Johnson, Victor Ross v Hegarty, Ian Robert

[1981] FCA 158

Re: VICTOR ROSS JOHNSON
And: IAN ROBERT HEGARTY (1981)
No. ACTG4 of 1981
Damages for personal injury - Damages

COURT

IN THE FEDERAL COURT OF AUSTRALIA

AUSTRALIAN CAPITAL TERRITORY DISTRICT REGISTRY
GENERAL DIVISION
McGregor(1), Davies(1) and Kelly(1) JJ.

CATCHWORDS

Damages for personal injury - Plaintiff police officer - Loss of earning capacity - Superannuation Act 1976 (Commonwealth) Pension payable consequent upon injury - Mitigation of damages - Whether pension to be taken into account in reduction of damages - Whether defendant tortfeasor should have benefit of advantages conferred on plaintiff independently of right of redress against defendant.

Damages - Personal injury - Accident injuring police officer - Officer discharged from police force because of injuries - Officer entitled to statutory pension - Whether pension entitlement should be taken into account when assessing damages.

HEADNOTE

The respondent, a member of the police force at the material time, was injured in a motor vehicle accident. Because of the injuries suffered in the accident he was retired from the police force and thereupon became entitled to a pension under the Superannuation Act 1976 (Cth). The respondent obtained a verdict for damages for the injuries sustained in the accident. The appellant appealed to the Full Court of the Federal Court of Australia on the ground that the judge should have taken into account the respondent's pension entitlement when assessing the quantum of damages.

Held, per curiam, dismissing the appeal, that receipt by the respondent of a pension under the Superannuation Act 1976 up to the date of the trial and thereafter should not be taken into account in assessing the respondent's damages.

Graham v. Baker (1961), 106 CLR 340; Jones v. Gleeson (1965), 39 ALJR 258, applied.

National Insurance Co. of New Zealand Ltd. v. Espagne (1961), 105 CLR 569; Parry v. Cleaver, (1970) AC 1; Paff v. Speed (1961), 105 CLR 549, considered.

HEARING

Canberra, 1981, July 20; September 24. #DATE 24:9:1981

APPEAL.

Appeal from a decision of the Supreme Court of the Australian Capital Territory (Lockhart J.) awarding damages for personal injuries to the respondent.

C. G. Gee, for the appellant.

J. B. Norris, for the respondent.

Cur. adv. vult.

Solicitors for the appellant: Abbott Tout Creer & Wilkinson.

Solicitors for the respondent: Snedden Hall & Gallop.

E. F. FROHLICH

ORDER

The appeal be dismissed.

The cross-appeal be allowed so that there will be, in substitution for the judgment of the Supreme Court of the Australian Capital Territory, judgment for the respondent in the sum of $109,500 and costs.

The appellant pay the respondent's costs of and incident to the appeal and cross-appeal, those costs to be taxed.

JUDGE1

The respondent who was born on 6 August 1943 and who had been a member of the Police Force of the Australian Capital Territory since mid-1969 was injured in a motor vehicle accident on 10 June 1975. Between the date of the accident and 17 August 1978 he lost at least 136 days' pay through injuries sustained in the accident. On 17 August 1978 he was compulsorily retired, against his will, from the Police Force because of the effects of those injuries. He thereupon became entitled, pursuant to the provisions of s.66 of the Superannuation Act 1976 (Commonwealth) ("the Act"), to a pension of 70 per centum of his annual rate of salary on his last day of service. He might, had he chosen, have elected pursuant to the provisions of s.68 of the Act to take as a lump sum his contributions to the Superannuation Fund. He would then have been entitled as well to a pension of 50 per centum of that rate of salary.

The respondent brought suit in the Supreme Court of the Australian Capital Territory against the appellant claiming damages for the injuries sustained in the said accident due to the negligent driving of the appellant. Liability not being in issue, he recovered a verdict of $107,000 and costs. Judgment was entered accordingly. The appellant appeals to this court against so much of that judgment as held that receipt by the respondent of a pension under the Act up to the date of trial and thereafter should not be taken into account in assessing the respondent's damages. It is claimed in the grounds of appeal that the learned trial judge erred in so holding and, particularly, in holding that a number of decisions of the High Court of Australia "were determinative of the question which (he) had to decide" and in declining to hold that they were "distinguishable from the facts of (the respondent's) case". The appellant claims that the amount of the damages awarded would have been $47,138.97 less had not the learned trial judge refused to take into account the payments of pension made and to be made.

The respondent cross-appealed. He claimed that the learned trial judge was in error in discounting his future economic loss by using a discount rate of 6 per centum and that his Honour should either have made no discount at all in respect of that loss or, alternatively, should have discounted at the rate of 2 per centum only. The respondent claims that he would have received a further $3,980.00 but for the alleged wrongful discount.

