NSW Insurance Ministerial Corporation (formerly Government Insurance Office of New South Wales) v Rosniak

[1993] HCATrans 28

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IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Sydney No S98 of 1992

B e t w e e n -

NSW INSURANCE MINISTERIAL

CORPORATION (formerly

GOVERNMENT INSURANCE OFFICE OF

NEW SOUTH WALES)

Applicant

and

LEAH SHEREE ROSNIA.K, by her

Tutor, JOHN ROSNIA.K

Respondent

Application for special leave

to appeal

MASON CJ
TOOHEY J

MCHUGH J

Insurance 1 12/2/93

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 12 FEBRUARY 1993, AT 11.22 AM

Copyright in the High Court of Australia

MR H.D. SPERLING, QC: If the Court please, I appear with my

learned friend, MR K. CONNOR, for the applicant.

(instructed by G.M. Meadows, Solicitor for the New

South Wales Insurance Ministerial Corporation)

MR T.D. KELLY:  I appear for the respondent, if the Court

pleases. (of T.D. Kelly & Co)

MR SPERLING:  Your Honours, could I hand up a document which

outlines the questions that we would rely upon as

supporting the application for special leave?

MASON CJ: Yes.

MR SPERLING:  We have tabulated or set out in a table a summary of the result in the Court of Appeal: if I

could hand that up, Your Honours. Could I ask the

Court to glance through that?

MASON CJ: Yes.

McHUGH J:  What do you mean by "His approach" in column 3,

row 3, opposite "Meagher JA", under the heading

"Cost of Fund management"?

MR SPERLING: His Honour Mr Justice Meagher proposed an

approach to that issue.

The Court will perceive that this table is

designed to support the first of the points in the

first document that I handed up which relates to

the question of how inconsistency between proposed
orders should be resolved where there is no

majority, and Your Honours will see from the table

that there were three aspects of the case on which

there were differing opinions. In the first

column, "The Assessment of Future Losses", which

became ground 5 which my learned friend sought to

add to his notice of cross appeal and which

ultimately resulted in the court's order for a new

trial, secured the results that one sees in the

first column, the President holding that he would

give leave to amend and granting a new trial.

Mr Justice Mahoney saying nothing on the subject at

all, notwithstanding that the court had reserved

for consideration whether leave to proceed on that

ground should be granted. But His Honour

Mr Justice Mahoney's silence would indicate that he

was of the opinion either that leave should not be
granted or that the cross appeal for a new trial

should be refused substantively. His Honour

Mr Justice Meagher was of the opinion that leave to

proceed on that ground should be refused.

Insurance 2 12/2/93

So, the plaintiff in the proceedings in the

Court of Appeal secured the opinion of only one

judge in her favour on this issue, and that was

Mr Justice Kirby, and notwithstanding that, an

order in favour of the plaintiff for a new trial

was made.

Then, in relation to the assessment of damages

for the ''Cost of Fund Management, there a

more - - -

TOOHEY J: Sorry, Mr Sperling, just before you leave that

first aspect of ground 5, I appreciate what you say

in regard to the different approaches of the three

judges. When the matter was the subject of further

argument and further judgment, was the question of

ground 5 explored by anyone other than the

President?

MR SPERLING: It was not explored in the judgments of

Their Honours.

TOOHEY J: Well, it is referred to, I think, in the second

judgment of the President.

MR SPERLING: Yes, it is, Your Honour, and that was

consequent upon agitation of the question when the

matter came back to the Court of Appeal, at which

time we made the submission that the difference of
opinion between Their Honours should be resolved in

the way that we now contend for rather than the way

in which it was done.

TOOHEY J: Yes. I was rather focusing on ground 5 itself

and the history of ground 5. Because you made the

point that it was only the President who, in

effect, directed his - well, two members of the

court directed their minds to ground 5: one

expressly giving leave to amend; the other

expressly refusing.	Now, in the further argument
that took place, to what extent was leave to amend

canvassed?

MR SPERLING:  We made a submission when the matter went back

to the Court of Appeal that His Honour

Mr Justice Mahoney should pronounce upon that issue

and His Honour's response in argument was that that

was unnecessary.

MASON CJ:  Did he say why it was unnecessary?

