Husher v Husher

Case [1999] HCA 47

HIGH COURT OF AUSTRALIA

GLEESON CJ,
GUMMOW, KIRBY, HAYNE AND CALLINAN JJ

JOHN LESLIE HUSHER   APPELLANT

AND

WENDY JOAN HUSHER & ANOR  RESPONDENTS

Husher v Husher [1999] HCA 47
9 September 1999
B10/1999

ORDER

  1. Appeal allowed with costs.

  1. Set aside the order of the Court of Appeal of Queensland made on 21 August 1998 and in lieu order:

(a)  Appeal allowed with costs.

(b) Set aside the judgment and orders of Cullinane J made on     1 October 1997 and in lieu order that:

(i)the plaintiff have judgment against the defendants in the sum of $261,958.85 together with interest pursuant to s 48 of the Supreme Court Act 1995 (Q) from 1 October 1997 until payment on so much of the said sum as remains unpaid on and after 22 October 1997;

(ii) the defendants pay the plaintiff's costs of and incidental to the action at trial to be taxed on a solicitor and client basis.

On appeal from the Supreme Court of Queensland

2.

Representation:

D B Fraser QC with R W Trotter for the appellant (instructed by Messrs Dempseys)

J S Douglas QC with A M Daubney for the respondents (instructed by Quinlan, Miller & Treston)

Notice:  This copy of the Court’s Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports.

CATCHWORDS

Husher v Husher

Damages – Tort – Personal injuries – Quantification – Loss of future earning capacity – Husband and wife partnership at will – Equal division of profits – No significant contribution by wife to partnership's business activity – Whether loss of future earning capacity calculated by reference to plaintiff's past share of partnership profits.

  1. GLEESON CJ, GUMMOW, KIRBY AND HAYNE JJ.   In November 1994, Mr John Husher (the appellant) was injured when a car driven by Mrs Wendy Husher, his wife (the first respondent) was involved in an accident.  He brought an action in the Supreme Court of Queensland against her and "Transport Accident Commission Insurance"[1] (the second respondent) claiming damages for personal injury.  Liability was admitted.  Damages were assessed and judgment entered in favour of the appellant by the Supreme Court of Queensland.  The only question in this Court is how that part of the damages to be awarded to the appellant for loss of future earning capacity should be assessed.

    [1]This description of the second respondent may be a misnomer for the body corporate established by s 10 of the Transport Accident Act 1986 (Vic) under the name "Transport Accident Commission" and which appears to have had the carriage of the defence of the claim. No point was made about the name or identity of the second respondent and we do not notice it further.

  2. Before the accident the appellant was a block layer.  He carried on this business in partnership with his wife.  Subject to some qualifications that are now irrelevant, the appellant and his wife engaged no employees for the purposes of the business.  It was the appellant's skill and labour which generated income…

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AGLC
Husher v Husher [1999] HCA 47
Case
[1999] HCA 47
Decision Date

CaseChat Overview and Summary

The case of *Husher v Husher* involved an appeal to the High Court of Australia concerning the quantification of damages for loss of future earning capacity. The appellant, a tradesman, was a partner in a business conducted in partnership at will with his wife. The dispute centred on whether the appellant's loss of earning capacity should be calculated by reference to his past share of the partnership profits, despite his wife's entitlement to an equal share.

The legal issue before the High Court was whether the appellant's damages for impaired future earning capacity should be assessed by reference to the entire income generated by the partnership, or limited to the portion he would have personally received. This required the court to consider the nature of the partnership and the appellant's control over the partnership's income, particularly in circumstances where the wife made no significant contribution to the business's activity.

The High Court reasoned that the assessment of damages for loss of future earning capacity must be closely tied to the specific facts of each case. It emphasised that the inquiry should focus on what the plaintiff could have done in the workforce but for the injury and what sum of money they would have had at their disposal. The court distinguished the present case from situations involving partnerships not terminable at will or where other partners contribute significantly to the business. In this instance, the appellant was likely to have exploited his own earning capacity and controlled the destination of the net income. The court allowed the appeal, setting aside the orders of the Court of Appeal and the trial judge. The judgment was varied to substitute specific sums for past and future economic loss, and the appellant was awarded costs of the appeal and trial on a solicitor and client basis.

Orders

Orders of the court

1.

Appeal allowed with costs.

2.

Set aside the order of the Court of Appeal of Queensland made on 21 August 1998 and in lieu order:

(a) Appeal allowed with costs.

(b) Set aside the judgment and orders of Cullinane J made on 1 October 1997 and in lieu order that:

(i) the plaintiff have judgment against the defendants in the sum of $261,958.85 together with interest pursuant to s 48 of the Supreme Court Act 1995 (Q) from 1 October 1997 until payment on so much of the said sum as remains unpaid on and after 22 October 1997;

(ii) the defendants pay the plaintiff's costs of and incidental to the action at trial to be taxed on a solicitor and client basis.

