Glenda Margaret Hall v Yvonne Cramer - [2003] ACTSC 112

GLENDA MARGARET HALL v YVONNE CRAMER

[2003] ACTSC 112 (19 December 2003)

DAMAGES – personal injury – assessment – motor vehicle accident involving rear end collision – whether redundancy payment taken into account in reducing damages payable for loss of earning capacity – relevance of fact that payment made due to plaintiff’s voluntary decision to take early retirement.

Smoker v London Fire & Civil Defence Authority; Wood v British Coal Corporation [1991] 2 AC 502

Parry v Cleaver [1970] AC 1

The National Insurance Co of New Zealand Ltd v Espagne (1961) 105 CLR 569

Graham v Baker (1961) 106 CLR 340

Medlin v State Government Insurance Commission (1995) 182 CLR 1

Colledge v Bass Mitchells & Butlers Ltd [1988] 1 All ER 536

Wilson v National Coal Board (1981) SLT 67

Black v Brimbank City Council (1998) 152 ALR 491

Clay v Freda (1988) 144 LSJS 274

Crowden v Pickards Mather & Co International t/a Savage River Mines (Unreported, TASSC; B32/1996; 4 July 1996).

Wall & Lambe v Wall [1998] SASC 7017 (23 December 1998)

No SC 430 of 2002

Judge: Higgins CJ

Supreme Court of the ACT

Date: 19 December 2003

IN THE SUPREME COURT OF THE )

) No SC 430 of 2002

AUSTRALIAN CAPITAL TERRITORY )

BETWEEN: GLENDA MARGARET HALL
Plaintiff

AND: YVONNE CRAMER
Defendant

ORDER

Judge: Higgins CJ

Date: 19 December 2003

Place: Canberra

THE COURT ORDERS THAT:

There be judgment for the plaintiff in the sum of $158,561.55.

This is a claim for damages for personal injury arising out of a motor vehicle accident which occurred on 20 July 1996. The defendant was the driver of a motor vehicle which collided with the rear of a motor vehicle of which the plaintiff was the driver, whilst the plaintiff’s vehicle was stationary at the intersection of the Tuggeranong Parkway ramp and Hindmarsh Drive in the Australian Capital Territory.
The defendant concedes negligence. The only issue is the assessment of damages.
The plaintiff, who had previous spinal problems, was shaken up by the impact of the defendant’s vehicle. She was minding her daughter’s dog. It escaped, was run over by traffic and died. This added to the plaintiff’s emotional distress.
The ambulance arrived shortly after the impact. By this time the plaintiff was feeling pain in her neck and shoulder. That pain was, generally speaking, felt down the left arm, following the pattern of the seat belt impact. She went home after treatment at the scene.
By the next Wednesday both arms were experiencing pain.
Despite feeling miserable, the plaintiff went to work on the Monday. By Wednesday afternoon the pain was so bad that she consulted her general practitioner, Dr G D Kelly.
He put her off work for a month, after which there was a graduated return to work.
She was also under the care of physiotherapist Andrew Young and Dr Bryan Ashman.
On 19 August 1996 the plaintiff returned to work on a graduated basis, resuming full time work from 21 October 1996.
Physically, the plaintiff continued to experience pain, particularly whilst sitting, in the neck and lumbar spine.
Although there had been prior spinal problems dating from 1977, the plaintiff stated that she was “fine as from 1981, though there was persistent low level back pain”.
Before the accident, the plaintiff also suffered from stress problems but, felt that despite this, she was coping well by the time of the accident.
However, following her return to work, after resuming full-time duties, the plaintiff found it more and more difficult to cope.
She had intended to continue working until age 60 (24 November 2002), but instead opted for early retirement at age 54 years 7 months (1 July 1997). She attributes this to the continuing effect of her symptoms following the accident.
Treatment continued after the plaintiff’s retirement. She had one operation on 28 October 1989 and another in October 1999. She also had injections, but none of these procedures alleviated her pain. The condition of her lumbar spine, in particular, continues to deteriorate.
However, the neck, she feels, is now stable, although she has an exercise program to maintain and must be careful to avoid sudden head and neck movements.
She is allergic to analgesics but tolerates paracetamol for pain relief.
The plaintiff, perhaps unsurprisingly, also suffers depression. She can no longer play lawn bowls or golf. Her left leg is unreliable due to pain.
She suffers disturbed sleep due to pain in the left side from the hips and down the leg.
She had a pushbike but no longer uses it because of pain.
Her garden, fortunately, is low maintenance, but, although she will mow the internal area, she pays for the mowing of the front areas. She uses a long handled instrument for weeding so that bending is not necessary.
She can attend to household chores, but does not hang washing out.
Since the accident the plaintiff has experienced mental health problems. On 4 April 2002, an involuntary treatment order was made. She regards this breakdown in her mental health as related to the accident, particularly from her early retirement.
It is clear that the plaintiff had a prior history of spinal disability including spina bifida. She had some prior history of mental problems. She had managed, prior to this accident, to cope reasonably well though, of course, she was susceptible to both physical and emotional trauma.
It is also apparent that, apart from the somewhat complex medical history, the plaintiff has not been a consistently accurate historian with medical practitioners. I accept that, in part, this may have been contributed to by a lack of complete recording by some practitioners.

