the age of 55. He commenced to receive an invalidity pension upon his early retirement. His life expectancy was reduced to 31 December 2004 and his pension entitlements were to end prematurely on his death. Curtis J awarded damages for the net present value of the loss of future pension benefits.
[86] [2004] NSWDDT 1.
In Roberts v Amaca,[87] Mr Roberts was diagnosed with mesothelioma in November 2008 at the age of 63. He had since the age of 60 been in receipt of a pension pursuant to the United Kingdom National Health Superannuation Scheme. He had made compulsory contributions to that Scheme when he had worked in the United Kingdom. His life expectancy was reduced to 15 November 2011 and his pension entitlements were to end prematurely on his death. Curtis J awarded damages for the net present value of the loss of future pension benefits discounted by five per cent for the contingency of an earlier death. Curtis J said:
[87] [2009] NSWDDT 28.
Mr Watson SC for Amaca submits that because the theoretical basis of the entitlement to economic loss consequent upon personal injury is a loss of earning capacity, not a loss of income, no compensation may be awarded for the loss of this passive income. This submission is unsound.
In most cases compensation is not awarded for the loss of passive income because the tort has not deprived the victim of that capital asset which produces the income. The income continues for the benefit of the victim's estate.
Where death resulting from a tort deprives a victim of future income which would not have been generated by his personal exertion, he has nevertheless lost “something having a money value which [loss] should be made good in money.”
Any contrary conclusion would create a serious anomaly. If a victim sued before his death he would not be compensated for the loss of passive income (generated perhaps by a life estate) during the lost years, whereas, if he did not sue, and a surviving wife, dependent upon the income, brought an action against the tortfeasor pursuant to s 4 of the Compensation to Relatives Act 1897 she would recover damages “proportioned to the [financial] injury resulting from such [a] death”, that is, proportioned to so much of the passive income as was directed to her support.[88]
[88] At [68]-[71] (Emphasis in original).
In Dib v Amaca,[89] Mr Dib was diagnosed with mesothelioma in April 2016 at the age of 76. He had commenced to receive the age pension upon retirement in 2011. His life expectancy was reduced to late 2017 and his pension entitlements were to end prematurely on his death. Judge Russell held that he was not entitled to damages for the loss of future age pension benefits. Judge Russell distinguished the decisions in Lynch and Roberts on the ground that in each case the pension was payable as a result of contributions made by the plaintiff. Judge Russell expressed his conclusion as follows:
[89] [2017] NSWDDT 6.
A common thread runs through all of the Australian decisions referred to above. A recognised head of damages where income has been lost as a result of a tort is that a claim can be made for diminution in earning capacity, where such termination is or may be productive of financial loss.
There is no authority in Australia, binding upon this Tribunal, that loss of the ability to receive an age pension is a head of damages. The age pension is received without reference to the ability of a person to earn income, or without reference to whether there has been some interference with any ability to earn income.
While the compensatory principle applies, it applies to various heads of damage for which the law provides compensation. There are three categories of such loss, referred to in the earlier cases, and collected in CSR v Eddy. The categories are:
(a) Pain and suffering and loss of enjoyment of life – what the common law calls general damages;
(b) Out-of-pocket expenses – in a case such as the present the medical expenses incurred and the attendant care services provided;
(c) Loss of or interference with earning capacity which is or may be productive of financial loss.
Damages are not awarded simply because the compensatory principle is satisfied. That overarching principle is the one which is to be applied in assessing damages which are available as recognized heads of damage at common law.
In my view the claim for loss of a pension is not available as a matter of law and no damages are allowed for that claim.[90]
[90] At [166]-[170].
Analysis
Considered from first principles, there is no reason to distinguish between a financial loss of income by way of wages or from a profession or business carried on by the plaintiff due to premature death caused by a defendant’s negligence and a financial loss of income by way of a superannuation or age pension due to premature death caused by a defendant’s negligence.
In both cases, the compensation principle applies and the loss is recoverable in order to put the plaintiff in the same position as he or she would have been in if the tort had not been committed.
Moreover, the special rule for which Amaca contends is a rule that on Amaca’s own formulation is confined to damages for personal injuries. It does not apply generally to the assessment of damages for torts such as conversion of goods, negligence causing damage to goods or nuisance or economic torts such as conspiracy to cause economic loss, negligence causing economic loss or procuring a breach of contract. There is no underlying rationale for such a different rule for damages for personal injuries and indeed such a rule would be anomalous in the law of damages.
Amaca seeks to draw a distinction between income actively earned and income passively earned. There are two answers to this contention. First this is a distinction without a difference. There is no underlying rationale for making this distinction. In both cases the plaintiff suffers an actual financial loss caused by the defendant’s wrong. In both cases the application of the compensatory principle results in recovery.