MR SPERLING:  No, Your Honour. I should perhaps let

Your Honour have a reference to the transcript.	I
am afraid we have not got this in the materials,

and we only have one copy in Court, but if it would

be of assistance to the Court, I would be please to

Insurance 3 12/2/93

hand this up. It is a very short passage at page 4

of the transcript.

MASON CJ: Well, perhaps you could read it out.

MR SPERLING:  Yes, I could do that, Your Honour. I made

this submission:

Mr Justice Kirby came to the opinion -

my submission is somewhat longer than His Honour's

answer but I need to read it -

there should be a retrial. He did so on the

basis of a view that the amount of damages

were shown to have been inadequate because

there was evidence that the verdict would run

out in nine years. That finding, if I might

put it that way, was also made by

Mr Justice Meagher. There was a difference of

opinion between those two judges as to what

should be the consequence.

Mr Justice Kirby took the view that in

consequence of that there should be a retrial

of the damages. Mr Justice Meagher did not

come to that view because Mr Justice Kirby

took the view that there should be leave to

add the ground raising the question of a

retrial whereas Mr Justice Meagher took the

view that there should not be leave to add

that ground.

The question arose on 18 June at the last

oral hearing of the appeal on which occasion
the court reserved the question as to whether

the respondent should have leave to add the

relevant ground, which was ground 5. On that

reserved question of whether there should be

such leave, as I have indicated,

Mr Justice Kirby said there should;

Mr Justice Meagher said there should not and, with respect, Your Honour Mr Justice Mahoney

does not appear to have decided that question.

And His Honour said:

I do not have to because my judgment went the

other way.

Now, if anything is to be read into that - and

we do say that probably there is - it is that

His Honour took the view that by promulgating a

result inconsistent with a retrial, namely, a

result by way of reassessment of damages which he

himself embarked upon, that he was refusing the

plaintiff on that issue, whether on the leave

Insurance 4 12/2/93

aspect or whether on substantive grounds does not

appear, but he certainly took the view that any

such result was inconsistent with the position he

took.

TOOHEY J: Yes, I understand.

MR SPERLING:  And that is why we have said in our document

"semble". "Mr Justice Mahoney held that the

respondent was not entitled to succeed on this

ground because leave should be refused or

substantively", and we do not know which.

Then on the question of the cost of fund

management, which is our next column, we have a

more conventional or more familiar situation where

there is just an ordinary difference of opinion

with Mr Justice Meagher promulgating a method of

dealing with that aspect of the case, in which

Mr Justice Kirby agreed, and a different method of

dealing with it by Mr Justice Mahoney, which would

have had a somewhat different effect on the

arithmetic.

Then so far as components of the fund to be managed were concerned, which was a necessary

starting point in the assessment of damages for the

cost of fund management, again, there was agreement

between Mr Justice Kirby and Mr Justice Meagher,

with Mr Justice Mahoney taking a slightly different

approach. So that it is in that situation that we

make the observations that are recorded on page 2

of the document, that the respondent had failed to

secure a majority in favour of a new trial in

relation to the assessment of future losses, only

Mr Justice Kirby proposing that course, the

majority of the court agreeing on everything else,

and our submission that the orders proposed by

Mr Justice Meagher should have been made by the

court in order to resolve the inconsistency.

Now, a little more material, if I may, in

illuminating what happened and the reasons for why

it happened. At application book page 151, if I

may, at line 16, His Honour Mr Justice Kirby refers

to the manner in which the result came about.

Could I just ask the Court to be good enough to

read from the middle of page 151 down to the bottom

of the page?

Mr Justice Kirby elaborated on what had

occurred by way of justifying the approach when the

matter came back before the Court of Appeal in his

judgment on that later occasion, and that appears

at page 154 of the application book, at line 10.

Could I impose on the Court to read that section of

Insurance 5 12/2/93

the judgment, through to line 20 on page 155; that

is down to the next heading.

MASON CJ:	Yes.
MR SPERLING:	Now, our complaint, if I might put it that

way, with respect, is that His Honour

Mr Justice Mahoney was, we would say, obliged to
give a decision on the leave question because it

was a separate procedural matter that the court had

reserved for decision, and that would then have

produced a situation in which one knew by a

majority, Mr Justice Kirby having decided one way

and Mr Justice Meagher having decided the other

whether leave was to be given to pursue this point

at all. But moving on from that point, assuming

that the position stood as it was so that one did
not know whether Mr Justice Mahoney was against the

plaintiff on leave or substantively, we say that

the correct result is that the court should have

refused a new trial because the plaintiff had

failed to obtain a majority on that issue and

should have reassessed the damages itself in

accordance with the opinion of Mr Justice Kirby and

Mr Justice Meagher. That would have been to

reflect what has been called in recent cases,

reflecting the highest common denominator, rather

than what has been called the convention of the

most junior judge deferring to the most senior.

