State of Tasmania v Wilson
[2000] TASSC 152
•1 November 2000
[2000] TASSC 152
CITATION: State of Tasmania v Wilson [2000] TASSC 152
PARTIES: STATE OF TASMANIA
v
WILSON, John Arthur
TITLE OF COURT: SUPREME COURT OF TASMANIA (FULL COURT)
JURISDICTION: APPELLATE
FILE NO/S: 143/1999
DELIVERED ON: 1 November 2000
DELIVERED AT: Hobart
HEARING DATE: 30 May 2000
JUDGMENT OF: Cox CJ, Crawford and Slicer JJ
CATCHWORDS:
Damages - Measure and remoteness of damages in actions for tort - Measure of damages - Personal injuries - Method of assessment - Diminution of future earning capacity - Whether award of damages was excessive - Factors to be taken into account.
Malec v J C Hutton Pty Ltd (1990) 169 CLR 638; Medlin v State Government Insurance Commission (1994 - 1995) 182 CLR 1, referred to.
Aust Dig Damages [32]
Damages - Measure and remoteness of damages in actions for tort - Measure of damages - Personal injuries - Deductibility of specific benefits and amounts - Pensions and superannuation benefits - Interim disability pension prior to retirement.
Redding v Lee (1982 - 1983) 151 CLR 117, referred to.
State of New South Wales v Davies (1998) 43 NSWLR 182, distinguished.
Aust Dig Damages [52]
REPRESENTATION:
Counsel:
Appellant: T J Ellis
Respondent: A R Mills
Solicitors:
Appellant: Director of Public Prosecutions
Respondent: Piggott Wood & Baker
Judgment Number: [2000] TASSC 152
Number of paragraphs: 62
Serial No 152/2000
File No FCA 143/1999
STATE OF TASMANIA v JOHN ARTHUR WILSON
REASONS FOR JUDGMENT FULL COURT
COX CJ
CRAWFORD J (Dissenting in part)
SLICER J
1 November 2000
Orders of the Court
Appeal allowed.
Judgment dated and entered on 15 December 1999 varied by substituting the sum of $53,640 for the sum of $66,140.
Serial No 152/2000
File No FCA 143/1999
STATE OF TASMANIA v JOHN ARTHUR WILSON
REASONS FOR JUDGMENT FULL COURT
COX CJ
1 November 2000
I have had the benefit of reading the Reasons for Judgment prepared by Slicer J and agree with his reasons and conclusions in respect of all grounds of appeal. In particular I agree that although the award of $50,000 for loss of earning capacity from the time the cause of action accrued was on the high side, it has not been shown to be so high as to manifest appealable error. I wish only to address ground 5, which was expressed in these terms:
"5The learned Trial Judge erred in law in making no reduction in the sum awarded for loss of earning capacity, to take into account the benefits paid to the respondent under the Retirement Benefits Act."
It appears that at first instance the appellant sought to persuade the learned trial judge to take into account in reduction of any award for loss of earning capacity, both past and future, any benefit received by the respondent pursuant to the Retirement Benefits Regulations 1994 ("the Regulations"). His Honour was not asked to differentiate between any of these benefits. However, on the hearing of the appeal, the learned Director of Public Prosecutions, who appeared for the appellant, confined his submission to one that the learned trial judge should have taken into account that part of the interim invalidity pension paid to the respondent in the two year period, 1 January 1996 to 1 January 1998, which represented the appellant's contributions as employer to the payments received by the respondent. In that period, the latter had received $42,000 by way of interim invalidity pension, but it was acknowledged that his contributions were equivalent to 30 per cent of the benefits. Accordingly, the Director of Public Prosecutions argued that $29,400 should have been taken into account. He eschewed any suggestion that the benefits received by way of permanent invalidity pension after January 1998 should be taken into account.
The latter course was clearly right, in my opinion, for the reasons set out by Slicer J. The well-established principle in respect of the recovery of damages was reiterated in Haines v Bendall (1991) 172 CLR 60 at 63, where Mason CJ, Dawson, Toohey and Gaudron JJ said:
"The settled principle governing the assessment of compensatory damages, whether in actions of tort or contract, is that the injured party should receive compensation in a sum which, so far as money can do, will put that party in the same position as he or she would have been in if the contract had been performed or the tort had not been committed: Butler v Egg and Egg Pulp Marketing Board (1966) 114 CLR 185, at p 191; Todorovic v Waller (1981) 150 CLR 402, at p 412; Redding v Lee (1983) 151 CLR 117, at p 133; Johnson v Perez (1988) 166 CLR 351, at pp 355, 386; MBP (SA) Pty Ltd v Gogic (1991) 65 ALJR 203; 98 ALR 193; Livingstone v Rawyards Coal Company (1880) 5 App Cas 25, at p 39; British Transport Commission v Gourley (1956) AC 185, at pp 197, 212. Compensation is the cardinal concept. It is the 'one principle that is absolutely firm, and which must control all else': Skelton v Collins (1966) 115 CLR 94, per Windeyer J at p 128. Cognate with this concept is the rule, described by Lord Reid in Parry v Cleaver (1970) AC 1, at p 13, as universal, that a plaintiff cannot recover more than he or she has lost."
