James Hardie & Co v Roberts

[2000] HCATrans 99

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S175 of 1999

B e t w e e n -

JAMES HARDIE & COY PTY LIMITED

Applicant

and

GARY ROBERTS AS EXECUTOR OF THE ESTATE OF THE LATE GUY EDWARD ROBERTS

First Respondent

SELTSAM PTY LIMITED

Second Respondent

Application for special leave to appeal

GLEESON CJ
GUMMOW J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 17 MARCH 2000, AT 9.31 AM

Copyright in the High Court of Australia

MR C.G. GEE, QC:   May it please your Honours, I appear with my learned friend, MR G.M. WATSON, for the applicant.  (instructed by Allen Allen & Hemsley)

MR D.F. JACKSON, QC:   If the Court pleases, I appear with my learned friend, MR F. TUSCANO, for the first respondent.  (instructed by McLaughlin & Riordan)

MR J.D. HISLOP, QC:   May it please the Court, I appear with my learned friend, MR J.J.E. FERNON, for the second respondent.  (instructed by Toomey Pegg & Drevikovsky)

GLEESON CJ:   I asked the Registrar to mention to counsel involved in this case that I think I own some shares in a company that is the holding company of your client, Mr Gee.  I assume nobody has any objection to my sitting?

MR GEE:   Yes.  We all received that communication, your Honour, and the answer is that there is no objection, as I understand it, by any party.

GLEESON CJ:   Yes, Mr Gee.

MR GEE:   Your Honours, could I just start with a few words directing specifically to the question why leave should be granted.  First, we submit that the matter is of general importance.  It was so recognised by the court below, see the judgment of his Honour Justice Meagher in the application book at page 31.  In any event, absent his Honour’s remark, courts throughout the land are confronted with the problem of cases in which some award of damages for lost years has to be given.

Second, your Honours, we submit that this is an excellent vehicle to test the point.  Many of the decided cases on deduction for the lost years are speaking in the abstract or the judgments or speeches are in the abstract.  In this case, your Honours, not only do we have a concrete judgment for a specific amount, we also have a set of alternative findings based on different permutations and combinations depending upon the correct choice of deductible from the probable earning capacity and those three choices were findings of fact by his Honour at application book pages 7 and 8.  If leave were granted and the applicant’s arguments found favour, there would be no need for further litigation.

GLEESON CJ:   What is the principle for which your client contends?

MR GEE:   The principle, your Honour, is that when there is a finding that a tort has shortened life the law has developed to the point where unquestionably there will be an award of damages for the inability of the deceased from the notional moment of death to exploit a probable earning capacity.  From that sum all hands agree something has to be deducted for the fact that the law is compensating the plaintiff in effect as if he were alive but he is, in fact, or it is taken to be that he is dead.  All hands agree that some element reflecting that last fact must be deducted from the award of damages. 

The competition is between the fundamental principle that there should be compensation but no more, which we respectfully submit has manifestly been affronted by the findings at first instance or the holding at first instance on the one hand, and on the other the proposition that damages will be awarded for lost earning capacity.  The problem, we respectfully submit, to answer your Honour the Chief Justice’s question, is this, that in coming to answer the second question the court below and the Court of Appeal in McLean insufficiently recognised a macabre but ineluctable fact referred to by the joint judgment in Sharman v Evans that a dead man has no living expenses.

The question is not whether there is a lost earning capacity or even the quantum thereof.  They are givens for the purposes of this exercise.  You start with those.  The problem is to determine a corpus which will reflect the fact that you are compensating as if the plaintiff were alive when, in fact, on the probabilities he will be dead and spending nothing on himself.

GLEESON CJ:   Now, that is the problem, but what is your solution?

MR GEE:   Yes.  The solution, in our respectful submission, is that which was adumbrated in, first of all, Pickett to some extent and then fully in the House of Lords in Gammell, namely that the moneys which the plaintiff would have spent on himself – and we grasp the nettle – including indulgences ‑ ‑ ‑

GLEESON CJ:   Such as?