Now, could I come to deal briefly, if I may,

with the asserted convention which, if given leave,

we would wish to argue on appeal is very much a

minority view and one which should not be followed.

The Court will bear in mind that in this connection

the question is a recurring problem and the

situation has arisen where there is a difference of

opinion as to what should be done, certainly, in

the Supreme Court of New South Wales.

MASON CJ: But presumably this convention only applies where

the members of the court come to the conclusion
there is no other means of satisfactorily resolving

the difference of opinion.

MR SPERLING:	Your Honour, that assumption should not be made, with respect, because in this case there was,
and it would seem that the proponents of the
convention do not make that qualification.
TOOHEY J:	The picture becomes more clouded, I think,

Mr Sperling, if you look at what Mr Justice Mahoney

said on the second occasion, on page 163, when he

says:

As I understand the judgment of Kirby P

in which he concluded that there should be a

Insurance 6 12/2/93

retrial, the President would have concluded

that there should be a retrial even if the

suggested error or errors had not been made.

Now, I take it, that is a reference to the

Todorovic v Waller point on which, according to the

President, the matter should go back, in any event,

for argument? Orders Mr Justice Mahoney and then

something else.

MR KELLY:	I think, Your Honour, the error referred to is that in relation to the actuary's evidence as to
whether the fund would run out in nine years or
28 years.

MR SPERLING: Yes. It is the error of the court on the

previous occasion to which His Honour refers.

TOOHEY J:  But that is not quite what I am putting to you.

Mr Justice Mahoney says:

the President would have concluded that there

should be a retrial even if the suggested

error or errors had not been made.

MR SPERLING:  Yes. I think all His Honour means is that on

the view of the evidence that the court had
previously formed, Mr Justice Kirby was of the

opinion that there should be a retrial.

TOOHEY J: Because of his misunderstanding as to the period

over which the fund might be depleted?

MR SPERLING: Certainly on evidence which included that

misunderstanding.

TOOHEY J: Yes, I see.

MR SPERLING:  Then we came back and said, "It's not that

many years, it's that many years", and His Honour

Mr Justice Kirby said, "Well, that doesn't make any
difference to my opinion.	Even on the correct view

of that piece of the evidence, I'm still of the

opinion", he said, "that there should be a

retrial", and Mr Justice Mahoney is doing no more

than recording that mental process on the part of

His Honour Mr Justice Kirby.

TOOHEY J: So, on the second occasion, Mr Justice Mahoney

does not direct his attention to whether or not the

cross appeal should be amended to take in - - -

MR SPERLING: Precisely. Exactly. That, we would say, is

the position.

Now, we have summarized such cases as we have

been able to find on this so-called convention, and

Insurance 7 12/2/93

if I could hand up a document which summarizes

them. Now, we have also put the cases into folders

but we do not believe it will be necessary for the

Court to actually look at the decisions but if I

could hand up the folders as well so that in the
event the Court wishes to look at the authorities,

they are there. I wonder if I could ask the Court

to read over that summary?

MASON CJ: It seems that this is an area of law that has

been highly developed in Australia, particularly in

New South Wales in recent years.

MR SPERLING:  Yes.

MASON CJ: Is there no accompanying development elsewhere?

MR SPERLING: No, we have found none. There is an early

South Australian decision that we have referred to.

MASON CJ: Yes, 1914.

MR SPERLING: Yes, and we have found nothing elsewhere and

we are in the dark as to how other States deal with

the question. Perhaps there is more unanimity on

benches in other States.	I do not know if that is
so.

MASON CJ:  I think that may be so, actually. But what I was

going to say to you:  in the case of a difference

that cannot be resolved by members of the court

amongst themselves, what alternatives are there to

this convention?

MR SPERLING: Either the withdrawal of the judgment or the

deferring of one judge in favour of another based

on what will produce the result that does least

violence to the view of any of them.