However, exceptions have been recognised in respect of benefits received under policies of insurance (Bradburn v Great Western Railway Company (1874) LR 10 Ex 1) or as gifts from a benevolent third party and some forms of statutory pensions (National Insurance Company of New Zealand v Espagne (1961) 105 CLR 59). The test of what kind of statutory benefit should be taken into account in relief of the tortfeasor was discussed in Redding v Lee: Evans v Muller (1982 - 1983) 151 CLR 117, two appeals heard together, the first relating to invalid pensions payable under the Social Security Act 1947 (Cth) and the second relating to unemployment benefits received under the same Act. At 125, Gibbs CJ said:
"The test suggested is a general one, and it requires the court to consider the nature of the benefit which the defendant seeks to set off against the damages, and to inquire whether the person or body supplying the benefit intended that the plaintiff should enjoy it in addition to whatever damage he might recover from the defendant. In the case of a benefit provided under statutory authority, the intention of the legislature, in providing the benefit, must be gleaned from the statute itself as a matter of interpretation. If the statute expressly provides (as some statutes relating to workers' compensation have done) that a plaintiff who has recovered damages shall repay the amount of the benefit it will be clear that the receipt of the benefit must be disregarded in the assessment. In many cases, however, the statute under which the benefit is provided will give no assistance of this kind. Then it will be necessary to consider closely the nature of the benefit itself. The conclusion that the benefit is intended for the plaintiff personally and not in reduction of the damages may more readily be drawn when it is seen that the receipt of the benefit is not dependent on the loss of wages or earning capacity (I shall refer again to the distinction) for which the plaintiff claims damages (cf Parry v Cleaver (supra), per Lord Wilberforce at 42) and is not intended to replace the lost wages or remedy the loss of earning capacity."
At 138, Mason and Dawson JJ, having referred to the injustice of reducing damages by virtue of the plaintiff's foresight in insuring himself against payments caused by a tortfeasor, said:
"Again, it has been acknowledged that it would be unjust and unreasonable to reduce damages on account of benefits received by the plaintiff resulting from benevolence. Benefits of this kind spring from a desire to assist the plaintiff, not from any wish to relieve against the tortfeasor's liability (Espagne (supra) p 598 ).
A similar comment may be made about pension and superannuation benefits whose purpose is to ameliorate the plaintiff's situation irrespective of his right to recover compensation against the tortfeasor. For this reason no distinction should be drawn between pension and superannuation benefits to which the plaintiff has contributed and those to which he has made no contribution, although there is a stronger reason for refusing to reduce the plaintiff's damages on account of payments which he has himself made, thereby diminishing the assets which he otherwise owns.
Our experience since Espagne enables us now to say that generally speaking the entitlements to, or the conditions for eligibility for, pension and superannuation benefits are so expressed that they do not have regard to the recipient's right to recover compensation from a third party."
In Manser v Spry (1994) 181 CLR 428 at 436, the Court said:
"To ascertain whether a statutory benefit possesses the 'distinguishing characteristic' that it is to be enjoyed independently of, and cumulatively upon, the right to damages, the court must endeavour to discover the intention of the legislature.
There are three possible indicia of a relevant legislative intention: the financial source of the benefit, the presence of a provision which requires a repayment of a statutory benefit out of the damages awarded or paid and the nature of the benefit. If a scheme for provision of a benefit be funded by contributions made by employers and employee-beneficiaries as a kind of insurance against misfortune, the principle in Bradburn v Great Western Railway Co (supra) indicates that the benefit is to be enjoyed by a beneficiary who encounters the misfortune without reduction of the damages to which he or she is otherwise entitled. That view has been taken of benefits paid under contributory pension schemes created under statute."
At 437, the Court said:
"Finally, if all indicia of intent fail, the 'settled principle governing the assessment of compensatory damages' which the majority stated in Haines v Bendall (supra) must be applied."