MR GEE:   Your Honour, I would not want to be pinned down to what might be an indulgence ‑ ‑ ‑

GLEESON CJ:   I am sure you can think of something, Mr Gee.

MR GEE:   Well, I will, your Honour.  An indulgence might be driving an expensive car when a cheap car would get a man from A to B just as well.

GLEESON CJ:   The same with wine?

MR GEE:   Wine is a possibility, your Honour, in the event that the deceased drank wine.  If he drank expensive imported beers versus the local product, one can multiply examples.

GUMMOW J:   But what is the principle in Gammell in the House of Lords?

MR GEE:   That you deduct what the deceased would have spent on himself in the lost years.

GUMMOW J:   Well, that does not sound like a principle to me.

MR GEE:   I am sorry?

GUMMOW J:   That does not sound like a principle to me.

MR GEE:   Well, your Honour, as a principle it has the advantage of identifying the corpus ‑ ‑ ‑

GUMMOW J:   But why?  Why do they say that?  One knows what they said but what is the principle for it, the result of it?

MR GEE:   I cannot answer it in a sentence, your Honour.  I have to develop it a little.  Of course we accept that the measure of compensation is lost earning capacity, not necessarily wages, but it is very important, with respect, your Honours, to recognise that the fact of compensation results not just from having a measure but also from the fact that the earning capacity would have been exploited.  That is Graham v Baker in this Court.  The principle is that once the plaintiff has notionally died he will be spending nothing on himself and to fail to reflect that fact in the deduction means, to take the language of Sharman v Evans, that you are compensating for a gross loss when a net loss only has been incurred.  It gets back in point of principle, in our respectful submission, to the proposition that the dead man has no expenses is ‑ ‑ ‑

GUMMOW J:   At all.  At all?

MR GEE:   On himself, your Honour.

GUMMOW J:   Well, what does “on himself” mean?

MR GEE:   Well, “on himself” means that which ‑ ‑ ‑

GUMMOW J:   It is a metaphor for something else.

MR GEE:   Well, your Honour, the same can be said, with respect, for any solution to the deduction problem, whether it is ‑ ‑ ‑

GUMMOW J:   That is right.  That is right.  That does not mean yours is better than the Court of Appeal’s though.

MR GEE:   Well, your Honour, at least it has, with the utmost respect, the advantage that it does not lead to the estate being overcompensated, as his Honour expressly found at first instance, by a not insignificant sum of money.  It is superior, with respect, your Honour, because it does not produce the result that the plaintiff and his estate would be better off than if the tortfeasor had never reduced his life expectancy.  The principle ‑ ‑ ‑

GLEESON CJ:   Where do we find – where do you say the error lies in the judgment of the Court of Appeal?  Take the briefer judgment, that of Mr Justice Meagher, where is that in error?

MR GEE:   Yes.  Now, your Honour, Justice Meagher said at 33 between lines 5 and 15:

The law must take the attitude that he can spend his money as he likes.  It cannot be deducted from his damages, for the simple reason that it is irrelevant to his earning capacity.

And that is true, we accept, for a plaintiff where there is no question of diminution of life and, therefore, of lost years.  He then went on:

First, damages for the lost years should, as a matter of consistency, be treated as damages for lost earning capacity.

Now, with great respect, questions of consistency do not arise.  You have to ask yourself what special situation does arise when you are compensating in this unique situation.

GLEESON CJ:   Well, he seems to attribute to you agreement with that proposition.

MR GEE:   I hesitate to accept that we did offer that agreement, your Honour.  To the extent that anything was accepted, it was that when you are looking at the measure for earning capacity in the lost years you start with the probable earning capacity.  That, we accept, is a given.  Then he went on:

If that be so, one should have thought moneys used for personal pleasure ought not be deducted; again, because they have no relevance to earning capacity.