Plaintiff’s medical evidence

Dr Patrick Leerdam had been the plaintiff’s general practitioner since 10 June 1997. He recorded her complaint at that time as being that –

... since the motor vehicle accident in question, she had been unable to sit for long periods of time. She was able to perform most of her activities of daily living and household chores but strenuous activity often left her with backache which she treated with rest and gentle back exercises.

Dr Leerdam noted the plaintiff’s “history of neck and lower back problems prior to 20 July 1996. She had had C5-6 cervical fusion and L4-5 and L5-S1 fusion”.
In December 1997, Dr Leerdam felt that the plaintiff had suffered an exacerbation of her pre-existing conditions, and that the increased level of symptoms she then experienced would continue.
By June 1998 Dr Leerdam noted anxiety symptoms associated with an MRI scan. A CT scan, however, was undertaken and showed C6-7 disc herniation. Dr Leerdam considered this “possibly’ was a result of the accident and referred the plaintiff to Dr KN Chandran.
Dr Chandran recorded a history including Lupus in 1994 which caused the plaintiff to take 10 months off work but which responded to physiotherapy and exercise. Lupus is an inflammatory disorder of the joints. There was a complaint of severe neck pain which Dr Chandran found related to the C6-7 disc protrusion. That was consistent with injury, not the Lupus condition. He advised surgery. The injury he considered “on the balance of probability” to relate to the accident of July 1996.
The operation was performed on 28 October 1998. Dr Chandran considered the operation to have been successful. He reviewed her on 14 December 1998. Progress was good. Again, on 9 February 1999 Dr Chandran reported “satisfactory progression of the fusion”. The plaintiff, however, reported sacroiliac pain on the right side.
On 9 March 1999 Dr Chandran again reviewed the plaintiff’s condition. The fusion he considered to be “adequate”, but noted abnormalities at L3/4 and some “soft tissue abnormality of the left at L5/S1 level involving the left L5 nerve root”. The plaintiff complained of low back pain for which Dr Chandran recommended exercise and hydrotherapy.
As at 6 May 1999, Dr Chandran noted that the plaintiff reported that the neck pain had gone and there was no arm pain, although, on 22 October 1999, she complained that some discomfort attended prolonged sitting. Back pain extending into the left leg was her main complaint.
This latter complaint was further investigated by Dr C Edmund Graham. He did a discogram on 3 October 2000. He found “two disrupted painful discs”. However, his attribution of responsibility was that 50 per cent was due to the more recent motor vehicle accident and 50 per cent to “her prior problem”. The disability might be ameliorated with treatment but “I can’t see her ever being totally free of low back pain”. A spinal fusion could be required in “years to come at a cost of $10,000 - $15,000”.
Finally, on 26 February 2001 the plaintiff was assessed by Dr Robert G Scott, an occupational physician. Dr Scott found that the plaintiff had developed a Chronic Pain Syndrome. However, he considered that –

... with retraining and rehabilitation, [the plaintiff should] be able to resume some part-time remunerative work.

That work, he considered, was confined to –

a clerical position, with no repetitive bending and/or lifting, with the ability to move about and take breaks as required, and with minimum computer use.