MASON CJ: But you take it, in a case like this, that there

is no willingness to withdraw, there is no

willingness to defer; what are you left with?

MR SPERLING: Hopefully, a pronouncement by this Court that

the court is obliged to enter upon that

consideration.

MASON CJ: Enter upon a consideration as to - - -

MR SPERLING:  What orders the court should make, as a body,

that will do least violence to the view of any

member of the court or that will best reflect the

majority view where there is a majority view in

principle on some issue of importance in the case.

McHUGH J: But that seems to indicate some misunderstanding

and if you can hammer out an order, then you hammer

Insurance 12/2/93

the order out.	It is only when you cannot get an
order.

MR SPERLING: That situation has arisen many times and many

times a solution has been found which does least

violence and is most consistent with the varying opinions of the court and which does not involve

anything so arbitrary as the most junior judge

deferring to the most senior which yields a

situation such as occurred in this case where, on a

matter of such importance, namely, that there
should be a retrial, the plaintiff secures that
result with the opinion of only one judge,

notwithstanding that two of Their Honours were

against it and also a majority of Their Honours

were in favour of a different specific outcome.

MASON CJ: But is not the inference to be drawn here, at

least from the judgments, that Their Honours did

give serious consideration to endeavouring to

formulate some order that would truly give effect

to a majority view or something that approached a

majority view, and were unable to do so?

MR SPERLING: No, Your Honour. There is a passage in

His Honour Mr Justice Kirby's judgment which

Your Honours have read which indicates that

Their Honours consulted when they realized there

was a disagreement. That would appear to have been

consultation to see whether there could not be some

persuasion to a different view, to a different

opinion, on some one or more of the issues in the

case.

It is not suggested for a moment by His Honour

Mr Justice Kirby's judgment that there was any consultation with a view to formulating orders

which would best reflect and be least inconsistent

with the different opinions - - -

MASON CJ: But you cannot really draw a distinction between

the two, can you? Any collegiate court, confronted

with a difficulty in terms of divergence in result
following the delivery of three different reasons
for judgment, automatically gives consideration to
the formulation of an order but in conjunction with
the possibility that there can be some

qualification expressed by a member of the court of

a view expressed in the reasons for judgment.	The
two are just not distinct and separate matters.

MR SPERLING:  We would say, with respect, they are quite

distinct and separate matters. That, on the one

hand -

MASON CJ:  As a matter of practicality, they are not.

Insurance 9 12/2/93

MR SPERLING: 

Your Honour, of course, has the experience,

but may I submit, with respect, that that is not
so.

MASON CJ: Let me say the High Court has had vast experience

in the matter, Mr Sperling.

MR SPERLING:	Of course, but may I submit, with respect, there is an important distinction to be made and
that is you may have a situation in which, say,
three judges, on a variety of issues, come to
various individual opinions on those issues and
each separately, as a result of their opinions, proposes the orders, and let us assume, the only
orders which will reflect for each of them the opinions that they have formed.

Now, obviously, there is room for consultation

about their opinions that have led to those

inconsistent orders and following consultation, an

opinion may be changed in which case the orders

that that judge would propose in accordance with

his changed opinion will change. That is one

situation. That is the usual situation, if I may

say so, with respect.

What we are talking about here is a situation

where, following consultation, no judge is able to
change his opinion and therefore no judge is able

to change the orders which he proposes as a

necessary consequence of opinions that he still

holds. Now, it is that second situation that we

are confronted with here. In that second

situation, a totally different exercise is now to

be performed and it is with a view to obtaining a

result, and there are a number of things that can

be done. In some of these cases, a judge has

withdrawn his judgment, which leaves a clear

majority in favour of something. For example,

where the court is equally divided that has

occurred.

On other occasions, a judge has deferred to

another, notwithstanding that what he is then doing is concurring in orders which are inconsistent with his own opinions, and that has occurred. It has

occurred on what I might call a rational basis,

looking for the result which is most consistent

with the range of views that have been expressed,

and it has occurred on what I might call, with

respect, an irrational basis by an arbitrary

deferring of the most junior judge to the opinion

of the most senior.

Now, what we say is that this Court would

perceive this to be an important matter in the

administration of justice; would consider that it

Insurance 10 12/2/93

is appropriate that it should embark upon an

inquiry as to what is the appropriate course in

such a case, and what we seek to do at this stage

is merely to show that this is a serious question

that should be considered because when one looks through these cases that we have summarized, one

sees that there is a paucity of support for what is

called the convention of the most junior judge

deferring to the most senior.