Now, your Honour, the problem is that when we come to the deduction question for which we now contend, we are no longer asking a question about earning capacity.  We have accepted that earning capacity is the measure.  We have accepted that there is a lost exploitation thereof.  All that is embraced in the findings in this case of his Honour Justice Curtis that the probable future earnings were $466 per week, but now is posed the entirely different question, recognised as different and described as different, particularly in the joint judgment in Sharman v Evans, that we now have to do something quite different about the fact that we are going to give money for a period when the plaintiff will not be alive to spend what he is given and that, with respect, is not dealt with in the judgment to which your Honour the presiding Judge has taken me.

GLEESON CJ:   I am sorry, there is one thing I want to be clear about. 

MR GEE:   Yes.

GLEESON CJ:   The point of view against you as expressed in this judgment is that what you deduct is moneys that would have to be expended to utilise earning capacity.

MR GEE:   Yes, and that is what is said in Justice Sheller’s judgment too, yes.

GLEESON CJ:   Yes, for example, travel, clothing, food.  I understand that.

MR GEE:   Yes.

GLEESON CJ:   What I want to understand is the practical point of difference.  What do you say in addition to that should be deducted?

MR GEE:   That which a court would find would be the probable expenditure by the plaintiff on himself had he lived, not his ‑ ‑ ‑

GLEESON CJ:   Over and above what an average person would spend?

MR GEE:   No, no.

GLEESON CJ:   Why would you limit it to indulgences?

MR GEE:   No, over and above what has been described as bare minimum or some such formula.

GLEESON CJ:   Why?  Why would you allow him the bare minimum?

MR GEE:   Well, that is our point, your Honour.  You do not restrict the allowance to the bare minimum.  You do not draw an artificial line and say, “The deduction is to be confined to bare minimum,” which is what has happened here.

GLEESON CJ:   Well, Justice Meagher says the deduction is to be confined to moneys that would have to be expended to utilise earning capacity.

MR GEE:   Your Honour, a slightly round‑about answer.  Behind tab 2 of the book of authorities which we gave the Court will be found the copy of the decision of the Court in Fitch v Hyde‑Cates.

GLEESON CJ:   Yes.

MR GEE:   At 498 Justice Mason, as he then was, considering the issue halfway down:

In Pickett all the members of the House of Lords, with the exception of Lord Russell of Killowen, thought that a deduction of the victim’s probable living expenses in the lost years should be made, but none favoured an additional deduction of the probable living expenses of dependants.

We are through all that.  We have no question of ‑ ‑ ‑

GLEESON CJ:   Can I take you a little further up the page?

MR GEE:   Yes, yes.

GLEESON CJ:   About a fifth of the way down the page:

there are solid grounds for thinking that the true measure of the deceased’s loss is…..the amount of his future earnings less his probable living expenses to enable him to earn future wages.

Is that not what Justice Meagher was talking about?

MR GEE:   Your Honour, it is, but could I just respectfully come back to that passage in a moment.  What I was going to take the Court to is further down on 498 where his Honour picked up and adopted what Lord Wilberforce had said in Pickett in the passage that is quoted at the foot of the page:

“The judgments –

that is the judgments in Skelton v Collins –

further, bring out an important ingredient, which I would accept, namely that the amount to be recovered in respect of earnings in the ‘lost’ years should be after deduction of an estimated sum to represent the victim’s probable living expenses during those years ‑

Not expenses to exploit earning capacity, living expenses –

I think that this is right ‑ ‑ ‑

GLEESON CJ:   Well, he would have to feed himself to be able to work.

MR GEE:   Of course he does, your Honour.

GLEESON CJ:   But you seem to want to deduct the amount he would have to pay for expensive foods.