The defendant tendered a number of medical reports. Some related to the plaintiff’s prior medical history.
Dr David Roebuck had treated her following a motor vehicle accident on 28 April 1977. He noted a history of back pain since 1961. By 11 May 1978 he reported in support of the plaintiff’s invalidity retirement that the “spondylosis” was 70 per cent of the disability and “anxiety” 30 per cent. Each was attributable to the 1977 accident.
On 19 September 1979 Dr Roebuck advised the plaintiff’s employer, the Department of Defence, that the plaintiff had sustained “a mild disc lesion at the C5-6 disc level” and was suffering increasing lumbar spine pain from the accident.
Later, the plaintiff’s general practitioner, Dr I L Ferguson, referred her to Dr C Edmund Graham. Dr Graham saw her in August 1980. He confirmed the C5-6 disc lesion and recommended surgical intervention.
On 30 September 1980 he reported that the plaintiff underwent that spinal fusion. On 11 December 1980 he reported that the plaintiff was “in good shape as far as her work is concerned”.
Dr Ferguson, in a report dated 25 May 1982, detailed the plaintiff’s history from the date of the 1977 accident, noting “frequent bouts of lower back pain spreading down the left leg as far down as the calf with pins and needles and left leg weakness”. He recounted injury in an earlier motor vehicle accident in 1960 from which date she suffered, 18 months later, episodic pain in the neck and lower back. It had resolved by 1977.
The spinal fusion in 1980 had improved her neck symptoms, but some disability remained in the lumbar region. There had been revealed radiologically “a spina bifida of the S1 segment” (on 26 October 1977).
There was, in Dr Ferguson’s opinion, a residual liability to cervical spine subluxation with mild neck pain, correctible by spinal manipulation.
She had a pre-existing dorsal spine arthritis, aggravated and accelerated by the 1977 accident, with dorsal spine subluxation. Manipulation and anti-inflammatory drugs would be needed to control this condition. A similar comment was made concerning the plaintiff’s lumbo-sacral spine, but the latter was said to have “responded poorly” to manipulative treatment.
A further operation was conducted at two levels by Dr Graham on 12 August 1987. However, as at 11 February 1992 he reported continuing thoraco-lumbar pain due to the arthritic condition which was aggravated by work.
In 1994 the plaintiff was absent from work between 18 and 29 April with stress-related symptoms. She also developed symptoms of thoracic spondylosis and repetitive strain injury involving the left elbow (per Dr C Edmund Graham; 12 September 1994). She was still unfit for work as at 16 January 1995.
She was reviewed on 3 March 1995 by Dr Jacques Joubert, consultant neurologist. Her disability manifested itself in severe back pain. She had ceased work in July 1994 due to worsening back pain and associated symptoms. Dr Joubert considered physiotherapy and Tai Chi to be important in managing the plaintiff’s degenerative spondylitic condition. It was, in his view, desirable for the plaintiff to undertake a return to work rehabilitation programme.
On 10 April 1995 Dr Graham recommended ongoing physiotherapeutic treatment to support the plaintiff’s attempt to return to work on 11 May 1995. He stated –

I believe she is a very genuine person with a real problem.

