Newman v Nugent

[1993] HCATrans 257

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IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Perth No P31 of 1992

B e t w e e n -

RUPERT NEWMAN

Applicant

and

JOY BEVERLEY NUGENT

Respondent

Application for special leave

to appeal

MASON CJ
DEANE J

GAUDRON J

Newman 1 27/8/93

TRANSCRIPT OF PROCEEDINGS

FROM PERTH BY VIDEO LINK TO CANBERRA

ON FRIDAY, 27 AUGUST 1993, AT 11.58 AM

Copyright in the High Court of Australia

MR G.P. MILLER OC:  May it please the Court, I appear with

my learned friend, MR B.E. LAWRENCE, for the

applicant in this matter. (instructed by

H.J. Wisbey & Associates)

MASON CJ:  Yes. The Registrar has been informed by

Mr Richards, who represents the respondent in the

proceedings, that he will not be represented at the

hearing and will submit to the order of the Court

save as to costs.

MR MILLER: Yes, I understood that, Your Honour.

Your Honours, this application we submit, does

involve a point of law of general application, and
of importance in the assessment of damages for

personal injury generally in this country. That

question is whether interest should be awarded on

damages for past gratuitous services, and it does

involve a consideration of the nature of an award

they are not in the nature of special damages; a

for gratuitous services in the law of tort.

fact made quite clear in the Court's recent

decision in Van Gervan v Fenton, and they are an

exception to the traditional basis upon which an

award of damages is made.

As Mr Justice Mahoney said in Burnicle v

Cutelli, in the passage which is quoted in

paragraph 3 of the outline, they are an exception
because the fact that the services were rendered is

accepted, but the fact that they were rendered

gratuitously is ignored, and the reason for that,

Your Honours, of course, is a reason of public

policy. And so this question involved the

principle upon which interest should be awarded on

damages.

MASON CJ:  Mr Miller, is it accepted that the statutory

provision in Western Australia, which authorizes an

award of interest in the case of damages, extends

to interest in relation to an award covering the

provision of gratuitous services?

MR MILLER: It would, Your Honour, and Mr Justice Kennedy

made that clear in one of the Western Australian

decisions to which reference is made. The Western

Australian section, section 32(2)(aa) provides

that:

Interest may not be awarded in relation to any

general damages in respect of pain and
suffering, or the loss of enjoyment or the
amenities of life, but otherwise interest may

properly be awarded.

Newman 27/8/93

and, an award for gratuitous services could not

come within the definition of pain and suffering, or loss of enjoyment or of the amenities of life.

MASON CJ: Notwithstanding that the award is in respect of

the loss of capacity to look after oneself.

MR MILLER:  That would be the submission because it is

submitted that gratuitous services are more in the

nature of an award for economic loss, although a

component of general damages, clearly not a

component which could be defined within that narrow

definition in the Western Australian statute.

MASON CJ:  What was the basis on which Mr Justice Kennedy

considered it, that it was an award, or the loss of

capacity to look after oneself?

MR MILLER:  Yes, Your Honours, the case is

Torrent v Lancaster, which has been supplied to the

Court, it is an unreported case, which is on the

list of authorities of the applicant at No 8, and

the judgment of Mr Justice Kennedy, the relevant

passage is to be found on pages 20 to 21, if

Your Honours have that unreported decision?

MASON CJ: Yes, we have it.

MR MILLER: Mr Justice Kennedy's judgment being the second

of the judgments, and His Honour, at the foot of
page 20 of his reasons, made reference to the
nature of the award in that particular case, and

then at the top of 21 said:

those general damages would not fall into the

category to which s 32(2)(aa) of the Supreme

Court Act 1935 does not apply, and interest

could still be awarded on them.

Do Your Honours pick that up?

MASON CJ: Yes.
MR MILLER:	So, that is the only Western Australian

authority on the matter, but the applicant in this

case would certainly, with respect, accept that

that is the case, that award of damages for
gratuitous services would not properly fall within
the exception of 32(2)(aa) of the Supreme Court

Act.

MASON CJ: Yes.

MR MILLER:  There was in the notice of appeal in the Full

Court, I think it was put that it may fall within

that exception, but that has been abandoned since.

So, Your Honours, the question then is what is the

Newman 3 27/8/93

principle upon which interest is awarded on

damages, and that principle was clearly expressed

by the Court in Haines v Bendall in the passage

which is quoted at paragraph 4 of the outline.

Interest, or course, allows the plaintiff to be

placed in, or restored to, the situation as far as

money can do in which he or she would have been but

for the defendant's negligence.

The argument goes this way: because a

plaintiff awarded damages for past gratuitous

services has not expended money or incurred
liability carrying interest in order to obtain the

services then, the applicant contends, interest

should not be awarded on those damages, and it is a

proposition supported in New South Wales in a

number of cases, one of which is Settree v Roberts,

which is cited at the foot of paragraph 4 of the

outline.