MR GEE:   From plaintiff to plaintiff that is right because otherwise – well, I am sorry.  Yes, your Honour, that is what we say and it is consistent with – I am sorry, I will start again.  If you are going to deduct anything for the man eating in the lost years, then you have to deduct what is appropriate for that man, not some other man or not some hypothetical eater.

GLEESON CJ:   What do you actually do, investigate the living habits of the individual?

MR GEE:   That is exactly what Judge Curtis did in this very case, your Honour, and that is exactly the inquiry that would be undertaken, otherwise what do you do, take a tariff for all Australians and say, “The bare minimum living expenditure for an Australian worker is,” and get back to a sort of basic wage tariff?  That can have nothing to do, with respect, your Honour, with the concept of compensating a particular plaintiff.  But I still have not quite read the sentence in Lord Wilberforce’s extract which we suggest is of some importance.  He went on to say:

I think that this is right because the basis, in principle, for recovery lies in the interest which he has in making provision for dependants and others, and this he would do out of his surplus.

That is after he has spent whatever he spends, not some hypothetical person spends, on himself.  Let me now return to the passage that your Honour the Chief Justice took me to further up the page.  Now, first of all, if I may say so with respect, it is easy to take his Honour’s observations on this question of the deduction as if they were somehow at the centre of what his Honour was speaking of.  On the contrary, these observations are all part of a general discussion of avoiding double liability, double compensation for both the plaintiff and the estate, and it was in that context, particularly when one reads 497 and over on to 498, that one sees how his Honour led up to a discussion of what should be deducted without any necessity for his Honour to have come to a particular specific, let alone binding, concluded view about what should be deducted.

After all, he did, with respect, obviously pick up with approval both what had been said in Pickett and what had been said in Gammell v Wilson by Lord Scarman and the passage that I took your Honour to.  The critical sentence that many have suggested is contrary to our position is to be found about halfway down page 498 where his Honour said:

Once the relevant loss is identified as a loss of earning capacity there is a difficulty in saying that there should be deducted future expenditure on the living expenses of the deceased’s dependants as well as future expenditure on his own living expenses which should be regarded as an essential condition of the exercise of his earning capacity.

That has been, with respect, misread to suggest that what it means is that you take the essential necessities to exercise earning capacity and that is all you deduct.  What his Honour was truly saying ‑ ‑ ‑

GUMMOW J:   What his Honour had deep in his subconscious was the learning on section 51(1) of the Income Tax Act and the phrase “necessarily incurred”.

MR GEE:   Perhaps so, your Honour.  It is not for me to speculate about what might have been in his Honour’s subconscious but ‑ ‑ ‑

GUMMOW J:   Yes, but then given the principle that his Honour puts at the top of 498 I can understand the analogy that is involved.

MR GEE:   Yes.  Your Honour, I have little time, but could I just suggest, with respect, that exactly the same sort of observation could be made about the short judgment of his Honour Justice Murphy upon which Justice Sheller fastened to decide that the bare minimum was the appropriate  ‑ ‑ ‑

GLEESON CJ:   Do you say there should be deducted the cost of supporting dependants?

MR GEE:   No, no.  No, that has been decided.  It has been decided clearly.

GLEESON CJ:   What about the cost of supporting an unusually extravagant dependant?

MR GEE:   Your Honour, that is not in the equation.  We accept that all of that is outside the corpus that we would seek to carve out of probable future earning capacity.  We are talking about expenses on the plaintiff himself and thus, if a man is frugal and puts aside or spends a lot of money on exceptionally extravagant dependants, so be it.  It will not be deductable in the way for which we urge, but the contrary is true.  If the dependants are getting next to nothing because the plaintiff is spending the money on himself during his lifetime, then that situation ought to be reflected in the deduction that is then made when the law tries to assess what has been taken away from him in the lost years.  Now, the ‑ ‑ ‑

GLEESON CJ:   Yes, thank you, Mr Gee.

MR GEE:   Yes, thank you, your Honour.