The plaintiff’s physical condition prior to the accident in July 1996 was therefore precarious. She had a severely disabled spine at various levels as well as a fragile, emotional state.
Thus, despite the defendant’s assertions that the impact between the defendant’s vehicle and that of the plaintiff was too slight to cause significant injury, I am satisfied that, given the plaintiff’s fragile physical state, even a relatively slight impact was likely to, and did, cause considerable injury. Of course, part of the resultant disability was caused or contributed to by the plaintiff’s prior disabilities, and there was a strong likelihood that, in any event, the plaintiff’s health would have deteriorated to a considerable extent due to natural progression of her spinal disease and the vicissitudes of life generally.
The defendant’s medical reports, subsequent to the accident, suggest that the accident involved (per Dr Ashman; 27 November 1996) a likely “temporary” aggravation of her pre-existing cervical and lumbar fusions. He expected the aggravation to settle in six months.
Dr Geoffrey Stubbs examined the plaintiff on 25 March 1997. He considered that the plaintiff had suffered a temporary aggravation of her pre-existing condition but was suffering merely from problems she would have experienced in any event. He found her a difficult historian.
In April 2003 Mr Harold Schaeffer, consultant neurosurgeon, reported on an examination of the plaintiff. His physical findings were ambivalent, though much of the uncertainty was based on the difficulty of obtaining a clear history from the plaintiff and considerable doubt as to the force of the impact. He did form the view that “there is a very substantial non-physical element”.
There was a further report from Dr Stubbs of 5 May 2003. He reported a moderate degree of disability comprising continuing pain in the neck, arms and back. He attributed to the plaintiff the view that the operation at C6/7 did not effect any improvement. This was not the history Dr Chandran reported. Nor did the plaintiff, in evidence, make this claim. I think, given that it is unlikely that the plaintiff would not complain if the fusion had been unsuccessful, Dr Stubbs must have misunderstood the plaintiff. Given the consistent complaint of medical practitioners as to the difficulty of obtaining a clear history from the plaintiff, this is not surprising. Dr Stubbs disagreed with the opinion of Dr Chandran that the neck operation had been made necessary by the 1996 motor vehicle accident.
It is also relevant to note that in March 2002 the plaintiff was compulsorily hospitalised for apparent paranoid beliefs and behaviour.
Dr William Knox, psychiatrist, reported that, although she refused to acknowledge any mental health problem, the plaintiff was, in his opinion, suffering from a Delusional Disorder. This was successfully treated with medication.
On the basis of the foregoing, it seems to me that the plaintiff did suffer a temporary exacerbation of her spinal condition. I think that there was a further exacerbation of her symptoms by reason of her underlying psychological state. The level of her physical disabilities now is probably no greater than it would have been, even absent the 1996 accident. However, I do accept that the shock of the accident, including the death of her daughter’s dog, affected the plaintiff’s ability to cope with both work and her physical disabilities. Her perception of pain levels, in my view, is now heightened beyond that which they would have been absent the accident, at least up to her retirement.
To that extent, I accept that the accident contributed to the plaintiff’s decision to retire in 1997. How long she would, but for the accident, have remained at work, is difficult to assess but there was, in my view, a 50 per cent chance that she would have retired no later than age 60.
I also consider that the contribution of the accident to the plaintiff’s overall loss of enjoyment of life was, on the balance of probabilities, spent after the plaintiff’s retirement. Indeed, her retirement itself, though a source of loss, contributed to her physical well-being. It removed a source of stress, both physical and mental.
For general damages I consider a sum of $30,000 to be appropriate. Almost all of that is attributable to the past. I award $3,800 for interest.
I accept that the plaintiff’s loss of earning capacity past and present would, in gross terms, though clear of tax, be $178,896.00. That figure must, as I have indicated, be discounted heavily both for receipt of those earnings as a lump sum and for the contingency of earlier retirement. I would award $83,600.
As those earnings have already been entirely foregone, they attract interest at a commercial rate up to the plaintiff’s 60^th birthday. In round figures that amounts to $20,900. That figure has been discounted for reason of the chance of early retirement.
A similar discount applies to lost superannuation following 1997. I would allow $9,300 on that account.
The out-of-pocket expenses total $8,352.75. The plaintiff paid $5,217.50 between July 1996 and 4 October 2000. I award $2,608.80 for interest accordingly.
An issue is, however, raised as to the relevance, if any, of the redundancy payment received by the plaintiff as part of her retirement package. That question can arise only insofar as the sum paid exceeds the pension/superannuation otherwise payable to the plaintiff on retirement. Although, on one view of it, the plaintiff’s loss of earnings following her retirement was the difference between the after-tax earnings she would otherwise have received and her employer-funded superannuation/pension entitlement, the law is clear that such an entitlement is not to be taken into account in reduction of damages for lost earning capacity.
So much was confidently asserted by the House of Lords in the aptly entitled Smoker v London Fire & Civil Defence Authority; Wood v British Coal Corporation [1991] 2 AC 502. A plea to reconsider Parry v Cleaver [1970] AC 1 was rejected. Lord Templeman, at 545, speaking for all their Lordships stated –