Secondly in the modern world the extent of the activity required to earn “active” income can vary enormously. A celebrity can earn large amounts of money by spending a few minutes endorsing a product and moreover the endorsement may have been made and recorded in the past but the income continues as long as the promotor continues to display the endorsement to the public with no additional effort at all by the celebrity. Similarly the owner of a successful established business may do little or no work to maintain it: it may run itself from the momentum created by the owner establishing it.
If Amaca’s proposition were to be accepted, it would give rise to other anomalous results. Assume that a plaintiff becomes entitled to a superannuation pension after 30 years of service to his or her employer but is only entitled to it if the plaintiff attends for one week (or one day or one hour or one minute) per year to work at the plaintiff’s place of employment. If the plaintiff develops mesothelioma as a result of the defendant’s negligence leading to a premature death so that the plaintiff cannot attend at work, the loss of the pension is a direct result of lost earning capacity. If it be accepted that such a plaintiff is entitled to recover damages for the loss of the pension, the time spent at work can be reduced to a vanishing point and there would be no valid distinction between that situation and the situation of Mr Latz. Amaca contends that in such a case the plaintiff would only be entitled to the fair value of the work performed, but this approach is contrary to fundamental principles of assessing loss in which regard is had to the income that would have been earned rather than the fair value of the work.
Assume that a plaintiff only becomes entitled to a lump sum or a pension after 30 years of service and develops mesothelioma as a result of the defendant’s negligence leading to premature death after 29 years of service. Amaca accepts that the plaintiff would be entitled to damages for loss of earning capacity for 12 months being the 30th year in which the plaintiff would otherwise have worked. However, there is no reason in principle why such a plaintiff should not be able to recover as consequential loss the loss of the lump sum or pension that would have been earned as a result of that additional work undertaken during the 30th year. The position is analogous to old time mariner contracts in which a sailor was only entitled to be paid on completing the voyage: in such a case if the sailor were prevented from completing the voyage by a wrongful act just before completion, the sailor would be entitled to damages being the agreed remuneration for the voyage.
The cross-respondent is a party to a charitable trust established by James Hardie to compensate the victims of asbestos diseases caused by that company. The trust establishes a fund to deal with asbestos-related claims for which James Hardie is liable and Amaca administers that fund. In essence, Amaca stands in the shoes of James Hardie.
The judge had before him documentary evidence that shows that James Hardie knew as long ago as 1938 about the risk to the health of its workers from asbestos dust, and that over the years that followed it became increasingly aware of the danger that it posed. That evidence indicates that by the early 1960s James Hardie was aware that asbestos sheeting could cause mesothelioma and that the end users of those products were at risk of developing that disease, and it made a conscious choice not to alert the public to that fact. By 1976 James Hardie was aware of precautions that could be taken to minimise the risk of contracting asbestos-related diseases as a result of cutting asbestos products of the type that it supplied to the cross-appellant, as it had implemented such precautions in respect of its own workforce.
By way of illustration, in 1963, a safety officer with James Hardie attended a meeting of senior executives of the company where he raised concerns about the threat posed to end users of the company’s products by exposure to asbestos dust as a result of cutting asbestos cement sheets. He advised that products should be labelled so that end users were aware of the risk. He suggested the company had a moral obligation not to give end users the impression there was no problem with asbestos. A senior executive and the company physician told him that once a product had been sold, they did not think the company had any further obligation. In 1966, an executive of James Hardie, referring to a newspaper article which described the lethal effects of mesothelioma as a result of exposure to asbestos, observed that he was “concerned about this sort of information getting around Australia”. In that same year, James Hardie’s industrial physician addressed is factory managers’ conference advising them that any exposure to asbestos is dangerous and cumulative, that exposure causes asbestosis and cancer and was suspected as an environmental pollutant posing a danger to people living within half a mile of factories using asbestos. Nonetheless, James Hardie continued to manufacture, market and sell asbestos products, including in particular, asbestos sheeting. In doing so the judge found it was driven by a commercial imperative.
The cross-appellant makes a number of criticisms of the approach taken by the judge in assessing exemplary damages. First, he submits that the judge appears to have based his award upon what a court would have awarded in accordance with what he regarded as different community standards 40 years ago. Second, he submits that the judge erred in concluding that conduct by a large profit thirsty manufacturer amounting to reckless indifference to the welfare and lives of customers would be considered less reprehensible in the 1970s than today. Third, he submits that on the basis of the findings the judge made, the award of exemplary damages is manifestly inadequate.
It is unnecessary to address the first two submissions as I am satisfied that the award made by the judge is manifestly inadequate given the findings he made, which findings were not only open on the evidence but supported by the evidence.