GLEESON CJ:   Yes, Mr Hislop.

MR HISLOP:   Yes, your Honour, we adopt the applicant’s submissions.  We do not wish to add anything further.

GLEESON CJ:   Thank you.  Yes, Mr Jackson.

MR JACKSON:   Your Honours, we do not suggest that the issue is not capable of being regarded, if one leaves out of account the more fundamental and underlying principles as to damages, as being of general importance, but I will come back to that.  Nor do we suggest that the case in factual terms would not otherwise be a suitable vehicle, but what we do contend is that the issue is not attended by sufficient doubt to merit the grant of special leave.

More specifically, your Honours, and I will come to develop this, we would say that the Court of Appeal did the right thing in sitting a five‑member court to consider the issue and, after having heard the applicant’s contentions, unanimously declining to accede to them and may I say several things in support of that proposition.  The first thing is that it is quite clear, in our submission, that the Court’s decision in Sharman v Evans 138 CLR 563 says that in respect of the lost years two deductions are to be made. They are, first, the deductions that would be made in any event in respect of loss of future earning capacity if the plaintiff were alive, that is the costs of earning the income: fares, work clothing and so on and matters of that kind.

Secondly, and this is the difference, in respect of the lost years there is an additional deduction to be made and that is what it would cost the plaintiff to live are the ordinary expenses of living but not the amount left over after the ordinary expenses of living such as, if one goes to the sad trivialities of the present case, the dog food for the man’s dog and, your Honours, in that regard could I take your Honours to Sharman v Evans at page 579. Your Honours will see first of all at the pages before page 579 there has been a discussion of what is to be deducted in the case of loss of earning capacity in cases other than the lost years and one sees in those pages what is to be deducted is, in effect, the cost of earning the income, earning income that might be brought about by the use of the earning capacity. Then at page 579 their Honours say at about point 3 on the page:

It follows that, still disregarding “lost years”, it will be appropriate in any assessment of the plaintiff’s damages for lost earning capacity to reduce those damages only in respect of –

and your Honours will see the references to the “‘saved’ outgoings” there referred to.  Then they come in the next paragraph to “lost years” and your Honours will see in the passage commencing there and going to the bottom of the page - and could I refer particularly to about the last paragraph on the page - the reference to the second deduction, that is there is to be taken into account:

at least the amount the plaintiff would expended on his own maintenance during those lost years.

Now, your Honours, if one goes then to page 581 your Honours will see the argument that is referred to and it is about point 2 on the page.  The argument goes:

In consequence it is only the loss of surplus income, whether in the form of cash savings or of acquired assets, which might have been derived during lost years that is to be compensated for – and see Luntz, Assessment of Damages –

but, your Honours, what one sees then in the following paragraph is that this result, of course, departs from the understanding of the effect of Skelton v Collins:

perhaps more importantly it appears to ill accord with any rational principle of compensation.

And your Honours will see then, if I could pass over the quotation:

We share the difficulty felt by Sheppard J and have concluded that, properly regarded, Skelton v Collins does not require that anything, other than the cost of a plaintiff’s own maintenance, should go in reduction of damages for lost earning capacity for “lost years”.

And your Honours will see that to the same effect at page 582 in the last paragraph on the page, going through to page 583 and, your Honours, that case makes it clear in that passage at 582 to 583 that the manner in which the plaintiff might have spent the plaintiff’s income during the lost years is irrelevant.  Your Honours, Sharman v Evans is not alone.  The Court in Fitch v Hyde‑Cates 150 CLR 482 did again refer to the issue. Could I just take your Honours in relation to that case to what had been argued because that is germane to what Justice Mason said. Your Honours will see at page 484 in the argument of Mr Murphy about five or six lines before the conclusion of it, the argument went:

In quantifying damages the court must take into account what the deceased may have spent on himself throughout his lifetime and what else may have had call upon his money.  This is not confined to essential living expenses, and includes money spent; for the enjoyment of life.