But Parry v Cleaver established clearly that pension benefits are not deductible and that double recovery is not involved. The cases on which the defendants rely are mainly those in which the courts have decided that payments which correspond to wages must be taken into account when assessing loss of wages. Thus unemployment benefit (Nabi v British Leyland (UK) Ltd [1980] 1 WLR 529) family income supplement (Gaskill v Preston [1981] 3 All ER 427), supplementary benefit (Lincoln v Hayman [1982] 1 WLR 488) payments under job release schemes and student maintenance grants are statutory wages which reduce the loss of contractual wages resulting from the tort. In Hussain v New Taplow Paper Mills Ltd [1988] AC 514, the plaintiff was entitled to receive full-scale pay over 13 weeks and thereafter half his pre-accident earnings, and the House held that these payments were deductible because, in the words of my noble and learned friend, Lord Bridge of Harwich, at p 530:

it has always been assumed as axiomatic that an employee who receives under the terms of his contract of employment either the whole or part of his salary or wages during a period when he is incapacitated for work cannot claim damages for a loss which he has not sustained ...
The defendants also relied on the decision of this House in Wilson v National Coal Board, 1981 SLT 67 that a redundancy payment must in certain circumstances be brought into account against damages for tort. In that case an injured miner received a redundancy payment for early dismissal but claimed damages for loss of earnings on the footing that he would have continued to be employed until he retired at the age of 62. Lord Emslie, Lord President, said, at p 70:

The pursuer simply cannot be allowed to profit by adopting two quite inconsistent postures, on the one hand that of the man who has lost his employment with the defenders wholly or mainly as the result of the closure of Littlemill Colliery, and, on the other hand, having been compensated for that actual loss of employment, that of the man who has not lost his employment with the defenders, and who but for the accident would have continued to work for them for the rest of his working life.
I can find nothing in the authorities which casts doubt over the effect or logic of this House in Parry v Cleaver [1970]AC 1.

The logic of Parry v Cleaver was that a police officer who was obliged to contribute to a pension fund did not lessen his loss of earning capacity by reference to the disability pension that became payable by virtue of his early retirement caused by his tortious injury.
Lord Reid regarded such a pension as analogous to the receipt of insurance payments or benevolence following disability retirement. In the case of benevolence, Lord Reid considered (at 14C-D) –

It would be revolting to the ordinary man’s sense of justice, and therefore contrary to public policy, that the sufferer should have his damages reduced so that he would gain nothing from the benevolence of his friends, or relations or of the public at large, and that the only gainer would be the wrongdoer.

So far as insurance proceeds were concerned, his Lordship continued (at 14D-E) –

I think that the real and substantial reason for disregarding them is that the plaintiff has bought them and that it would be unjust and unreasonable to hold that the money which he prudently spent on premiums and the benefit from it should enure to the benefit of the tortfeasor.

Here again I think that the explanation that this is too remote is artificial and unreal. Why should the plaintiff be left worse off than if he had never insured? In that case he would have got the benefit of the premium money: if he had not spent it he would have had it in his possession at the time of the accident grossed up at compound interest.

It made no difference that the “insurance” was with the employer or that it was a term of the employment that the contributions be made. Even if a pension is receivable as a result of disability, the loss arises out of being deprived of the opportunity to find a new employer.
Reference was made to the distinction drawn by Dixon CJ in The National Insurance Co of New Zealand Ltd v Espagne (1961) 105 CLR 569, 573-4 –

The reasoning begins with a distinction which I thinks 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 produce of a disposition in his favour intended for his enjoyment and not provided in relief of any liability in others fully to compensate him ... An invalid pension is granted in the exercise of an administrative discretion, though doubtless a discretion exercisable on grounds which are not at large, and it is granted as a benefit to the person after a consideration of his general situation ... But a grant even of such a pension cannot be obtained as of strict right and it is plain that it is granted after a consideration of the position or situation in which the applicant stands and entirely for his use and benefit and not in relief of any person antecedently liable to him to compensate him in any way for his loss of vision.