Background

Background to the litigation

In this case it was probable that the appellant would have exploited only his own earning capacity to generate net income of a particular amount and that he would have been able to control the destination of that net income as he chose. In those respects, this case differs from some other hypothetical examples mentioned in the course of argument. No true comparison can be made between this case and that of a person expected to remain a member of a partnership not terminable at will or a partnership in which persons other than the injured plaintiff contribute significantly to the firm's business activity, either by capital contribution or by contribution of skill and labour. In those cases other considerations intrude in deciding what is the loss occasioned by the impairment of the plaintiff's future earning capacity. In at least some cases of the kinds mentioned it may be that the plaintiff's probable exploitation of earning capacity to generate income over which the plaintiff would have had control would be limited to the amount of the benefits the plaintiff could have expected to receive under the partnership arrangements (for as long as those arrangements were likely to have persisted) but each case will turn on its own facts.The importance of the facts in each case Deciding what value is to be ascribed to the loss of future earning capacity of an injured plaintiff requires close attention to the facts of each case. The task is not one to be undertaken by seeking to classify cases as concerning "sole traders" or "partnerships" or "wage-earners" or "trading trusts", and then attempting to deduce some rule of general application to all cases falling within the classification thus devised. Rather the inquiry is about what could the plaintiff have done in the workforce but for the accident and what sum of money would the plaintiff have had at his or her disposal. Only when those inquiries are pursued can a judgment be made about what capital sum to allow as damages for the impairment of the plaintiff's earning capacity. In doing so, regard must be had, of course, to all those contingencies of life that might reasonably be expected to affect the course of events in the future.Adjustment for taxation consequences? One other point, mentioned in the course of argument, but not falling for decision in this case, should be noted. Should any account be taken of the taxation consequences of income-splitting arrangements like those the appellant had made? The assessment of damages for loss of future economic capacity involves questions of judgment and estimation. Being an attempt to predict what would have happened, the process can never be exact. The fact that calculations are made by multiplying present values of net income by the expected duration of remaining working life should not obscure that the process is necessarily inexact. Even so, the assessment of lost earning capacity requires some care in identifying (as best one can) what net income the plaintiff would have had at his or her disposal. That may require some consideration of the taxation consequences of different arrangements.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

GLEESON CJ, GUMMOW, KIRBY AND HAYNE JJ CJ, GUMMOW, KIRBY AND HAYNE JJ (dissent) CALLINAN J
In the course of argument, reference was made to Spargo v Haden Engineering[20]. There the Full Court of the Supreme Court of South Australia considered the assessment of lost earning capacity of a plaintiff who had been employed as a sheet metal worker by a company which was trustee of a discretionary family trust. The plaintiff had generated the only income received by the trustee company and that income was distributed to the plaintiff and members of his family. The Court held that the damages to be allowed to the plaintiff for loss of future earning capacity should be calculated by reference to the whole of the income he had generated. Perry J said[21]:"But it does not follow that if the Court should properly have regard to the total income produced in the business in assessing the plaintiff's loss of earning capacity, in determining the net income for the purpose of calculating the amount to be allowed for loss of earning capacity, only the small amounts of tax, if any, paid by the various family members with reference to the amounts allocated to them, should be deducted. To do so, is to be over-generous to the plaintiff. If he is to be given the benefit of aggregating the distributed income for the purposes of measuring his earning capacity, the allowance for income tax in determining the net earnings should approximate the amount which he might have paid on the gross earnings if they had been brought to account by him rather than by the family trust."We accept that an adjustment of the kind proposed by Perry J was not inappropriate in that case. But neither party suggested that any question of the different taxation consequences of different arrangements (of the kind considered by Perry J) arose here.[20](1993) 60 SASR 39.[21](1993) 60 SASR 39 at 54.Conclusion In our opinion the appeal should be allowed with costs. The parties to the appeal agreed that in that event the judgment entered at trial should be varied by substituting in the calculation of damages the sums of $45,000 and $160,000 respectively for past and future economic loss. Having offered to compromise his claim for less than the sum to be awarded, the appellant should have his costs of trial taxed on a solicitor and client basis. We would therefore order:1.Appeal allowed with costs.2.Set aside the order of the Court of Appeal of Queensland made on 21 August 1998 and in lieu order:(a) Appeal allowed with costs.(b) Set aside the judgment and orders of Cullinane J made on 1 October 1997 and in lieu order that:(i)the plaintiff have judgment against the defendants in the sum of $261,958.85 together with interest pursuant to s 48 of the Supreme Court Act 1995 (Q) from 1 October 1997 until payment on so much of the said sum as remains unpaid on and after 22 October 1997;(ii)the defendants pay the plaintiff's costs of and incidental to the action at trial to be taxed on a solicitor and client basis. This case is concerned with an assessment of damages for loss of earning capacity suffered by a partner in a business whose efforts were productive of virtually the entirety of the profits of the partnership. The question is whether the appellant, a tradesman in a partnership at will with his wife, was entitled to recover damages for the impairment of his earning capacity undiscounted by reason of his wife's entitlement to a half share in the partnership profits.

Ratio Decidendi

Legal Principle Established

Established by: GLEESON CJ, GUMMOW, KIRBY AND HAYNE JJ, CALLINAN J

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