From these statements of principle it is clear that the benefits of a permanent invalidity pension under the Retirement Benefits Act 1993, which does not contain any provision requiring such a benefit to be taken into account, do bear that distinguishing characteristic that they are to be enjoyed independently of and cumulative upon any right to damages.
However, as Mason and Dawson JJ said in Redding v Lee (supra) at 138 - 139:
"In addition to pension and superannuation benefits and benefits arising from benevolence, all of which may be disregarded provided their purpose is to confer a benefit on the plaintiff irrespective of the plaintiff's right of action against the tortfeasor, it is necessary to identify two other broad categories of benefits, the first of which will in general be disregarded and the second of which will in general have to be brought into account in the assessment of damages.
The first category concerns proceeds from insurance policies, such as those received by the plaintiff in Bradburn (supra). The second category comprises benefits provided to the plaintiff which are a substitute, or partial substitute, for wages. The clearest example of such benefits is provided by the receipt of sick leave payments."
They cited Graham v Baker (1961) 106 CLR 340 and then said:
"Other benefits, though not strictly provided pursuant to the terms and conditions of the plaintiff's employment, may be of such a nature that they should be placed in the same category." (at 139)
In the present case, the interim invalidity pension was not paid on retirement. It was paid pursuant to reg96(2) following a determination of the Board that the respondent was unfit to perform the duties of his position, but was likely to recover sufficiently so as to enable him to perform the duties of his position, or such other position which he might be required to accept and that accordingly he should not be retired on the ground of invalidity. Notwithstanding the grant of the interim invalidity pension, the respondent remained a contributor and was obliged to continue to contribute to the fund as provided by reg30 (reg96(3)). Furthermore, the pension is payable after absence from duty on sick leave without salary for a continuous period of 30 calendar days and is calculated at 75 per cent of the contributor's salary over the past 12 months of employment (reg57(1)). Payment may be suspended if he engages in any business or occupation on his own account or is, in the opinion of the Board, employed (reg57(3)). The permanent invalidity pension differs in that it is payable on retirement through invalidity rather than being dependent on the loss of wages or earning capacity. In New South Wales v Davies (1998) 43 NSWLR 182, the Court of Appeal held that the essential characteristic of the benefits of a permanent pension paid to a police officer was "one based on discharge from the police force for incapacity to discharge the duties of his office" (per Sheller JA at 191). That case is distinguishable from the present, as it was concerned with a permanent pension and not any interim payment while the officer remained in the police force. In fact, he had remained on full pay until his discharge from the force. There was no award for economic loss for that period.
In my opinion, the benefits received by the respondent by reason of the receipt in the two year period January 1996 to January 1998 of an interim invalidity pension ought to have been taken into account because they are a substitute, or partial substitute, for wages. The learned trial judge made an award of $50,000 for diminution of the respondent's earning capacity from the time that the respondent ceased to receive regular salary. It appears he received holiday pay and sick leave with pay and after 30 days of sick leave without pay, received the interim pension in early January 1996. The lump sum of $50,000 was intended to cover the period commencing at the time sick leave without pay commenced and concluding at normal retiring age of 65 years. No differentiation was made between past loss to the time of trial in September 1999 and future loss for some 4½ years until the respondent's 65th birthday. It would not be right to make allowance for the $29,400 paid by way of interim pension by simply deducting it from the $50,000 award. In my view, the proper course is to set off the interim benefit against the sum fairly attributable to the period of 2 years during which it was received. Although we have no precise figure for that period of time, it represents approximately 25 per cent of the total time for which his Honour made allowance for diminution of earning capacity and I would regard approximately $12,500 as damages fairly attributable to the respondent's loss in respect of those two years. I do not overlook the fact that the discount for contingencies, such as premature death, would be higher in respect of prospective loss than that for past loss, but a broad brush approach is appropriate in the circumstances. In my opinion, if the benefits of the interim pension ought to be taken into account, as I have held they should, a reduction of the plaintiff's award by $12,500 would meet the justice of the case. I would so order.