The pension will not be ignored if there is a loss attributable to the earlier receipt of a pension, as was the case with Parry v Cleaver (supra).
Nor, as Graham v Baker (1961) 106 CLR 340 held (per Dixon CJ, Kitto and Taylor JJ), is “sick pay” or “sick leave” to be regarded as other than wages paid, though no services were rendered, albeit loss of sick leave credits, if suffered, might produce an item of compensable loss.
It is not, in this case, disputed that the plaintiff’s pension rights were taken early as a result of the accident, though, as I have said, how much earlier than otherwise is not capable of a precise answer. In my opinion, it is clear that circumstance should not reduce the loss otherwise flowing from the damage done to the plaintiff’s earning capacity following the accident.
However, there is dispute as to the redundancy payment attributable to the plaintiff’s decision not to work on but to retire early. That decision was, at least, substantially contributed to by the effects of the subject accident. It was a reasonable response by the plaintiff to the ongoing effects of the aggravation to her symptoms caused by the accident. The words of McHugh J in Medlin v State Government Insurance Commission (1995) 182 CLR 1, 23 are apt -

No doubt it is true that the plaintiff’s act of early retirement created a financial loss where none had been present or was likely to arise. But if the defendant’s negligence caused the conditions which produced the loss, that negligence is a material cause of the financial loss unless the plaintiff’s act of retirement is to be treated as “breaking the causal chain” or was a breach of his duty to mitigate his loss. Because the act of retirement was not unreasonable and the reasons for it were the result of his injuries, the plaintiff’s loss was causally related to the defendant’s negligence.

However, his Honour also said –

I see nothing unreasonable in his early retirement even when the defendant’s interests are taken into account. Moreover, the defendant is entitled to have credited against the loss of salary any benefit to the plaintiff arising from the accelerated payments of his pension and lump sum entitlements.

I was referred to Colledge v Bass Mitchells & Butlers Ltd [1988] 1 All ER 536. The plaintiff, following his tortious injury, accepted a voluntary redundancy. As in this case, it appeared that the decision to take early redundancy was a result of the effects of the accident.
Sir John Donaldson MR, at 539, noted that –

On the judge’s findings, but for the accident the plaintiff would have been unlikely ever to have been made redundant and would have worked for the defendants until his retirement.

I cannot be satisfied in the present case that the plaintiff would not have been offered a package for early retirement had she not suffered the personal injury she did. Indeed, her pre-accident employment history renders it not unlikely that she would have been offered redundancy at or shortly after it was offered though she may have resisted accepting it.
Nevertheless, as in Colledge v Bass Mitchells Ltd (supra), the payment ($28,459.50) would not have been received by the plaintiff but for the accident.
The latter case purported to follow Wilson v National Coal Board (1981) SLT 67. That was said at the time to be a decision on its special facts and that a redundancy payment was to compensate for the loss of a settled job, not to compensate for loss of earnings.
Colledge v Bass Mitchells Ltd (supra) was considered by Moore J in Black v Brimbank City Council (1998) 152 ALR 491. His Honour considered that the redundancy payment taken by an employee should be regarded, in effect, as part of the compensation otherwise payable to him for wrongful dismissal. Cases involving damages for personal injury were distinguished by his Honour on the basis that in those cases –

The redundancy payment did not arise from and was only indirectly linked to, the act that founded liability and the entitlement to damages.

That finding also depended on the fact that the entitlement to the redundancy payment would not have arisen had the contract run its course.
In Clay v Freda (1988) 144 LSJS 274, a worker, injured in a motor vehicle accident, had his employment terminated. As a result he became entitled to and was paid a redundancy payment. King CJ noted that the payment was –

... not in consequence of the appellant’s injuries nor a substitute for earnings which he would have received if uninjured. It was in that sense unrelated to the appellant’s injuries and incapacity. It was a payment made on termination of employment by reason of redundancy and in consequence of an entitlement under the award arising from his years of service. The fact that the redundancy was contributed to by the respondent’s diminished working capacity in that the employer could not provide work suited to that diminished working capacity,… did not change the character of the entitlement or payment. The appellant would have been entitled to the redundancy payment irrespective of the nature of the factors which led to the appellant being “surplus to the company’s requirements”. The entitlement and payment were not referable, except in the indirect sense just mentioned, to his partial incapacity or loss of earnings. After termination of his employment he was free to take up any new employment he chose without effect upon his entitlement.