The judge found that James Hardie’s conduct occurred in circumstances where it was fully informed about the lethal dangers of asbestos yet failed to warn its customers, including the cross-appellant, of the potential harm that might be suffered by using its products. It failed to advise them and him of known precautions that might have minimised that harm. Its conduct amounted to reckless indifference. The judge considered that the evidence gave rise to the irresistible inference that the company put profit ahead of public safety and was anything but a model corporate citizen. It was motivated in doing so by its thirst for profit which it valued ahead of the cross-appellant’s safety. While the judge considered that this conduct in the 1970s was less egregious than it would be today, it is implicit in that finding that he nonetheless considered that James Hardie’s conduct at that time was egregious. These are damning findings.
These findings are sufficient for the judge to have concluded that the conduct of James Hardie in this case was conduct of a reprehensible kind which distinguished this case from Parker. While for the purposes of assessing an award of exemplary damages the defendant’s conduct must be assessed by reference to the standards of conduct that applied at the time, the damages to be awarded are to be assessed as at the time of judgment.
In my view the award of $30,000 in the circumstances of this case, and given the judge’s findings, is so outside the permissible range of exemplary damages that could be awarded in these circumstances, even allowing for the restraint that courts traditionally exercise in awarding exemplary damages,[179] that the cross-appellant must succeed on this ground. The award is manifestly inadequate.
[179] XL Petroleum (NSW) Pty Ltd v Caltex Oil (Aust) Pty Ltd (1985) 155 CLR 448 at 463; Johnstone v Stewart [1968] SASR 142 at 146; Backwell v AAA [1997] 1 VR 182; TCN Channel Nine Pty Ltd v Anning (2002) 54 NSWLR 333 at [185].
In the circumstances, this court should set aside the award made and reassess the award for exemplary damages.
Given the damning findings made by the judge, which were not only open on the evidence but justified by the evidence, I would assess exemplary damages in an amount of $250,000.
In assessing damages I am conscious that the purpose of the award is to punish the cross-respondent, provide retribution, act as a deterrent to the cross-respondent and others minded to behave in a similar way and demonstrate the court’s disapproval of that conduct. In circumstances where this is a statutory award of exemplary damages made in the context of the Act, I accept that the need for deterrence is limited to the cross-respondent and others who might be liable for claims pursuant to the Act. I accept that James Hardie is no longer manufacturing and selling asbestos products. Accordingly, the role of deterrence is further circumscribed, but others are still engaged in businesses which involve the handling of asbestos. Accordingly there is still a role for general deterrence in an award of exemplary damages. In any event, the award of exemplary damages is not confined to deterrence. The award exists to punish the cross-respondent, to provide retribution and to demonstrate the court’s disapproval of the cross-respondent’s conduct. Those factors loom large in this case.
In that regard, I am conscious that Amaca might be exposed to further actions in the future in which a claim for exemplary damages could be made. This is the first award of exemplary damages made against the cross-respondent. It is for courts in the future who may have to assess a claim for exemplary damages to determine whether, if an award of such damages is to be made, it should be mitigated because of any earlier award made against the cross-respondent for exemplary damages for the conduct which justified the award in this case.
For these reasons I would allow the appeal on ground 3 of the cross-appeal.
Conclusion
I would allow the appeal and the cross-appeal. As a result I would set aside the award of damages made by the judge. I would re-assess damages. I would order the appellant / cross-respondent to pay the respondent / cross-appellant damages in the sum of $782,000.
I would hear the parties as to costs.
HINTON J:
Introduction
I have had the benefit of reading the judgments of Blue J and Stanley J in draft for which I am grateful. I do not repeat the factual background to this matter nor summarise the reasons of the trial Judge.
In what follows I adopt the terminology used by Blue J.
Seven questions arise for determination. They are:
1.Should Amaca Pty Ltd (Amaca) be permitted to argue in this Court that damages were not recoverable by Mr Latz for the loss of his superannuation pension when the point was not taken at trial?
2.If so, was Mr Latz entitled to recover damages for the loss of the superannuation pension?
3.If yes, was the amount of such damages to be determined net of the reversionary pension?
4.Was Mr Latz entitled to recover damages for the loss of the age pension?
5.Was the trial Judge right to have awarded damages for loss of capacity to perform domestic services within the meaning of s 9(3) of the Dust Diseases Act 2005 (SA) (Dust Diseases Act) in the amount of $100,000?[180]
[180] Cross-appeal, ground 1.
6.Was the trial Judge right in assessing the cost of maintenance in the lost years to be deducted from any assessment of future economic loss at the rate of $210 per week?[181]
[181] Cross-appeal, ground 2.
7.Was the trial Judge right to award exemplary damages in the amount of $30,000?[182]
[182] Cross-appeal, ground 3.