File No FCA 143/1999
STATE OF TASMANIA v JOHN ARTHUR WILSON
REASONS FOR JUDGMENT FULL COURT
CRAWFORD J
1 November 2000
The respondent sued the appellant for damages for personal injuries he suffered on 18 February 1995 when he was an inpatient at the Royal Hobart Hospital. He was admitted for the investigation of a heart problem and was given the drug Anginine by intravenous infusion. Due to either human error or mechanical failure in the system for the administration of the drug, he received a substantial overdose. The appellant admitted liability for the overdose and the judge assessed damages of $66,140, made up of $15,000 for pain and suffering, $50,000 for loss of earning capacity and $1,140 for special damages. The appeal is confined to the assessment of $50,000 for loss of earning capacity. The appellant relied on four grounds of appeal. The first was argued essentially upon the basis that $50,000 was a manifestly excessive sum when regard in particular was had to the learned judge's findings of fact. The second was that there was a failure by the learned judge to give adequate reasons. The third involved an argument that the learned judge adopted a wrong method for assessing damages for loss of earning capacity. The fourth was that the learned judge erred in making no reduction in the sum awarded for loss of earning capacity, taking into account certain benefits paid to the respondent pursuant to the Retirements Benefits Regulations 1994.
The respondent was born on 27 June 1938. At the time of what I will refer to as the overdose incident, on 18 February 1995, he was aged 56. He was a qualified nurse and had held the employment position of Director of Nursing in Mental Health, Southern Region, with the Department of Health, since 1988. In that position, he supervised the delivery of all nursing services throughout the southern region of Tasmania in relation to mental health facilities conducted by the Department. Prior to his hospitalisation in February 1995, he was in reasonable physical health for a man of his age. He had a hearing impairment which required him to wear a hearing aid in his right ear. Surgery on his lower back had not significantly reduced his level of physical activities.
The immediately senior position to that held by the respondent was Program Manager, Mental Health, Southern Region. That position fell vacant until 24 October 1997, when Mr J T Leary was appointed to it. The respondent did not apply for the position. The role of Program Manager included the consideration of changes to the structure of the organisation. Possibly within three days of Mr Leary's appointment, the respondent approached him with an unsolicited written proposal to restructure nursing management. His proposal included the abolition of several positions, including his own position as Director of Nursing. Mr Leary thought it was too early for him to be considering such changes. While the respondent's retirement was canvassed, no decision was made on the restructuring proposal. It was not implemented before the respondent ceased work. Insofar as it related to his position of Director of Nursing, it has, in effect, since been implemented, for the respondent's position has not been filled since the last day on which he worked, 15 February 1995.
It was the respondent's evidence that had his restructuring proposal been implemented, prior to 15 February 1995, he would have taken a redundancy and found other work, initially in non-Government employment. After whatever period might have been specified in his redundancy agreement, he would have returned to Government employment.
The learned trial judge had little difficulty finding that in late 1994 the respondent was under considerable stress arising from his employment as Director of Nursing. He requested a meeting with Mr Leary, which the latter thought was on 22 November 1994. He communicated to Mr Leary that he was distressed and said that he was going to see a doctor. At the suggestion of his general practitioner he saw Dr Isles, a psychiatrist. Dr Isles said that the respondent saw him because he was experiencing stress in his work situation. The respondent felt his concentration was slipping somewhat and his sleep had been disturbed by concerns about conflicts between his ethical approach to his profession and what he was being required to do as an administrator. He described a conflict he was having with another psychiatrist. Dr Isles thought that the respondent's anxiety was the normal anxiety of an executive under pressure and was not a clinical anxiety. Dr Isles discussed stress management ideas with the respondent and also tried to help him see that his moral outlook could be satisfied without the strain he was putting on himself. The consultation occurred on 21 November 1994. Dr Isles saw the respondent again on 7 December 1994, at which time the respondent was feeling a good bit better and was able to cope a lot better.
The learned judge referred to a statement made by the respondent on 29 August 1995, in the course of applying to the Retirement Benefits Fund Board for a benefit on the grounds of invalidity. In it he said that he considered the invalidity related to a meeting he requested in December 1994 with Mr Leary "regarding high levels of stress being experienced at that time". His Honour found that the reference was to the meeting which Mr Leary thought was on 22 November 1994.
From the respondent's approach to Mr Leary with his restructuring proposal in about October 1994, coupled with his concern about work related stress, the learned judge concluded that in late 1994 the respondent was contemplating leaving his employment as Director of Nursing.