GLEESON CJ:   Is that the issue?

MR JACKSON:   That is the issue in this case, your Honour.

GLEESON CJ:   Yes.

MR JACKSON:   When one fines it down, that is what is being put, and your Honours will see on the next page, page 485, the argument to the contrary, about five lines from the top of the page:

Matters entirely personal to the deceased have been excluded.

And so on.  Now, your Honour, it is in that context that one comes to what was said by Justice Mason, with whom the other members of the Court agreed, at page ‑ ‑ ‑

GLEESON CJ:   At the moment I cannot understand what money spent for the enjoyment of life as distinct from money spent to have the capacity to earn has got to do with loss of earning capacity.

MR JACKSON:   Could I just come to that in a moment because that is the next point I wanted to make, really.  If I could just pause to say something about that.

GLEESON CJ:   I can see what it has got to do with loss of saving capacity.

MR JACKSON:   Quite, your Honour.  May I come to that in just a moment, but I was just going to say about it that one does, of course, have to translate loss of earning capacity into money and one does that by saying, looking at the common things of life, how could one translate loss of earning capacity into money and it involves really two things:  earning money in particular occupations does involve some expense, so one takes that off; secondly, in the case of the lost years, the person would have to have some basic expenses of life.  One might live frugally or profligately but there are some basic expenses that one would take off, so something has to come off.

GLEESON CJ:   Is part of the argument against you that if you are dealing with a man who perhaps had an extraordinarily high earning capacity that you would take off, during the lost years, the amount he spent on polo?

MR JACKSON:   Yes, your Honour.  Yes, it is, and on any other thing that was not necessary.  The argument - and we, I think, would accept this - one does look, of course, at the fact that people in different situations perhaps live more expensively and some live more expensively than others, but it does not follow from that that one takes off from whatever is left after taking out of account the basic expenses of living, however, the money is spent on any indulgences, it is called, whether it be playing polo or buying food for two dogs.  May I come back to that in just a moment.  At page 498 one sees the first new paragraph on the page where what we would seek to say is that Justice Mason, for the Court, was saying:

there are solid grounds for thinking that the true measure of the deceased’s loss is not the amount which he would have in his hands to spend, distribute or save, after defraying his probable living expenses and –

then dealing with the particular case –

those of his dependents, but the amount of his future earnings less his probable living expenses to enable him to earn future wages.

GLEESON CJ:   One thing I need to be clear about is this, however, I understand – I think I understand – why it sounds strange to say that a person with a particularly high earning capacity who has two dogs and plays polo should not suffer a deduction for the cost of the polo and the two dogs, but what about when you start to deduct an amount for keeping a roof over his head, do you ignore the fact that he will have a very expensive roof over his head?

MR JACKSON:   Not entirely, your Honour.  Could I say this:  if one looks at the – if one is looking at earning capacity, earning capacity is usually turned into income by acting in particular ways.  Concomitantly with acting in particular ways people expend money.  Now, in relation to a person who has a particular very remunerative occupation one would expect that with – I mean, if one took, for example, some kind of pop star, you would expect that the expenses that went with that of living in relatively lavish circumstances, at least during the perhaps brief high point of their career.  Now, there may also be other expenses such as having bodyguards and things of that kind that go with it.  Now, those are things that you take into account and take into account what it would cost to bring that earning capacity to fruition, some kind of living expenses that are greater than others.

GLEESON CJ:   So, that consistently with the decision of the Court of Appeal in the present case, if you started to consider the earning capacity of a deceased pop star you would treat as living expenses to be deducted the cost of living in the standard of accommodation to which he was accustomed to live?

MR JACKSON:   In which one would expect someone ‑ ‑ ‑

GLEESON CJ:   Like that to live.

MR JACKSON:    ‑ ‑ ‑like that to live, yes.

GLEESON CJ:   Where do we find that said in the judgment of the Court of Appeal here?