In answer to question one, I agree with both Blue J and Stanley J for the reasons that they give, that Amaca should be permitted to argue that damages were not recoverable by Mr Latz for the loss of his superannuation pension during the “lost years” despite not taking the point at trial.
Skipping to the fifth question, I agree with Stanley J for the reasons he gives that domestic services compensable under s 9(3) of the Dust Diseases Act are those rendered, or which would have been rendered, to a member of the plaintiff’s household and that any award of damages is confined to compensating any loss or impairment of the plaintiff’s capacity to perform such services for the member or members of his or her household. I also agree that such loss does not include home maintenance but is directed to the care of those members of the plaintiff’s household who are dependent upon the plaintiff and that such loss falls to be calculated by reference to the commercial cost of their replacement.
As for the sixth question, I agree with Blue J for the reasons he gives that the trial Judge erred in assessing the cost of maintenance in the lost years to be deducted from any assessment of future economic loss at the rate of $210 per week. I also agree, for the reasons given by Blue J, that in determining the matter afresh the appropriate rate is $185 per week with the consequence that $15,089 is to be deducted from the award made by the trial Judge.
That leaves questions two, three, four and seven. Below I deal with each, but first it is convenient to analyse the character of the superannuation and age pensions received by Mr Latz.
I gratefully adopt Blue J’s treatment of the statutory provisions creating the pension entitlements payable to Mr Latz under the Superannuation Act 1974 (SA) as repealed and replaced by the Superannuation Act 1988 (SA) and under the Social Security Act 1991 (Cth).
The age pension is a non-contributory pension. Its character may be described in the same terms as those used by Webb J to describe the widow’s pension in Lincoln v Gravil.[183] Webb J said:[184]
[183] (1954) 94 CLR 430.
[184] Lincoln v Gravil (1954) 94 CLR 430 at 437-438.
I do not overlook the fact that thousands of recipients of the Commonwealth pension have in fact contributed heavily towards Commonwealth social services; and so it is understandable if they do not regard the pension as benevolence. But their claims to the pension are not based on their contributions; they would have the same claims if they had not paid a single penny in contributions. That is the test of the quality of the pension under existing legislation. This pension really serves the same purpose as the benefits in cash and kind formally provided by benevolent societies.
In The National Insurance Co of New Zealand Ltd v Espagne, a case concerning whether receipt of the invalid pension under the Social Services Act 1947-1957 (Cth), a predecessor of the Social Security Act 1991 (Cth), should be deducted from an award of damages for personal injury, Dixon J said:[185]
[185] (1961) 105 CLR 569 at 573.
…I think that it is wiser as well as better in the general interest to say simply what is the reasoning which leads to the conclusion that the pension under the Social Services Act 1947-1957 should not be taken into account in reduction of damages. The reasoning begins with a distinction which I think is clear enough in general conception. There are certain special services, aids, benefits, subventions and the like which in most communities are available to injured people. Simple examples are hospital and pharmaceutical benefits which lighten the monetary burden of illness. If the injured plaintiff has availed himself of these, he cannot establish or calculate his damages on the footing that he did not do so. On the other hand there may be advantages which accrue to the injured plaintiff, whether as a result of legislation or of contract or of benevolence, which have an additional characteristic. It may be true that they are conferred because he is intended to enjoy them in the events which have happened. Yet they have this distinguishing characteristic, namely they are conferred on him not only independently of the existence in him of a right of redress against others but so that they may be enjoyed by him although he may enforce that right: they are the product of a disposition in his favour intended for his enjoyment and not provided in relief of any liability in others fully to compensate him. This is readily seen in the case of benevolence. If a fund is raised by subscription for the benefit of a badly injured neighbour obviously this cannot operate in relief of the liability of a man who negligently caused the injury. So in a contract of accident insurance; where in the absence of special stipulation the insurer will not succeed by subrogation or otherwise to the insured's right of recourse against others in the case of injury by their negligence. But for the reason given it does not follow that the negligent parties can treat the insurance as operating in relief of their liability. It was effected by the money of the plaintiff for his own benefit in the event of an accident, a benefit both independent of and cumulative upon whatever right of redress against others might arise out of the circumstances of the accident.
The age pension may be similarly viewed. It is an advantage accruing to those satisfying the residence requirement who are 65 and over, if born before 1 January 1957, or 67 and over, if born after, whose means are such that the pension is intended to lighten the monetary load they bear and continue to do so until their death.
By contrast the superannuation pension payable to Mr Latz is a contributory pension. In Parry v Cleaver Lord Reid characterised a contributory pension as follows:[186]
[186] [1970] AC 1 at 16.