The relationship between the appellant’s incapacity and the redundancy payment is so tenuous and indirect that the payment cannot be regarded, in my opinion, as diminishing the loss resulting from the incapacity. It was paid in recognition of his previous service, not in substitution for earnings, and the entitlement was not dependant on the loss of earning capacity.

Millhouse J, with whom Mohr J agreed, came to the same conclusion, stating, at 279 –

... the respondent having been injured is simply not relevant to his receipt of the redundancy payment. Had he not been injured he would have been entitled to the payment if he decided not to go to Elizabeth. He probably would have been able to find another job in or near Adelaide and paying about the same as the one at GMH. The redundancy payment was not connected with his earning capacity.

Those remarks are entirely applicable to the plaintiff in these proceedings. It is true that the decision to accept redundancy was in fact related to the increased incapacity she was then suffering at work. However, the entitlement did not arise because of that fact. It arose because, whether for that or an unrelated reason, the employer chose to offer the plaintiff an inducement to take early retirement.
The defendant’s submission that, as this plaintiff in fact took redundancy because of the consequences of the accident, Clay v Freda is distinguishable is, in my view, unsustainable. Mr Freda was offered redundancy because, due to his reduced work capacity, GMH could not offer him suitable “light duties”. However, though that was the factual situation, the entitlement was not one which was necessarily conditioned upon such incapacity. In that respect it differs from workers compensation or incapacity leave payments. The latter become non-deductible only insofar as, statutorily or otherwise, they are legally refundable to the employer in the event of recovery of damages for wrongful injury.
Clay v Freda (supra) has been applied by Wright J in Crowden v Pickards Mather & Co International t/a Savage River Mines (Unreported, TASSC; B32/1996; 4 July 1996).
His Honour rejected a submission that Clay v Freda (supra) was distinguishable because (at par 53) –

... There is no evidence in the present case as to the exact source or nature of the plaintiff’s payment.

The redundancy payment was, as in Clay v Freda, based on past service and did not fetter the plaintiff’s entitlement to seek other employment. Nor did his Honour consider that the sums received as a lump sum, though in respect of annual leave, sick leave and long service leave, should reduce the plaintiff’s entitlement.
In Wall & Lambe v Wall [1998] SASC 7017 (23 December 1998), the plaintiff in consequence of a wrongful injury, accepted a voluntary separation package.
Lander J (with whom Prior and Wicks JJ agreed) held that the package should not be offset against the award for loss of earning capacity, stating, at [95]–

It is not enough, however, for a defendant to establish that a plaintiff has received a benefit, which he or she would not have received but for the injuries. The defendant must also establish that the benefit received must have been received for the purpose of replacing the earning capacity lost and in circumstances where the payment can be enjoyed independently of any right of action against the tortfeasor.

As Wright J did in Crowden’s case, Lander J rejected a submission that Clay v Freda could be distinguished on the ground that the payment there referred to was made pursuant to an award.
It seems to me, therefore, that whatever may be the position with regard to a claim for damages for wrongful dismissal, the receipt of a redundancy package by this plaintiff cannot be relied upon by the defendant to diminish the award otherwise appropriate for loss of earning capacity.
I, therefore, award damages as follows:

General damages   $30,000.00
Interest thereon   $3,800.00
Loss of earning capacity   $83,600.00
Interest on earnings foregone   $20,900.00
Superannuation foregone   $9,300.00
Out-of-pocket expenses   $8,352.75
Interest on expenses paid   $2,608.80
Total:   $158,561.55

That sum seems appropriate. I direct the entry of judgment accordingly and I will hear the parties as to costs.

I certify that the preceding ninety-seven (97) numbered paragraphs are a true copy of the Reasons for Judgment herein of his Honour, Chief Justice Higgins.
Associate:
Date: 19 December 2003

Counsel for the plaintiff: Mr R Mildren

Solicitor for the plaintiff: Vandenberg Reid

Counsel for the defendant: Mr D M Wilson

Solicitor for the defendant: Hunt & Hunt

Dates of hearing: 7 and 8 July 2003

Written submissions received from plaintiff: 11 July 2003

Written submissions received from defendant: 18 July 2003

Date of judgment 19 December 2003