One should also be alert to what I have to

say, with respect, are a couple of slips by

His Honour Mr Justice Kirby in citing some of these

cases as supporting a convention that the most

junior judge should defer to the most senior.

His Honour, for example, cites Sharman v Evans as

an illustration of that. He cites Pennant Hills

Restaurant as an illustration of that, and he cites

Kovac v Kovac as an illustration of that and in

none of those cases did the most junior judge defer

to the most senior. In all of those cases there

was a course taken inconsistent with the opinion of

a particular judge but he took that course in order

to secure a result which would best reflect the

majority view of the court in principle.

McHUGH J: But if you did that in every case, you would get

some results which are quite different from what

has occurred hitherto. Take a case like Verwayen.

There was a substantial majority against Verwayen

on every point in the case but Verwayen succeeded.

On your argument, Verwayen should have failed.

MR SPERLING: That sort of implication, of course, has to be

taken into account, Your Honour. I do not suggest

there are not countervailing considerations. There

are. But it is a matter which needs to be

resolved, particularly since there have now been a

series of cases, which we refer under point (12)

here in which the New South Wales Court of Appeal

has adopted the practice of looking for a solution

of the highest common denominator and now we find a
decision cropping up in the course of those where a

different approach is taken. So, there is an

inconsistency of approach that is being taken.

MASON CJ: If we granted special leave limited to this

point, what order would you be seeking that this

Court should make?

MR SPERLING: If special leave were granted in accordance

with this point, we would say that this Court would

perceive that the appropriate orders to make in

consequence of resolving this point would be that

the order for a new trial should have been refused

and that there should be judgment for the plaintiff

in accordance with the assessment of damages made

Insurance 11 12/2/93

by His Honour Mr Justice Meagher, in which

His Honour Mr Justice Kirby concurred but for the

rider that the latter judge thought there should be

a new trial instead of that. So, it is a very easy

path, we would suggest, to orders that best reflect
the range of opinions in the court if it were
resolved in our favour that that was the

appropriate objective.

So, I think in answer to Your Honour, it is

competent to deal with the question alone with

product, if that should be the Court's opinion.

TOOHEY J: Except that would leave you saddled with a

judgment adverse to your approach on the question

of the cost of fund management.

MR SPERLING: It would.

TOOHEY J:	But you would be content with that?
MR SPERLING:	No, I would not be content and, indeed, I

would press the Court for leave on that issue also,

Your Honour. But what I was asked was, "What would

happen if leave were granted only on the narrow

point?", and my indication is that that would be

productive.

TOOHEY J: It would shut out the question of Todorovic v

Waller.

McHUGH J: It would also shut out the Van Gervan v Fenton

point.

MR SPERLING: Yes, certainly. When I say it would be

productive, I do not mean that it would be

preferable. I just mean that if the Court were to

allow leave on that isolated point, there would be

sense in doing that if the Court were against me on

the others. But I do wish to press for leave on

the others, if I might go to the other points.

MASON CJ:  It may not be so much a matter of general

principle, Mr Sperling, but according to your

contention, a matter of irregularity in this case.

MR SPERLING: Yes. Well, it may be, in which case it is

none the less a matter that we would say this Court

should correct because it is the only way - - -

MASON CJ:	I am not at the moment suggesting otherwise.
MR SPERLING:	What Your Honour says may be right.

TOOHEY J: Particularly, given the attention that you direct

to the approach to ground 5 and the fact that only

Insurance 12 12/2/93

one of the members of the court expressly granted

leave to add that ground.

MR SPERLING: Yes. Could I move then to the next point I

would wish to deal with in the first outline

document that I handed up, that is, what appears as

(iii) in the first outline document which was

whether a new trial should have been ordered. We

say there was a wrong exercise of discretion on the part of the court in ordering a retrial which would

not ordinarily be a special leave point. But the

circumstances which came about and the reasons for

the new trial do give rise to considerations which

we say qualify this for consideration as a reason

for granting special leave.

Could I hand up a note in relation to this

aspect?

MASON CJ: Yes.