What, then, is the nature of a contributory pension? Is it in reality a form of insurance or is it something quite different? Take a simple case where a man and his employer agree that he shall have a wage of £20 per week to take home (leaving out of account P.A.Y.E., insurance stamps and other modern forms of taxation) and that between them they will put aside £4 per week. It cannot matter whether an insurance policy is taken out for the man and the £4 per week is paid in premiums, or whether the £4 is paid into the employer's pension fund. And it cannot matter whether the man's nominal wage is £21 per week so that, of the £4, £1 comes from his “wage” and £3 comes from the employer, or the man's nominal wage is £23 per week so that, of the £4, £3 comes from his “wage” and £1 comes from the employer. It is generally recognised that pensionable employment is more valuable to a man than the mere amount of his weekly wage. It is more valuable because by reason of the terms of his employment money is being regularly set aside to swell his ultimate pension rights whether on retirement or on disablement. His earnings are greater than his weekly wage. His employer is willing to pay £24 per week to obtain his services, and it seems to me that he ought to be regarded as having earned that sum per week. The products of the sums paid into the pension fund are in fact delayed remuneration for his current work. That is why pensions are regarded as earned income.
But the man does not get back in the end the accumulated sums paid into the fund on his behalf. This is a form of insurance. Like every other kind of insurance, what he gets back depends on how things turn out. He may never be off duty and may die before retiring age, leaving no dependants. Then he gets nothing back. Or he may, by getting a retirement or disablement pension, get much more back than has been paid in on his behalf. I can see no relevant difference between this and any other form of insurance. …
The superannuation pension payable to Mr Latz may be similarly characterised. The primary beneficiary of the superannuation pension scheme was to be Mr Latz. He stood to enjoy a pension in the region of two-thirds of his final salary adjusted according to the consumer price index from the date of his retirement until death. The secondary beneficiary, in the event of Mr Latz’ death and his children having reached the age of non-entitlement, was Ms Taplin. Whether the primary or secondary beneficiary stood to receive pensions “depends on how things turn out”. As a contributor Mr Latz conceivably could have got nothing back. Another possibility was that between him and Ms Taplin more would be paid out than was paid in. Accordingly, the superannuation pension provided for by the Superannuation Act 1974 as repealed and replaced by the Superannuation Act 1988 is a form of insurance.
I do not doubt that upon his acceptance into the superannuation scheme created by the Superannuation Act 1974 the superannuation pension became an important component of Mr Latz’ salary package. The insurance it provided would have provided great comfort. It is tempting to consider the contributions made as deferred wages, but there being no guarantee of a return because any return “depends on how things turn out”, Lord Reid’s characterisation is to be preferred.
Against this background I turn to consider the second and fourth questions articulated above. The argument, simply stated, was that unless the superannuation and age pensions could be brought within one of the types of loss identified in the joint reasons in CSR Ltd v Eddy,[187] they were not compensable.
[187] (2005) 226 CLR 1 at [28]-[31] (Gleeson CJ, Gummow and Heydon JJ).
Mr Latz claimed damages for personal injury that he sustained as a consequence of his being negligently exposed by James Hardie Coy Pty Ltd (James Hardie) to asbestos dust. That claim was for pecuniary compensation for all consequences arising from the injury. In Haines v Bendall Mason CJ, Dawson, Toohey and Gaudron JJ opened their joint judgment as follows:[188]
[188] (1991) 172 CLR 60 at 63; Manser v Spry (1994) 181 CLR 428 at 434-435 (Mason CJ, Brennan, Dawson, Toohey and McHugh JJ).
The settled principle governing the assessment of compensatory damages, whether in actions of tort or contract, is that the injured party should receive compensation in a sum which, so far as money can do, will put that party in the same position as he or she would have been in if the contract had been performed or the tort had not been committed: Butler v. Egg and Egg Pulp Marketing Board; Todorovic v. Waller; Redding v. Lee; Johnson v. Perez; M.B.P (S.A.) Pty. Ltd. v. Gogic; Livingstone v. Rawyards Coal Co; British Transport Commission v. Gourley. Compensation is the cardinal concept. It is the "one principle that is absolutely firm, and which must control all else": Skelton v. Collins, per Windeyer J. Cognate with this concept is the rule, described by Lord Reid in Parry v. Cleaver, as universal, that a plaintiff cannot recover more than he or she has lost.
(citations omitted)
I do not understand the joint reasons in CSR Ltd v Eddy[189] to modify the settled principle governing the assessment of compensatory damages – the compensatory principle – as so strongly stated in Haines v Bendall in any way. The discussion in the joint reasons of the types of loss that are compensable where a plaintiff has sustained personal injury as a consequence of the defendant’s negligence is not, it seems to me, intended as an exhaustive statement, hence the topic is qualified when introduced by the non-exclusive descriptor of what is to follow as what a plaintiff is “traditionally seen as able to recover”.[190] If the contrary were true, the compensatory principle would cease to be controlling.