MASON CJ:  But is it not the contrary view that because the

plaintiff has sustained a loss, the plaintiff is

entitled to compensation in respect of that loss

and, accordingly, there ought to be interest award

in so far as the plaintiff is kept out of receipt

of that compensation?

MR MILLER: That is the contrary view, Your Honour, but it

begs the question, what is the nature of the loss?

And, critical to the determination of this

application, is what is the nature of loss?

MASON CJ:  Is that not established by the decisions of this

Court? It is a loss of capacity to look after

one's self.

MR MILLER: Exactly, but the decisions of this Court have

not pinpointed whether or not it is such a loss

that could be equated with actually expended money,

or a loss which has incurred liability carrying

interest.	The Court has been silent on it.	This
is the thrust of this appeal.	It is unique in the

realm of damages because of the fiction, really,

that damages are awarded for gratuitous services

ignoring the fact that the services were rendered

gratuitously, that the problem arises.

DEANE J: But is there a legal answer to it, or is it the

answer what accords best with general

considerations of justice?

MR MILLER:  The Full Court adopted the latter. They took

the view there is nothing in principle, no reason

why the defendant should benefit by not paying

interest. But that begs the question of what

really is the loss? The New South Wales courts

have had no doubt about it. They have taken the

Newman 4 27/8/93

view that because it is something of an enigma and

the damages are awarded, notwithstanding that the

services were gratuitously given, then it would be

wrong, in principle, to award interest upon them.

That is the argument which the applicant puts

and it is a very important point, Your Honours,

because although the amount of money involved

ultimately, in this appeal, was not great, one only

has to think of the number of cases and the number

of Australian States where these actions still lie,

to appreciate that an enormous sum of money is

involved in the resolution of the question.

That is the issue: why should defendants pay

interest upon awards for past gratuitous services

when they have not expended moneys and they have

not a liability which has carried interest, and

they are benefitting, for reasons of public policy,

from an award of damages which ignores the fact

that the services were rendered gratuitously. So

propounded, Your Honours, an award of interest, in

our respectful submission, is quite wrong, in

principle. And that is the way it has been seen in

New South Wales in the various cases which have

been cited in the outline of argument.

MASON CJ: But is not the New South Wales way of looking at

this erroneous? If you look, for example, at the

judgment of Justice Hutley in the New South Wales

case of Settree v Roberts, which I think is one of

the authorities that originated this view in New

South Wales, it is treated as a claim for:

interest on the value of the mother's past

voluntary services. The respondent had not

paid his mother anything.

This is at page 654 of (1982) 1 NSWR. That strikes me as being an erroneous way of looking at it. You ought to be looking at the fundamental proposition

that it is compensation awarded for loss. Then, of

course, if the plaintiff does not receive that

compensation when he should receive it, he is kept

out of the compensation and he is entitled to

interest.

MR MILLER: First of all, Your Honour, may I respectfully

submit that Mr Justice Hutley's view is not the

strongest of the views which have been expressed in

New South Wales on this.

MASON CJ: Which is the strongest?

MR MILLER:  Mr Justice Mahoney, in my respectful submission,

puts the matter much better. The passage is

Newman 27/8/93

referred to in the outline of argument at

paragraph 7 in Burnicle v Cutelli.

MASON CJ: Is that in this bundle of authorities?

MR MILLER:  Yes, it is, Your Honours. That case is No 3 on

the list and should be accordingly indexed.

Mr Justice Mahoney's judgment is at page 37 of that judgment:

In my opinion, damages to be awarded to a

plaintiff injured by negligence remain

compensatory, ie, they are awarded for loss

actually (whether immediately or

prospectively) suffered by the plaintiff.	The
Griffiths v Kerkemeyer principle is, in the

sense and to the extent I there discussed, an

exception to the traditional basis for award

of damages.

I have already cited this:

It proceeds on the basis that the injury has

established in the plaintiff a need for

services. The actual detriment suffered by

the plaintiff as the result of that injury

will, in fact, be less than otherwise it would

have been because the services necessary to

satisfy that need have been supplied

gratuitously by a third party. It requires

that, in assessing the plaintiff's damages,

the fact that the services were rendered be

accepted but that the fact that they were

rendered gratuitously be ignored. This it

does by reason of the public policy to which

the court referred in Griffiths v Kerkemeyer.

His Honour then goes to the heart of the

nature of an award for damages for gratuitous

services. Mr Justice Hutley did rather compare

such an award with an award for special damages,

which, as the Court has since made clear, it
certainly is not.	But once one sees it in the way

that Mr Justice Mahoney has put it, with which we

respectfully agree, then it is difficult to see, in

principle, why interest should be awarded, because

interest traditionally is only awarded upon moneys

expended or liability which has carried interest.