MR SPERLING: 

The main point on this aspect of the case is

that apart from the adjustments which were proposed
by Mr Justice Meagher and which Mr Justice Kirby

agreed with but for his thoughts about retrial,

there was no error in the verdict.  It is common

ground that the verdict was, in particular in
relation to future losses, assessed in conformity

with the principles in Todorovic v Waller.

Now, that being so, to order a new trial with particular regard to the assessment of damages for future losses, notwithstanding the absence of error

was, in our submission, a miscarriage of discretion

and involved Mr Justice Kirby's proposed order,
which became the order of the court, carrying with
it an implication inconsistent with the authority
of this Court and, for the reasons we have given,

we say that is an aspect on which we can rely for

the purpose of this application.

Lastly, there is what is (ii) on our first

document which is the assessment of damages for the

cost of the fund management which has two aspects,

that is, the future cost and whether there should

be a set off for the ordinary cost of fund

management. And this is the last outline document,

if I might hand that up.

MASON CJ: Thank you.

MR SPERLING:  Now, as far as paragraph 1 is concerned, the

Court has an affidavit by Ms Gray which shows these

figures resulting from her inquiries. We have

checked on the legislation in other States and we

do find that the legislation elsewhere does contain

similar provisions relating to the fee being a

Insurance 13 12/2/93

factor of income. So that this decision would be

relevant to other States as well as New South

Wales.

Could I just hand up our summary of that legislation just by way of assurance to the Court

that we have done our homework on that. We have

the legislation here but I do not think I need to burden the Court with it. I do not believe there is anything I need to add to the way in which the

argument has been put in relation to future cost on

pages 1 and 2 of this document except for this,

that where, on page 2 in paragraph (d), we show
that by substituting, say, 10 per cent for

His Honour Mr Justice Meagher's starting point of a

15 per cent return on investment for the life of
the fund, one ends up with a rate of return of
3 per cent, effectively, for the purpose of the

application of a formula along the lines of

Mr Justice Meagher's proposal. That would produce

a figure for the cost of fund management in the

order of $30,000 which is roughly what we contend

for in this case, as compared with a figure of some

$80,000-odd which is produced under the application

of Mr Justice Meagher's formula which begins with

15 per cent, which we say is quite unrealistic.

As far as the set off is concerned, I believe

that what we want to say is sufficiently recorded

in the document.	Those are our submissions, if the
Court pleases.

MASON CJ: Yes, thank you, Mr Sperling. Yes, Mr Kelly?

MR KELLY:  Your Honours, the respondent opposes this

application and says that this is not the suitable

vehicle for a special leave application. The order

that is appealed from is not an order finally

determining the rights of the parties but merely an

order for a retrial.

If one goes to the affidavit of

Mary Anne Grieve, sworn 9 February 1993,

paragraph 2 of that affidavit: that retrial is
presently scheduled to commence before His Honour

Mr Justice Badgery-Parker on 3 May next. Were that

retrial to be aborted, in my submission, the

respondent, who is a brain-damaged young woman now

of 21 years of age and a ward of the Protective

Commissioner of the Supreme Court of this State,

would suffer or may suffer the irremediable

prejudice of being deprived of the argument that by

virtue of this Court's subsequent decision in Van

Gervan, her allowance for future care should be

assessed in relation to its commercial cost rather

than, as discounted by His Honour the trial judge,

on the basis of Kovac.

Insurance 14 12/2/93

This is dealt with in paragraphs 3 and 4 of

that affidavit, if I can take Your Honours to that

section. It will be seen that in the event that

that submission were to succeed, the respondent may

have those damages reassessed on the figures

obtaining as at the time of trial at an extra

$288,000. In the event that this Court was to make

an order putting an end to that retrial, the

plaintiff will or may well have lost that

opportunity.

We say further that whether one looks at this

on the basis of seniority or the highest common

denominator, which my friend defines as that order
doing the least violence to the view of any of the

members of the court, quite clearly the order made

by the court meets both criteria.

If I could take Your Honours firstly to the

judgment of His Honour the President at pages 93 to

94 of the application book. Beginning at the foot

of page 93:

Obviously, for the reasons suggested by

Meagher JA, this Court could not try the

factual issues which are then joined upon the

enlarged cross-appeal. Upon them, the

appellant would, at trial, be entitled to

test the respondent's fresh evidence in a way

which was not possible before this Court.