On 15 February 1995, the respondent began to suffer a very focused, unremitting central chest pain and was taken by ambulance to the Royal Hobart Hospital and admitted. Stress tests performed the next day indicated a heart problem. Arrangements were made for an angiogram to be performed on 20 February 1995. The medication prescribed for the respondent was Anginine in liquid form by way of an intravenous infusion. On 18 February 1995 a grossly excessive amount of Anginine entered his body. As I have already said, the appellant admitted liability for what occurred. The respondent explained the experience by saying that he thought he was dying. It felt like a vortex had appeared in his mattress and he was being sucked down it. He felt as if he was being drained of all life. He shouted to a nurse, "what are you doing" and the attention of two other nurses was attracted to the room. They disconnected the Anginine drip, which one of them said was in free-flow. The respondent was reassured. His wife said that he appeared absolutely terrified, his eyes standing out of his head and he was as white as a sheet. The Registrar explained to him that as a consequence of the overdose, his blood vessels had been super-dilated. He was told that his body would naturally dispel the drug and his circulation would return to normal, that there was no reason for alarm and all was well. The learned judge found that the respondent was conscious throughout the incident, although he said he was not really compus mentis as he was recovering. His wife stayed with him for several hours until she was satisfied he had recovered and that her presence was no longer needed.
It was found by the learned judge that the respondent quickly recovered from the immediate physical effects of the overdose. They were not a concern to him by the next day, by which time his focus was on the upcoming angiogram which was performed on 20 February 1995 without incident. As a result of it, a decision was made to perform an angioplasty on 22 February. Its performance was not successful. As the procedure was being carried out, a vessel occluded. It was necessary for the respondent to immediately undergo emergency coronary artery by-pass surgery. A triple vessel coronary by-pass graft was performed. The respondent has no recall of what occurred however. His next recollection is of waking in ICU on 25 February. He was shocked and horrified to find that he had undergone open heart surgery. Whilst recovering in hospital, he contracted pneumonia and during the course of a two day period, he suffered from atrial fibrillation. He found it very scary. Whilst in hospital, his sleep was disturbed by dreams. That is a common result of the medication he was taking.
The respondent was discharged from hospital on 2 March 1995 and shortly thereafter undertook a rehabilitation program designed for people who have undergone cardiac surgery. His evidence, supported by his wife, was that he did not fully recover from the physical effects of the surgery for six to eight months. By that time he was able to undertake all his former physical activities. However, he had a number of problems which included difficulty getting comfortable when trying to sleep, bad dreams, breathlessness and panic attacks which he described as a feeling of acute panic and dying.
In his reasons for judgment the learned trial judge conducted a detailed analysis of the evidence for the purpose of determining whether or not, since the surgery, the respondent had been suffering from post traumatic stress disorder or merely an anxiety disorder. His Honour found that the latter was the case. He concluded that the anxiety disorder did not have a unitary cause. Matters referred to by the expert witnesses as contributing to the condition were:
· the pain and fear he suffered in association with his angina attack;
· difficulties he had in obtaining admission to the Royal Hobart Hospital;
· the overdose incident;
· the angiogram;
· the angioplasty;
· the emergency triple by-pass cardiac surgery;
· being told that he had died in the course of the operation;
· atrial fibrillation;
· annoyance he had about the hospital's response to the overdose incident.
It was held by the learned judge that of those matters, the one that had the most prolonged and significant impact on the respondent's physical health was the cardiac surgery. Whilst the impact of the overdose incident on his physical health was of short duration it was a traumatic life‑threatening incident. It was likely that the cardiac surgery and the overdose incident were the major causes of his psychiatric condition. His Honour said that as he was satisfied that the overdose incident was one of the causes of the respondent's condition, the respondent was entitled to damages referable to the same. There being competing causes for the condition, of which the appellant was responsible for one, the evidentiary burden was on the appellant to disentangle the non-tortious causative factors; Watts v Rake (1960) 108 CLR 158 and Purkes v Crittenden (1965) 114 CLR 164.
As a consequence of his anxiety disorder, the respondent suffered from breathlessness, occasional panic attacks, bad dreams and related problems. He suffered from sexual dysfunction involving a loss of libido and sexual function. He had reduced confidence. He was less tolerant and more irritable, emotional and susceptible to stress. He was uncomfortable in crowds and less enthusiastic about socialising, although the learned judge did not regard those problems as significant. Although there was some prospect of the condition settling of its own accord, the learned judge said that the reality was that the symptoms had persisted to varying degrees over a period of about 4½ years, which suggested that they were intractable in which case treatment might alleviate them, but would not cure them.
The learned judge found that prior to the respondent's hospitalisation, he was suffering from employment-related stress sufficient to prompt him to seek medical help and to raise the matter with his immediate superior at work. Quite apart from the overdose incident, a number of his experiences during the course of his hospitalisation, in particular the coronary by-pass surgery, were likely to have had an adverse impact on his psychiatric and psychological state. "On balance, I consider it is probable that even if the overdose incident had not occurred, the plaintiff would have suffered some anxiety and other symptoms as a consequence of the cardiac surgery and related expenses", his Honour said.