[189] (2005) 226 CLR 1.
[190] CSR Ltd v Eddy (2005) 226 CLR 1 at [28] (Gleeson, Gummow and Heydon JJ).
Here it should also be remembered that the development of heads of damages has tracked the demise of the jury trial in the civil jurisdiction, and the collateral rise of trial by judge alone, with the attendant duty to provide reasons including reasons explaining the basis upon which an award of damages is made.[191] As much is plain from a comparison of the “orthodox direction to a jury” in personal injury cases as recorded by Fullagar J in Paff v Speed, which did not require juries to allocate specific amounts to different heads of damage, with contemporary judgments.[192] The “orthodox direction to a jury” suggests that the loss of fixed future income distinct from wages to be earnt would be a monetary loss actually suffered included in a claim for special damages.
[191] Gamser v Nominal Defendant (1977) 135 CLR 145 at 147-149 (Gibbs J), 149-150 (Stephen J); Sharman v Evans (1977) 138 CLR 563 at 571-2 (Gibbs and Stephen JJ); Griffiths v Kerkmeyer (1977) 139 CLR 161 at 162-3 (Gibbs J), 188-189 (Mason J).
[192] (1961) 105 CLR 549 at 558-559.
Even if I am wrong and CSR Ltd v Eddy[193] does constrain damages recoverable for personal injury to the three types identified in the joint reasons, I would hold that the loss of pension entitlements is an actual loss and thus falls within the third category. Here I bear in mind that prior to the development of the second type and its inclusion of actual and future wages within the concept of earning capacity, the actual loss of wages up to the date of trial was pleaded as special damages. I see no reason why, subject to the terms of the statute conferring the relevant pension, such fixed financial loss should be treated any differently to the way in which loss of wages to trial once was. By that I mean, if loss of wages to trial, an actual fixed financial loss, forms a component of the second type of loss, by dint of the development of the law, I see no reason why a different actual fixed financial loss (not susceptible to the arguments underpinning the development of the second type of loss[194]) should not remain recoverable as an actual loss. It is merely a financial loss of a different species, loss of earning capacity being another species of the genus financial loss.[195]
[193] (2005) 226 CLR 1.
[194] Arthur Robinson (Grafton) Pty Ltd v Carter (1968) 122 CLR 649 at 658 (Barwick CJ); R Parsons, Mitigation of Tort Damages for Loss of Wages (1955) 28 ALJ 563.
[195] Graham v Baker (1961) 106 CLR 340 at 347 (Dixon CJ, Kitto and Taylor JJ).
Here, by reason of James Hardie’s negligence, Mr Latz will be denied the pensions that he would otherwise receive for the remainder of his life. Subject to any statutory indication to the contrary, the denial of the pensions due to the negligence of James Hardie amounts in my view to an actual financial loss that sounds in damages.
I turn to the third question.
In Zheng v Cai[196] five justices of the High Court referred, with approval, to the judgment of Windeyer J in The National Insurance Co of New Zealand Ltd v Espagne where his Honour said:[197]
[196] (2009) 239 CLR 446 at [19]-[20] (French CJ, Gummow, Crennan, Kiefel and Bell JJ).
[197] (1961) 105 CLR 569 at 599.
In assessing damages for personal injuries, benefits that a plaintiff has received or is to receive from any source other than the defendant are not to be regarded as mitigating his loss, if: (a) they were received or are to be received by him as a result of a contract he had made before the loss occurred and by the express or implied terms of that contract they were to be provided notwithstanding any rights of action he might have; or (b) they were given or promised to him by way of bounty, to the intent that he should enjoy them in addition to and not in diminution of any claim for damages. The first description covers accident insurances and also many forms of pensions and similar benefits provided by employers: in those cases it is immaterial that, by subrogation or otherwise, the contract may require a refund of moneys paid, or an adjustment of future benefits, to be made after the recovery of damages. The second description covers a variety of public charitable aid and some forms of relief given by the State as well as the produce of private benevolence. In both cases the decisive consideration is, not whether the benefit was received in consequence of, or as a result of the injury, but what was its character: and that is determined, in the one case by what under his contract the plaintiff had paid for, and in the other by the intent of the person conferring the benefit. The test is by purpose rather than by cause.
Thus in this case any effect the reversionary pension may have on an award of damages for loss of the superannuation pension is a matter of determining whether the legislature intended there to be such effect. Here the principles enunciated by the High Court in Manser v Spry (Manser) may be considered applicable.[198] In Manser Mason CJ, Brennan, Dawson, Toohey and McHugh JJ said:[199]
[198] (1994) 181 CLR 428.