The appellant can succeed on the question of whether or not pensions paid or payable should have been taken into account as reducing the amount awarded the respondent for damages only if he can distinguish four decisions of the High Court to three of which the learned trial judge made reference. The four are The National Insurance Company of New Zealand Limited v. Espagne, (1961) 105 C.L.R. 569; Paff v. Speed, (1961) 105 C.L.R. 549; Graham v. Baker, (1961) 106 C.L.R. 340 and Jones v. Gleeson, (1965) 39 A.L.J.R. 258. The appellant also submitted that the decision of the House of Lords in Parry v. Cleaver, (1970) A.C. 1, ought not be followed.

In Espagne's Case, the learned trial judge, in assessing damages payable to the respondent for injuries including permanent blindness caused by the negligence of the defendant car owner, disregarded an invalid pension awarded him under the Social Services Act 1947 (Commonwealth) in respect of his condition on the footing of total blindness. The pension was granted in the exercise of an administrative discretion as a benefit to the respondent after a consideration of his general situation. Despite very special provisions in that Act concerning the grant of a pension to a blind person the granting of such a pension could not be obtained as a strict right (per Dixon, C.J., at p.574). The High Court held unanimously that the learned trial judge had correctly disregarded the pension in assessing the respondent's damages.

In Paff v. Speed the respondent was a member of the New South Wales Police Force who, while in the execution of his duty, was badly injured as a result of the negligence of the appellant. In those circumstances he might have received as a matter of discretion and did in fact receive a pension pursuant to the provisions, it would seem, of s.10 of the Police Regulation (Superannuation) Act, 1906 (N.S.W.) as amended. Although evidence of the receipt of the pension was held to be admissible in view of the way in which the respondent put his case, McTiernan and Menzies, JJ., expressed the view that the pension so granted him ought not be used to reduce the damages payable by the appellant on account of the injuries caused. Menzies, J., referred to Espagne's Case (at p.563). The other justices of the High Court expressed no opinion on the point although Windeyer, J., referred to what he had said in Espagne's Case (p.567).

In Graham v. Baker the relevant part of the headnote reads,
"In assessing damages for personal injuries to a plaintiff who was compulsorily retired because of such injuries no account should be taken of pension payments which accrued to and were paid to the plaintiff between the date of such compulsory retirement and the date on which he would have retired in the ordinary course of events."
The pension accrued to the appellant (plaintiff) as the result of his participation in a contributing superannuation scheme established pursuant to the Superannuation Act, 1916-1957 (N.S.W.). Section 22(1) of that Act provided that any contributor might be retired on pension from the service of his employer on the ground of invalidity or physical or mental incapacity to perform his duties. Section 29(1) provided that if a contributor were retired on the ground of invalidity or physical or mental incapacity to perform his duties and if such invalidity or incapacity was not (as was apparently the case) due to his own fault, he was to be entitled to the full pension for which he had been contributing at the time of his retirement. The legislation provided restrictions on the general entitlement none of which appears to have been applicable to the appellant's case.

In Jones v. Gleeson the appellant was awarded damages for injuries sustained as a result of the respondent's negligence. He was a constable in the Northern Territory Police Force and although at the date of the trial he had not been compulsorily retired it was plain that in the near future he would be, receiving then a pension appropriate to his rank and service. The pension would have been payable to him under the provisions of the Superannuation Act 1922 (as amended) of the Commonwealth. Section 38(1) of that Act provided that,
"A contributor who is retired on the ground of invalidity or of physical or mental incapacity to perform his duties shall be entitled to a pension."
The High Court treated as irrelevant the fact that the appellant would, on his retirement from the Police Force, receive a pension.

In Parry v. Cleaver the appellant had been a member of the Cheshire Police Force but as a result of severe injuries sustained through the negligence of the respondent was discharged from that Force and thereafter became entitled to a pension under the "Police Pension Scheme" to which he had, as he was bound to by the terms of his service, contributed. The House of Lords held by a majority that the police pension should be ignored in assessing the appellant's financial loss.

Counsel for the appellant submitted that there is no principle that in an action for personal injuries caused by the negligence of a defendant a disability pension payable to a plaintiff who by reason of such injuries is retired from his employment is irrelevant to the issue of damages and that no such principle can be extracted from the judgments of the High Court in the four cases in question. (Just such a principle is asserted in the headnote to the report of Jones v. Gleeson (p.258).) He submitted in effect that the true rule is that no plaintiff should, except in cases precisely on all fours with any of those four cases, be unjustly enriched by recovery of damages on account of any loss of earning capacity to the extent to which that loss has already been or will be compensated for by a disability pension.