And going down to line 18, His Honour bases such

order on the third end of justice, as he describes

it, that a retrial:

will, if need be, afford the respondent the opportunity (if she so chooses) to take any

complaint which she still has about Todorovic

v Waller to the High Court of Australia. That

would not be an opportunity effectively open	to her at present because of the way in which	the first trial was conducted in this regard.
If one then goes to the decision of His Honour

Mr Justice Meagher in the first judgment at

page 136, His Honour was disposed not to allow the

enlargement, going to line 17, on the basis:

that the amount of the fund was calculated in

accordance with the High Court's decision in

Todorovic v Waller -

and, secondly:

that the respondent did not raise the point in

her cross-appeal.

Insurance 15 12/2/93

Initially. Then going down to the foot of that

page, His Honour remarks, however, at line 24:

Nevertheless, what is at least an anomaly, and

at worst a rank injustice, deserves to be

emphasized, so that the High Court may have

the opportunity to reconsider Todorovic v

Waller on a suitable future occasion.

In my submission, His Honour's concurrence

ultimately with the orders proposed by the

President can hardly, in the light of that, be said

to do violence to his views.

If one goes, subsequently, to the second

judgment of His Honour Mr Justice Mahoney at

page 164 of the application book, His Honour, in

the last three lines:

The error or errors, if there be such,

can be taken into account and corrected upon

the retgial.

Accordingly, I agree with the orders

proposed by Kirby P.

That is to say, dimissing the application for

review of the initial order of the court

subsequently made to it by the applicant.

If I could then take Your Honours to just how

this situation has evolved in these proceedings.

If one goes to paragraph 5 of Mrs Grieve's

affidavit, it will be seen there is annexed an
extract from the written submissions of the

applicant to the Court of Appeal in this matter in

which it was urged upon that court that the

administration fees should be calculated on what
are said to be a number of principles, namely, that

the future rate of return on investment will be
10 per cent.	The likely future rate of inflation

will be 5 or 6 per cent, but preferably 6 per cent,

and that current tax scales should be assumed.

In support of those contentions, the applicant called in the Court of Appeal the actuary,

Mr Mccrae, who initially produced a table

indicating that, if one made those assumptions,

then on the initial fund, as discounted on the
3 per cent tables, the respondent would have to
make do with approximately one third of the funding
that His Honour the trial judge intended to give

her and consequentially would be institutionalized

at an earlier date than His Honour the trial judge

considered she should.

Insurance 16 12/2/93

His Honour Mr Justice Meagher then asked

Mr Mccrae to prepare a table, assuming drawings

upon the fund with those postulates that were being

urged upon the court by the applicant, namely,

10 per cent return on the fund, 6 per cent

inflation of the outgoings and the present tax

scales. The table prepared by Mr Mccrae is

exhibit 2 to Mrs Grieve's affidavit and appears at

page 9. That table, as will be seen, indicates

that on that approach and on those postulates urged

upon the court by the applicant, the fund that was

designed to last this respondent 61 years will, in

fact, be wholly exhausted in 28 years.

In response to Mr Mccrae, the respondent before the Court of Appeal recalled the actuary,

Mrs Brennan, who was requested to prepare a table,

assuming the drawings contemplated by His Honour

the trial judge but as inflated and with a return

on the fund urged upon the court as being

reasonable by the applicant in these proceedings.

That table prepared by Mrs Brennan is annexure C to

Mrs Grieve's affidavit at page 18 of that

affidavit. Does Your Honour have annexure C before

you there? That table indicates that on those

postulates urged upon the court by the applicant,

the sum of $1,657,000 is required at the outset for

the fund to last the distance and enable the

drawings contemplated by His Honour the trial
judge, as opposed to the sum of $1,026,000 in fact

provided by His Honour the trial judge in his

verdict by the application of Todorovic.

I would next seek to bring Your Honours to the

transcript of the proceedings before the Court of

Appeal, being annexure 3 to the affidavit of

Mrs Grieve, on pages 10 through to 14. Firstly, on

page 10, line 23, His Honour Mr Justice Meagher, in

reference to exhibit 2, asks of Mr Sperling:

Why can't we travel the verdict?

Given what exhibit 2 disclosed.

MR SPERLING: Because of the decision of the

High Court in Todorovic v Waller which

mandates a different approach and prohibits

this.