[199] Manser v Spry (1994) 181 CLR 428 at 436 (Mason CJ, Brennan, Dawson, Toohey and McHugh JJ).
There are three possible indicia of a relevant legislative intention: the financial source of the benefit, the presence of a provision which requires a repayment of a statutory benefit out of the damages awarded or paid and the nature of the benefit. If a scheme for provision of a benefit be funded by contributions made by employers and employee-beneficiaries as a kind of insurance against misfortune, the principle in Bradburn v Great Western Railway Co.indicates that the benefit is to be enjoyed by a beneficiary who encounters the misfortune without reduction of the damages to which he or she is otherwise entitled. That view has been taken of benefits paid under contributory pension schemes created under statute. If statute provides that a particular benefit is to be repaid out of damages, there is a clear indication that that benefit is not to go in reduction of the tortfeasor's liability. When such a provision relates only to one or some of the benefits provided under the statute, the non-repayable character of the other benefits may imply, according to the context, either that the legislature intended that the receipt and retention of the benefit should not be taken into account in the assessment of damages or that it had no such intention. Whether an implication of such a legislative intention should be drawn depends largely on the nature of the benefit. Gibbs C.J. said in Redding v Lee:
“If the statute expressly provides (as some statutes relating to workers' compensation have done) that a plaintiff who has recovered damages shall repay the amount of the benefit it will be clear that the receipt of the benefit must be disregarded in the assessment. In many cases, however, the statute under which the benefit is provided will give no assistance of this kind. Then it will be necessary to consider closely the nature of the benefit itself. The conclusion that the benefit is intended for the plaintiff personally and not in reduction of the damages may more readily be drawn when it is seen that the receipt of the benefit is not dependent on the loss of wages or earning capacity … for which the plaintiff claims damages (cf. Parry v Cleaver, per Lord Wilberforce) and is not intended to replace the lost wages or remedy the loss of earning capacity.”
Finally, if all indicia of intent fail, the “settled principle governing the assessment of compensatory damages” which the majority stated in Haines v Bendall must be applied. In Adams v Ascot Iron Foundry Pty Ltd, Walsh J.A., who described that principle as the “dominant rule”, said:
“The difficulty lies in ascertaining the relevant intention from an Act, which does not expressly declare any intention one way or the other. The difficulty … is in attempting to extract from the Act an actual meaning or intention with reference to the question which has to be resolved. The question may be one to which the Parliament or the draftsman of the Act did not in fact advert at all. Nevertheless, if it is possible to do so, it is necessary to extract from the Act indications of what was intended. If one cannot find any real indications pointing one way or the other, or if one finds indications both ways which are evenly balanced, it may be that the question must then be resolved by taking the view that the dominant rule … should operate.”
[(footnotes omitted)]
I note in passing the repeated commitment to the compensatory principle as controlling.
The second of the three indicia identified in Manser is not to be found in either the Superannuation Act 1974 or the Superannuation Act 1988.
As to the first indicia, as indicated above the scheme created by the Superannuation Act 1974 as repealed and replaced by the Superannuation Act 1988 is a contributory scheme that operates as “a kind of insurance against misfortune”, suggesting “that the benefit is to be enjoyed by a beneficiary who encounters the misfortune without reduction of the damages to which he or she is otherwise entitled”. In Harris v Commercial Minerals Ltd five justices of the High Court described the presence of this indicia as providing “strong ground for concluding that the legislature did not intend that the benefit should be deductible from an award of damages” for the injury.[200]
[200] (1996) 186 CLR 1 at 17 (Dawson, Toohey, Gaudron, McHugh and Gummow JJ).
With respect to the third indicia, the nature of the benefit, in Graham v Baker,[201] a pension payable upon compulsory retirement under the Superannuation Act 1916-1957 (NSW), which created a contributory scheme, was considered to fall within that class of benefit not deductible in a personal injury action as referred to by Dixon J in The National Insurance Co of New Zealand Ltd v Espagne. However, sick pay to which the respondent was entitled under an industrial agreement was deductible. Dixon CJ, Kitto and Taylor JJ explained:[202]
[201] (1961) 106 CLR 340 at 343 (Dixon CJ, Kitto and Taylor JJ).
[202] (1961) 106 CLR 340 at 345-346.
… But the contract [of service] contemplates the possibility that circumstances of a defined character may arise and prevent the employee from performing his duties. In those circumstances he is to be entitled to absent himself on sick leave and, subject to specified limits, to receive “full pay” whilst on leave. In our view the respondent’s contract says no more and no less than that, if he becomes unable by reason of sickness or other specified causes to perform his ordinary duties, nevertheless his right to “full pay” or, in other words, his ordinary wages, shall continue to be payable, subject to the limits specified during the period of his absence. If, therefore, the claim be made, as it was, that the respondent lost the whole of his wages between the date of the accident and the date of trial then the appellant was entitled to answer it by showing that for a period of 178 days he received his full wages.