It is interesting that Mr Justice Kirby in the Federal Court in Hodges v Frost, which is No 5 on

the list of authorities, accepted that it was now

beyond doubt that this was so. In Hodges v Frost,

Your Honours, at pages 381 to 382 - at the foot of

381, Mr Justice Kirby put it this way, under

paragraph No (7):

Newman 6 27/8/93

It now seems clear that interest is not

payable on the component of the verdict

calculated under this head of damages.

Glass JA has explained this rule on the ground

that the plaintiff, not being out of pocket,

cannot claim interest any more than he could

claim such interest on unpaid medical

accounts:  see . .... Burnicle v Cutelli .... . and

Settree v Roberts.

Your Honours, in logic, that, with respect,

seems to be the inevitable position. May I

rhetorically ask, ttWhy should the defendant pay

interest upon an award for damages for past

gratuitous services when no moneys have ever been

expended, no liability carrying interest has ever

been incurred?" It is a very simple and very

precise point and it is on that point that the

applicant asks the Court to grant special leave in

order that it may be resolved because of the

importance that it has in the assessment of damages

in this area generally.

DEANE J: Is there anything, Mr Miller, that says whether he

can claim interest on unpaid medical accounts when
the medical practitioner charges interest on unpaid

accounts?

MR MILLER:  I know of no authority, but one would assume

then that the Court would take the view that that

was a liability carrying interest. Interest is not

normally paid on unpaid medical accounts.

DEANE J: It is a distinction, though, is it not?

MR MILLER: Yes, it is, but one would think - - -

DEANE J: But not one that necessarily helps you.

MR MILLER:  I do not think, with respect, Your Honour, that

it affects our case at all. It is a separate

question and has quite different considerations.

DEANE J: What if one directed the question whether the

reasonable allowance for the gratuitous

circumstances was their contemporaneous value and

an interest component between the time rendered and

the time when value was being assessed, it would

move you into a slightly different area of

discourse.

MR MILLER: Well, Your Honours, our submission would be

that - one must divide this very clearly. If

gratuitous services are paid, and often they are,

and of some of these cases, indeed, it is clear

that they have been and that is why interest has

been awarded, one can readily understand why

Newman 27/8/93

interest would be awarded. Where the gratuitous

services are being assessed in value by the Court

by reference to something which is the notional commercial value of those services, it makes an

entirely different consideration. That is what the

Court in Van Gervan was saying, that this component

of an award has nothing to do with special damages,

and once seen that way, Your Honour, it is my

submission that the question of interest - it

becomes quite remarkable to think that interest

should be paid upon it.

GAUDRON J: Is not one of the difficulties this, Mr Miller?

One's notionally ascribing the value of services at

their market price - assuming that to be applicable

values as at the time of the verdict, you are, in fact, cutting out a component, are you not?

- as the measure of compensation for the loss.

MR MILLER: Cutting out a component, Your Honour, in what

way?

GAUDRON J:  In the sense that you are measuring damages by

reference to a past time, which is not really

applicable if you were measuring general damages?

MR MILLER: That is quite correct, Your Honour, but that is

the problem with damages for gratuitous services.

They may or may not reflect the commercial rate.

The court has a discretion. Normally, as this

Court has said, they will reflect the commercial

rate at the time, but it is still -

GAUDRON J: At the time they were rendered?

MR MILLER: Yes, but it is very much a notional assessment.

Even though the court has regard to what was the

commercial rate at the relevant time, it is

entirely notional. An award is then calculated,

but really, one can not put it better than

Mr Justice Mahoney put it. It is the exception,

and the exceptional nature of such an award which

makes it difficult in principle to see why interest

should be awarded upon it.

Your Honours, there is a conflict of authority in the various States to which reference is made in

paragraph 7 of the outline.

MASON CJ: Yes, we are aware of that, Mr Miller.

DEANE J:  The relevance of that takes one back to the point

you have been dealing with and that is whether,
what is really involved here, is a matter of legal

principle or a matter of assessment of what best serves the interest of justice, because if it is

Newman 27/8/93

the latter, I cannot see any problem in differences

between the States on the interest, when there are

such vast differences between whether you get

anything at all, to start with, and if so, how

much.

MR MILLER: With respect, I agree absolutely with

Your Honour, but the short and sharp point of this

application is, in principle, should interest be

awarded on past gratuitous services? Can it be?

Our argument is, because of the nature of those

gratuitous services, it cannot, in principle, be

justified. That is the submission for the

applicant.

MASON CJ: Yes, thank you, Mr Miller. Justice Gaudron and I

take the view that the proposed appeal has

insufficient prospects of success to justify the

grant of special leave to appeal.

DEANE J:  I would refuse special leave to appeal on the

ground that I do not consider an appeal would raise

any question of principle of sufficient importance

to warrant a grant of special leave. In that

regard, I do not consider that the existence of

differences of opinion between the courts of

different States, in relation to this particular

question, itself justifies a grant of special leave

to appeal.

MASON CJ:  The application is therefore refused.

AT 12.19 PM THE MATTER WAS ADJOURNED SINE DIE

Newman 9 27/8/93