If one then goes over the page to page 11,

Mr Sperling:

It works very well in times of low

inflation. It works like this -

indicating table 2 which shows the money running

out in 28 years -

Insurance 17 12/2/93

in times of high inflation. There is nothing
in the Todorovic v Waller formula to

compensate for the tax payable on that part of

the notional income from investment which

relates to the inflation rate. This is the

consequence. Seen another way, it is a

judicially imposed cap on damages.

MEAGHER JA: There is no escape from that?

MASON CJ: Well, there is no need to read all this out,

Mr Kelly.

MR KELLY:  Yes. That is how the matter has evolved in the

Court of Appeal, Your Honour, and that is what has

led to the order for retrial. The respondent seeks

to avail herself of that opportunity and the

additional opportunity that that will give her to

rely upon the subsequent authority of this Court in

Van Gervan.

I submit, in any event, that an order

referring the matter back for a retrial is not an
order finally determining the rights of the parties

and an inappropriate vehicle for a special leave

application.

MASON CJ: Yes, thank you, Mr Kelly. Mr Sperling?

MR SPERLING: First, Your Honour, it is not really anything

like the full picture to say that this order is not

a final result and it is merely an order for a new

trial. If a new trial is permissible in this case,

it would be permissible in many others for the same
reasons and those reasons, we say, are inapposite
and should not be permitted to stand as the reason

for anything to occur.

Not only that, the retrial on the main point

will be futile.	His Honour Mr Justice Kirby's
suggestion that it would provide an opportunity to

test actuarial evidence is, with respect, not right

because whereas such evidence was admissible on the

narrow question of damages for the future cost of

fund management, for reasons which are not now

sufficiently important to mention, it is quite a

different matter to propose that such evidence

would be admissible in order to persuade a trial

judge to take a course inconsistent with the

decision in Todorovic v Waller.

MASON CJ: Yes. Well, you have made that point before. You

made that in-chief.

MR SPERLING: So, the point I now make is that when it goes

back to the trial judge, the intent of His Honour

Mr Justice Kirby will not be achieved.

Insurance 18 12/2/93

Now, as far as the Van Gervan decision is

concerned, the plaintiff suffers no injustice if

the order for a new trial is refused and if the
applicant succeeds in the appeal, having been given

leave, because this plaintiff would then be in no

different position from any other plaintiff who had

suffered a judgment or had been party to a judgment

of the supreme court as at the same date on which

the court gave judgment in this case, the only

difference being that in this case it would have

been established that the Court of Appeal erred,

and that should not be a reason for putting this

plaintiff in a different position from other
plaintiffs in the same category, as a matter of

some broad concept of justice.

The last point I would make is to remind the

Court that everything that was said about the

likely future of this fund, both by way of evidence

and by way of submission in the Court of Appeal,

was said in the light of the evidence that was

given there on the assumptions that were made

there. And, if I might remind the Court that in

our hand-up document to deal with the wrong

exercise of discretion, at the very end of that

document we have done a little calculation which

assumes, in lieu of a 10 per cent return on

investment, a 6 per cent return on investment under current conditions of inflation, which gives a very
different result from the assumptions that were

made in the Court of Appeal.

So that what has been said in relation to that

aspect of the case should be received on the

assumption that there will be ups and downs that

could be expected to level out the effect of

Todorovic v Waller with changing economic

conditions to do with inflation and interest rates.

Those are our submissions, Your Honours.

MASON CJ:  Thank you, Mr Sperling. The Court will give its

decision at 2 pm.

AT 12.27 PM THE MATTER WAS ADJOURNED

UNTIL LATER THE SAME DAY

Insurance	19	12/2/93
UPON RESUMING AT 2.04 PM:

MASON CJ: Having regard to the individual reasons for

judgment delivered by the members of the Court of

Appeal, in particular, those of Mr Justice Meagher

on the second hearing, the Court is of opinion that

it was open to the Court of Appeal to make an order

for a retrial.

In all other respects, the Court is not

persuaded that this case is a suitable vehicle for

the ventilation of any question of general

principle. The application for special leave to

appeal is therefore refused.

MR KELLY:	I request costs.
MASON CJ:	You do not oppose that, Mr Sperling?
MR SPERLING:	No, Your Honour.
MASON CJ:	The application is refused with costs.

AT 2.05 PM THE MATTER WAS ADJOURNED SINE DIE

Insurance 20 12/2/93