MR JACKSON:   That issue – the precise issue, I think, is not dealt with because, of course, the Court of Appeal was dealing with facts where the judge had defined the circumstances into three.  You will see, first of all, I think in Justice Meagher - perhaps it can be seen in paragraph 24 in Justice Meagher at page 36 where, referring to Fitch v Hyde-Cates – it is really the passage at the top of page 37:

reduced only by the value of the maintenance of the deceased, but can be required to pay no more.

Then, at paragraph 25 on the same page, again in the quotation:

The measure of the damages is not what the deceased would have “preserved”, but the value of his lost capacity to earn computed over the years  he probably would have worked, but diminished by the costs of maintaining himself…the problem is to ascertain what his net earnings would have been, and to deduct from that sum the estimated costs of his maintenance, and not to deduct all that he spent for whatever purpose.

Now, that is one way of putting it.  It was not necessary for the Court to deal with the application of it to particular general circumstances.  Page 65, paragraph 84 I should have referred to, also.  Your Honour will see the proposition I think advanced in that paragraph, particularly at the top of the next page.

GLEESON CJ:   Yes, that is the point I am looking for.

MR JACKSON:   Yes.  What I was going to say was that all the – the second point is this, all the development of this issue in the intermediate appellate courts has been against the applicant’s contentions.  Your Honours have seen the passages from Fitch v Hyde-Cates that are referred to in the reasons below and also I would refer to the Commonwealth v McLean again referred to in the reasons below.  What we would seek to say is that in this case the reasons for judgment in the Court of Appeal are, first of all, unanimous, secondly, entirely in accordance with all the earlier decisions.

I will not go through their Honours’ reasons for judgment but what your Honours will see from them is that the argument for the applicant really seeks to undermine what we would submit is the very established Australian approach to the quantification of damages, that is, earning capacity, not earnings, and the reasons for judgment of the Court of Appeal demonstrate an application of the established view that the test is one of earning capacity.  Could I say, particularly, that the reasons of Justice Sheller commencing at page 54 and in the paragraphs 66 to 75 analyse, in our submission, carefully and correctly, the Court’s decision in Sharman v Evans and the ultimate conclusion arrived at by the Court of Appeal in that regard was correct.

Could I then endeavour to summarise what we would say, and it is this, first, the judgment of the Court of Appeal is unanimous and there is no Australian case which gives a shadow of support to our learned friend’s argument.  In fact, the observations of the primary judge in this case were, with respect, not in accordance with the law.  The course he arrived at in the end was correct but that was because he was and properly bound to.  The second thing is this, that the Court of Appeal’s decision does reflect the underlying notion that damages are for loss of earning capacity.

It does not matter whether it is or is not being utilised.  It does not matter how the injured person might have spent the earnings from the utilisation of the capacity and to find for the applicants in this matter, in our submission, would make a significant inroad into that underlying criterion

of earning capacity.  And, we would submit to what end, in effect, why, as it were, quicken Frankenstein’s monster in that regard, something that has been put to bed already in Australia.

The last thing we would say is this:  the applicants seek to change the law and they should be granted special leave, if your Honours were minded to do so, only on the terms referred to in our summary, page 109, paragraph 32 – that is in relation to costs.

GLEESON CJ:   Thank you, Mr Jackson.  Yes, Mr Gee.

MR GEE:   Your Honours, first could I say that in respect of the argument that was cited of Mr Murphy’s about taking into account all of the expenses, including indulgences, your Honours will have noted that nowhere in Fitch v Hyde-Cates or Sharman v Evans was that point ever ultimately dealt with, let alone the proposition rejected.  It was raised.  It never formed a necessary part of the decision in those cases because they were concerned more with the questions of whether there would be any deduction for the money that would have been spent on dependants and that was resolved.