The conclusion that the respondent’s so-called “sick pay” constituted wages in every sense of the word is completely in accord with a long line of authority concerning the right of an employee to receive his ordinary wages in respect of a period during which he is unable, by reason of sickness of accident to perform his duties.
Here, by analogy, the death of the primary beneficiary of the superannuation pension scheme disqualifies him or her from receiving the pension to which they were, whilst alive, entitled, but, simultaneously, enlivens in the secondary beneficiary an entitlement to a pension. For his or her contributions the primary beneficiary not only gains a type of insurance for him or herself but for their dependants and spouse in the event of the primary beneficiary’s death. The reversionary pension is a benefit to which the secondary beneficiary becomes entitled but it only accrues to them through the primary beneficiary. It is as if the pension to which the primary beneficiary was entitled switched to the secondary beneficiary, albeit in a reduced amount, upon the death of the primary beneficiary. If this analysis is correct then the primary beneficiary notionally continues after death to realise a benefit from the scheme in that his or her dependants or spouse receives a pension in consequence of his membership and contribution of the scheme.
It follows that the loss sustained by Mr Latz is the value of the superannuation pension he stood to receive to the age of 86.71 net of the reversionary pension.
I turn to question seven, the final question.
Exhibit P12 was tendered without objection. It consists of two bound volumes of documents relevant to the respondent’s claim for exemplary damages. In this Court it was said that P12 was tendered pursuant to s 8(3) of the Dust Diseases Act. That section provides:
(3) The following rules apply in a dust disease action before the District Court or SAET:
(a)the relevant court may admit evidence admitted in an earlier dust disease action against the same defendant (including in a dust disease action brought in a court or tribunal of the Commonwealth or another State or Territory);
(b)the relevant court may dispense with proof of any matter that appears to the court to be not seriously in dispute;
(c)the relevant court may invite a party to admit facts of a formal nature, or facts that are peripheral to the major issues in dispute, and may, if the party declines to do so, award the costs of proving those facts against the party.
Each of the powers conferred by s 8(3) are discretionary. The question of whether the evidence will be admitted remains one for the Court or Tribunal to determine. As mentioned, upon the plaintiff applying to tender P12 no objection was raised. No reason being given to exclude P12, it was admitted into evidence and could be used for all purposes. It is self-evident that s 8(3)(a) and (b) dispense with any automatic rule of exclusion and, in particular, the rule against hearsay. This being so, the content of the documents comprising P12 could be used as evidence of the truth of the facts asserted therein.
The trial Judge held:[203]
[203] Latz v Amaca Pty Ltd (Formerly James Hardie and Co Pty Ltd) [2017] SADC 56 at [123], [133].
Mr Semmler took me through an array of documents that show that James Hardie knew as long ago as 1938 about the risk to the health of its workers from asbestos dust and that over the years that followed it became increasingly aware of the danger that it posed. He pointed to evidence that indicates that by the early 1960s it was aware that asbestos sheeting could cause mesothelioma and that the end users of those products were at risk of developing that disease and that it made a conscious choice not to alert the public of that fact. This gives rise to the irresistible inference that it put profit ahead of public safety. The evidence also shows that by 1976 James Hardie was aware of precautions that could be taken to minimise the risk of contracting asbestos related diseases as a result of cutting asbestos products of the type that it supplied to Mr Latz, as it had implemented such precautions in respect of its own workforce.
…James Hardie was fully informed about the dangers of asbestos. It knew it could kill end users. It failed to warn Mr Latz of the potential harm he might suffer by using its product. It failed to advise him of known precautions that might have minimised that harm. Whilst its misconduct was not malicious or intentional, in the sense that it did not deliberately intend him harm, it amounted to reckless indifference.
No evidence was adduced of the legal landscape in the 1960s and 1970s when James Hardie became aware of the risk posed by its products to end users, or subsequently, relevant to the characterisation of the company’s conduct. No evidence was adduced of what action was reasonably open to James Hardie to take at any and all material times or of what action it did or did not take in the wake of the knowledge it possessed. No evidence was adduced of what if anything James Hardie did with the knowledge it possessed beyond what was contained in P12. In these circumstances the trial Judge’s conclusion that the company’s conduct was reprehensible was open. In the circumstances, I agree that the exemplary damages award was so low as to be indicative of error. I agree with Stanley J for the reason he gives that an award in the amount of $250,000 was appropriate.
Conclusion
In view of my conclusions on the seven questions raised, I join in the orders proposed by Blue J.
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