Prior to leaving hospital, the respondent told an occupational therapist that he planned to return to his former position as Director of Nursing, subject to making changes to reduce the stress of that work. Following his discharge from hospital, he convalesced at home. He had accumulated sick leave and holiday payment entitlements which he relied on. However, he formed the view that he was not up to returning to his former work. In reaching that view, it seems that he did not seek any medical advice on his capacity for work, or fully explore the treatment options that were available to him. On 29 August 1995 he applied to the Retirement Benefits Fund Board for a benefit based on retirement on the ground of invalidity. The Board referred him to Professor Jones for assessment. Professor Jones was of the opinion, on 21 September 1995, that the respondent was unable to perform duties at or even near those he had previously performed and considered that even if an improvement in his state occurred, allowing him to return to a lower level of nursing, it would probably engender its own problems arising out of the lowering of his status. Professor Jones was of the opinion that at that time the respondent was unable to work at all but it was too early to make an accurate judgment about the future, and he categorised the respondent as having a total and temporary incapacity with the suggestion that the categorisation be reviewed after a year.
Although the respondent regained his physical health following the cardiac surgery, he did not return to his former employment and he has not obtained or sought alternative employment. At the time of his hospitalisation in February 1995, his after tax income was about $37,000 per annum. Following his hospitalisation, he continued to receive payments from his employer in the nature of sick and holiday pay entitlements until about January 1996 or shortly before, when the Retirement Benefits Fund Board granted him an interim invalidity pension, which was equal to 75 per cent of his salary over the previous 12 months period. At that time he was 57 years of age. For the time being he remained an employee and was treated as if he was on sick leave without pay, as a consequence of which he was required to maintain the payment of his contributions to the contributory scheme under the Retirement Benefits Act 1993, into which he had been making contributions in the past. Those contributions were calculated at the rate applicable to the full salary which he would have been receiving if he was still working as Director of Nursing.
The interim invalidity pension continued for two years until January 1998, at which time he was formally retired from his employment on the grounds of ill-health and commenced to receive, from the Retirement Benefits Fund Board, a permanent invalidity pension which entitled him to receive benefits calculated as if he had worked until the age of 65. As a consequence of an election then made by him to convert the lump sum to which he was entitled, he received a pension of approximately $21,500 per annum after tax. If he had remained in his former employment, his after tax income at the time of the trial in September 1999, would have been approximately $41,000 per annum.
The respondent claimed $285,746.65 by way of damages for lost earning capacity. That amount included $140,670.65 for his loss of earnings from January 1996 until the trial in September 1999, the amount being calculated upon the basis of the earnings he would have received from his employment but for his incapacity, after deduction of income tax. No credit for the interim invalidity pension or the permanent invalidity benefit was made. For the period from September 1999 until he attained 65 years of age, on 27 June 2003, he claimed $145,076 upon the basis that at the time of the trial he would have been earning $41,224 per annum or $792.77 per week after tax. However, the particulars of his claim at trial were a little excessive for they represented a claim for loss of earning capacity for four years following the trial instead of three years nine months until his 65th birthday in June 2003. The figure of $145,076 was reached by applying a discount rate of 7 per cent per annum for a period of four years. An appropriate recalculation would reduce the total amount claimed for lost earning capacity to about $280,000 or a little less.
The learned trial judge made the following findings:
"I am satisfied that the plaintiff has not returned to work as a consequence of the anxiety state from which he suffers and for which the overdose incident is a contributing cause. I have, however, formed the view that regardless of whether the overdose incident had occurred, it is unlikely that the plaintiff would have returned to his former employment following his hospitalisation. In reaching this conclusion, I should say that I consider it to be significant that prior to the plaintiff's hospitalisation he was concerned about the stress of his work and was offering himself for a redundancy. I also consider it likely that the symptoms the plaintiff would have suffered from following his hospitalisation, regardless of the overdose incident, would have been sufficient to have enabled him to obtain an invalidity benefit. Having obtained that benefit, it is unlikely that the plaintiff would have sought alternative employment as it would have exposed him to the risk of having his pension suspended or reduced. If my views about this are correct, the plaintiff has suffered no loss of income by reason of the overdose incident. It is, of course, not certain that my prognostications are correct. They relate to hypothetical events which may or may not have occurred, regardless of the overdose incident. It is, of course, possible that the plaintiff would have returned to his former work had the overdose incident not occurred. This is a real possibility which cannot be dismissed as mere speculation. The plaintiff is entitled to compensation for the loss of this possibility. My assessment of this loss is an evaluation which defies precise calculation and it is undesirable that I seek to assess it on the footing of an evaluation expressed as a percentage; Malec v J C Hutton Pty Ltd (1990) 169 CLR 638 at 639 - 640 and 642 - 643."
