Southern Health Service v Smith

The appeal concerned the assessment of damages awarded to the respondent, Mr. Smith, in proceedings against Southern Health Service. The dispute centred on specific components of the damages award, including future economic loss in Australia and the USA, past economic loss in the USA, and interest on past economic loss. The primary judge had awarded a total of $595,456.48 in damages, with the appellants challenging the calculations for certain economic loss components.

The court was required to determine whether the primary judge erred in calculating future economic loss, particularly concerning the allowance for vicissitudes of life and the deduction of necessary expenses. Specifically, the court had to consider whether the primary judge had adequately accounted for the conventional 15% deduction for vicissitudes in relation to future economic loss in Australia, and whether the calculation of future economic loss in the USA had properly deducted expenses necessary to earn that income. The court also had to assess whether the primary judge's assessment of the respondent's future earning capacity, particularly in the USA, was supported by evidence and whether there was an inconsistency in the judge's findings regarding the duration of the respondent's potential working life.

The court found that the primary judge's judgment was fundamentally flawed, particularly in the calculation of damages. The appellants argued that the primary judge failed to deduct a conventional 15% for vicissitudes from the future economic loss in Australia, and that the calculation of future economic loss in the USA did not adequately account for expenses. The respondent contended that the multiplier used for Australian future economic loss was appropriate given his intention to work until an advanced age, and that the calculation for USA economic loss was reasonable. However, the court identified an irreconcilable inconsistency between the primary judge's view on the respondent's likely continued work at Vail and the duration implied by the multiplier used for Australian economic loss.

Consequently, the court upheld the appeal, set aside the verdict and judgment of the primary judge, and ordered a new trial limited to the assessment of damages. The costs of the appeal were awarded to the appellant, with the costs of the first trial to abide the outcome of the retrial.