What was not resolved, with respect, is the very point we see to agitate, should leave be granted.  Your Honour the Chief Justice’s example about polo is telling.  You ask yourself to look at the result.  If you recognise that once dead, polo will not be played, but if you do not deduct the expense involve that would have been an outgoing during life, there must be an enrichment beyond what is true compensation.

GLEESON CJ:   But that is an outgoing that has got nothing to do with earning capacity.

MR GEE:   I accept that it has got nothing to do with earning capacity but I can only reiterate, in my respectful submission, that this question is not concerned with earning capacity.  That is a given.  We accept that we have got a very rich man who would have exercised his earning capacity such that he could afford to play polo had he continued to live.  That we accept, as we must.  What we respectfully submit is that the courts have not gone the necessary next step and examined what happens in the precise case where that same person, who could have afforded to play polo if he had kept on living, is notionally dead.  If you do not deduct that from the accepted probable high earning capacity or low earning capacity, as the case may be, you will inevitably, in our respectful submission, be engaging in overcompensation.

GLEESON CJ:   Now, what if the man was a philanthropist and he spent a lot of money on making large donations to charity, would that also be deducted?

MR GEE:   Not on our argument, your Honour, because he is not spending it on himself.  It is not an expense which can be attributed to his living, “his living expenses”, in the words of the English cases.  My friend naturally wants to steer away from things that have been said in the United Kingdom of assistance in this matter because they are against him.  In Gammell v Wilson in the High Court, if I could just very briefly remind your Honours of what was said there, Lord Diplock spoke of deduction of both:

living expenses and pleasures since these would represent an expense that would be saved in consequence of death.

Lord Russell, who had dissented in the Pickett Case on the question of - who had dissented said that he read Pickett as deciding that:

X is entitled to claim in his damages compensation for financial benefits…..the “lost years,” less what he might have been expected to spend upon himself.

In our respectful submission it could not be simpler.  It is uttered by a persuasive authority.  Lord Scarman, whose material we have referred to your Honours in our written submissions, referred to the necessity to look:

at a standard which his job and career prospects at the time of death would suggest he was reasonably likely to achieve.

In the limited time remaining, could I concentrate on a critical passage in Sharman v Evans over which our learned friends skated.  At 581 Justice Sheppard’s quotation, which was not given to your Honours - it is about halfway down page 581 where he was questioning what seemed to be the received doctrine about damages:

I can understand, damages being compensatory, that they ought to be reduced by the amount necessary to maintain the deceased during the lost years because, ex hypothesi, he is no longer in need of the amount in question, and if he had lived the money would have been expended on him.

That precise passage, with respect, was accepted by the authors of the joint judgment, not only immediately below that quotation but also in their further summary at 583.  Further, at 582, two-thirds of the way down:

it would, we think, be wrong to treat Skelton v Collins as any authority for the proposition that only surplus income, in effect savings, are to be taken into account in assessing economic loss in the “lost years”.  It is well enough to take into account in reduction

of damages the likely expenditure on the plaintiff’s own maintenance and this for the reason stated by Sheppard J in Jackson v Stothard.

Then they went on to refer to the proposition that:

“a dead man has no personal expenses” –

What the law lacks, with great respect, and what we suggest this case gives the Court the opportunity to settle is what is really meant by “the plaintiff’s own maintenance”?  To that question, with respect, there is no present answer, certainly of the Court, and we respectfully submit, as we have before, that the decision below needs review.

GLEESON CJ:   Thank you, Mr Gee.

The Court is of the view that there are insufficient reasons to doubt the correctness of the decision of the Court of Appeal in this matter to warrant the grant of special leave and the application is refused.

Can you resist an order for costs?

MR GEE:   I cannot, your Honour.

GLEESON CJ:   The applicants must pay the respondents' costs.

MR GEE:   That would be the first respondents, your Honours, not the second respondents.

GLEESON CJ:   Of course.

AT 10.16 AM THE MATTER WAS CONCLUDED