In assessing damages for loss of earning capacity, the learned judge referred to the following contingencies to which he had regard, that is to say to the question of how long the respondent would have continued in the position of Director of Nursing, whether he would have sought and retained a redundancy payment upon retiring and, if so, how much, and whether he would have obtained other employment if he had retired early. The learned judge said that if the respondent had returned to work, he doubted that he would have continued in the position of Director of Nursing for long and considered that there was a reasonable prospect that he would have resigned upon obtaining a redundancy payout. The evidence about a potential redundancy payout was very meagre.
It was the respondent's evidence that in his circumstances at the time of the trial, it would be incredibly difficult for him to return to work at a lower level in nursing administration. His Honour understood him to mean that he would find it most embarrassing. The learned judge found that to work in other areas of nursing would require the respondent to re-train. Just as those matters operated at the time of trial as a deterrent to him from returning to work, they would have deterred him from doing so had he taken a redundancy payout. The learned judge said that he could not conceive of any way of assessing the respondent's loss of the possibility that he may have returned to work by means of a structured calculation. His Honour purported to make an in globo basis assessment for loss of earning capacity in the sum of $50,000. He refused to take into account the amounts the respondent had received under the Retirement Benefits Act 1993 by way of both interim and permanent invalidity pensions.
It was submitted for the appellant that the learned judge erred by failing to deduct the sum of $29,400 from the amount of the damages assessed for lost earning capacity, that sum being 70 per cent of the total of $42,000 which was paid to the respondent by way of interim invalidity pension between January 1996 and January 1998. Evidence was given by Miss K F Potter, an employee of the Retirement Benefits Fund Board, that in general 70 per cent of pensions are funded by the State and 30 per cent by member contributions. She was not saying that the respondent contributed 30 per cent of the funds required to pay for the interim invalidity pension he received, but that generally speaking it can be said that the source of 30 per cent of what is paid out to pensioners is member contributions and the source of the other 70 per cent is the State.
An entitlement to receive an interim invalidity pension could arise under the Retirement Benefits Regulations 1994 if the Board determined under reg96(2), that an employee, who had applied to retire on the grounds of invalidity, was unfit to perform the duties of his former position, was likely to recover sufficiently so as to enable him to perform the duties of his former position, or such other position which he might be required to accept, and should not be retired on the grounds of invalidity. By virtue of subreg(5), the relevant Head of Agency was prohibited from retiring that person, or permitting him to retire on the grounds of invalidity, during the period during which he was entitled to receive an interim invalidity pension. The amount of such a pension was fixed by reg40(1). After being absent from duty on sick leave without salary for a continuous period of 30 days, the interim invalidity pension was payable to the contributor in an amount equal to 75 per cent of the salary previously paid to him. The pension was to be suspended if he engaged in any business or occupation on his own account or if he was employed.
An entitlement to receive a permanent invalidity pension depended on the Board determining, under reg96(1), that the employee was suffering from such bodily infirmity, physical incapacity or mental incapacity as to be retired on the grounds of invalidity. By reg3(1), the word "invalidity" meant total and permanent incapacity, that is an infirmity or incapacity of such a kind that the Board was satisfied that he was, and until the age of 60 years would continue to be, unfit to work in a position for which he was reasonably qualified by education, training or experience and which he might be required to accept. The amount to which a contributor was entitled to receive if he retired on the ground of invalidity, was a lump sum calculated in accordance with a formula which depended on factors including the contributor's average annual salary, the rate or rates of contributions he had made and the length of his service. A person entitled to receive a lump sum was further entitled under reg77(1) to elect to convert the whole or part of it into a pension.