It is true that there are a number of dicta which indicate that if such a principle as that denied by counsel for the appellant exists it is not universally applicable. In Espagne's Case, for example, Dixon, C.J., said at p.572,
". . . unfortunately the plain fact is that no legal rule exists that can be applied to every case where an advantage accrues to the injured man which but for the injuries he would not have obtained."

"Nevertheless"
said Windeyer, J., at p.600,
"it is not, I think possible, to enunciate an exhaustive rule for all parts of this vexed topic. And the questions that arise can never be determined in the abstract. Each must depend on the terms of the particular contract, pension scheme, charitable benefaction or statute governing the benefit conferred."

Accepting that the dicta just quoted constitute in appropriate cases some limit on the approach that a court may take to the problem, it yet seems to be established, to adapt slightly the words used in Espagne's Case at p.573 by Dixon, C.J., with whom Fullagar, J., agreed, that "advantages which accrue to (an) injured plaintiff, whether as a result of legislation or of contract or of benevolence, (and) which, (although) conferred because (the plaintiff) is intended to enjoy them in the events which have happened, have the additional distinguishing characteristic, namely that 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 (and) are a 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" are not to be used to reduce damages which otherwise would be awarded him.

At p.576, McTiernan, J., said,
"As I pointed out in Paff's Case ((1961) 105 C.L.R. 549) the injury is not the causa causans of the receipt of the pension and it would not be just or reasonable for a tortfeasor to claim in the assessment of damages caused by his wrong a credit in respect of a payment received by the injured party from another party towards which the tortfeasor himself has not made nor is liable to make a contribution."

Menzies, J., said at pp.579-580,
"It is true that the consequence of this conclusion is that a plaintiff would receive both lost wages and a pension, and in a sense each may be regarded as a result of the injuries sustained; furthermore it is true as a general proposition that damages as loss of earnings should be assessed so that "the injured person should be placed in the same financial position, so far as can be done by an award of money, as he would have been had the accident not happened", to use the language of Lord Goddard in British Transport Commission v. Gourley ((1956) A.C. 185, at p.206). I think, however, that even it if were the case that a Commonwealth pension had been granted for the very same injury as gives rise to incapacity which has prevented the earning of wages, the receipt of the pension should not be regarded as something to be taken into account as mitigating damages for wages lost by reason of that injury, and the same would be true of any voluntary charitable payment whether it be described as too remote, collateral or as a payment by somebody having no connexion with the litigation. The loss of capacity or the blindness only qualifies a person to receive an invalid pension, which may be granted or refused, so that the injury should be regarded as the occasion rather than the cause of the pension payment."

After an exhaustive discussion, Windeyer, J., with whom Fullagar, J., also agreed, concluded, at pp.599-600, that,
"So far as any rules can be extracted, I think they may be stated, generally speaking, as follows: 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."

We think that the principle referred to in the headnote to the report of Jones v. Gleeson may have been too widely stated and that the correct principle appears from the several statements cited from Espagne's Case. But that there is such a principle we have no doubt and in this we follow, with respect, the words of the High Court in Jones v. Gleeson at p.259 where the Court said,
"In recent years, however, the relevance or otherwise to the issue of damages of the fact that an injured person is entitled to a pension has been considered by this Court on several occasions (see Paff v. Speed (1961) 105 C.L.R. 549; National Insurance Co. of New Zealand Ltd. v. Espagne (1961) 105 C.L.R. 569, and Graham v. Baker (1961) 106 C.L.R. 340) and a very different view has been taken from that which is expressed in the majority judgments in Browning's Case (Browning v. War Office, (1963) 1 Q.B. 750). It is unnecessary to restate the principle formulated in those decisions. We have no doubt that we should apply it and none the less so because, with respect, we entirely agree with it. Accordingly we treat as irrelevant the fact that the appellant in the present case will, on his retirement from the police force, receive a pension."

We are unable, despite the submissions made, to see any grounds upon which we might relevantly distinguish the present case from those just discussed. In particular, we are satisfied that the facts of Graham v. Baker and Jones v. Gleeson correspond so nearly to those of the respondent's case as to make those cases entirely indistinguishable from the present. We consider ourselves bound to follow the decisions of the High Court, that the learned trial judge approached the question of pension payments correctly and that his decision on that question ought to be affirmed.

Since the hearing of the appeal, the parties have agreed that the cross-appeal should be allowed so that the amount of $47,500.00 allowed by the learned trial judge for future economic loss is to be increased by $2,500.00 and the appellant is to pay the respondent's costs of and incident to the cross-appeal.

In the result, therefore, the appeal is dismissed, the cross-appeal allowed and there will be judgment for the respondent in the sum of $109,500.00 and costs of the action, the appellant to pay the respondent's costs of and incident to the appeal and the cross-appeal, those costs to be taxed.