It has been settled law for many years that payments in the nature of pensions and superannuation benefits should not be taken into account for the purpose of assessing damages for lost earning capacity to be awarded in favour of an injured plaintiff against a negligent tortfeasor, whether or not the tortfeasor was the plaintiff's employer or a third party. It ought not matter whether the employment contract had or had not been terminated at the relevant time, at least in the circumstances of this case. The employment contract continued during the relevant period, but it is not a case where, as was the situation with the respondent's sick leave and holiday pay, the employer made the payments in question. The payments were made by the Retirement Benefits Fund Board out of a fund established for the purpose in accordance with the legislation. The primary purpose of the legislation, according to the long title of the Retirements Benefits Act 1993, was to provide superannuation benefits for persons employed in the public sector and for their spouses and beneficiaries in certain cases. In Redding v Lee (1982 - 1983) 151 CLR 117, Mason and Dawson JJ at 138 made it clear that pension and superannuation benefits, whose purpose is to ameliorate the injured person's situation irrespective of his right to recover compensation against a tortfeasor, will not relieve the latter's liability. Their Honours added that no distinction should be drawn between pension and superannuation benefits to which the injured person has contributed and those to which he has made no contribution, "although there is a stronger reason for refusing to reduce the plaintiff's damages on account of payments which he has himself made, thereby diminishing the assets which he otherwise owns." They also said that experience since National Insurance Company of New Zealand v Espagne (1961) 105 CLR 59 enabled it to be said "that generally speaking the entitlements to, or the conditions for eligibility for, pension and superannuation benefits are so expressed that they do not have regard to the recipient's right to recover compensation from a third party".
In Manser v Spry (1994) 181 CLR 428 at 436, the Court said:
"If a scheme for provision of a benefit be funded by contributions made by employers and employee-beneficiaries as a kind of insurance against misfortune, the principle in Bradburn v Great Western Railway Co (l874) LR 10 Ex 1 indicates that the benefit is to be enjoyed by a beneficiary who encounters the misfortune without reduction of the damages to which he or she is otherwise entitled. That view has been taken of benefits paid under contributory pension schemes created under statute."
Cases in which the benefits provided to the plaintiff were a substitute, or partial substitute, for wages, such as sick leave payments, were distinguished by Mason and Dawson JJ in Redding v Lee (supra) at 139. But as I have already pointed out, sick leave payments are made by the employer. The interim pension received by the respondent, as well as the permanent pension, was paid not by the employer but by a separate statutory corporation out of a fund to which both the respondent and the employer contributed. It is a material difference and in my opinion it takes the case out of the category of benefits such as sick pay. I conclude that the learned trial judge was correct when he refused to deduct any of the payments received by the respondent from the Retirement Benefits Fund Board.
I deal next with the first ground of appeal which was argued upon the basis that the award of $50,000 for lost earning capacity was manifestly excessive, when regard in particular is had to the findings of fact of the learned judge. Those findings included that it was unlikely that the respondent would have returned to his former employment following his hospitalisation despite the overdose incident; that it was likely that following his hospitalisation, regardless of the overdose incident, his symptoms would have been sufficient to have enabled him to obtain an invalidity benefit; that having obtained the benefit, it was unlikely that he would have sought alternative employment; and that it was therefore unlikely that he had suffered or would suffer any diminution of earning capacity which was or would be productive of financial loss. Other findings included that if the respondent had returned to work it was doubtful that he would have continued in the position of Director of Nursing for long; that there was a reasonable prospect that he would have resigned upon receiving a redundancy payout; that it would have been most embarrassing for him to return to work at a lower level in nursing administration; that to work in other areas of nursing would in any event have required him to re-train; that such matters would have deterred him from returning to work.
Despite all those findings which supported the unlikelihood that the overdose incident caused a loss of earning capacity productive of financial loss, the learned judge concluded that the possibility that he would have returned to his former work had the overdose incident not occurred, was a real possibility which could not be dismissed as mere speculation, and that the respondent was entitled to be compensated for the loss of that possibility. Relying on Malec v J C Hutton Pty Ltd (1990) 169 CLR 638 AT 639 - 640 and 642 - 643, he correctly stated that the assessment of the loss was an evaluation which defied precise calculation and ought not be expressed as an evaluation based on a percentage.
No error has been demonstrated by the appellant so far as concerns the findings to which I have referred. They were all supported by the evidence. One question then remains. Was the award of $50,000 excessive to the point of error. In my respectful opinion it was. Although it was a real possibility, it was nevertheless unlikely that the overdose incident was productive of financial loss of the relevant kind. Having regard to the stress from which he was suffering in 1994 and that the respondent was contemplating leaving his employment as Director of Nursing late in 1994, it was likely that he would have retired in the near future and certainly well before reaching his 65th birthday even if the events of February 1995 had not taken place. Only what I would describe as a modest sum should have been awarded under the heading of lost earning capacity. The sum of $50,000, representing about 15 months' net earnings at the rate applicable at the date of trial, was in my opinion excessive to the point of error, having regard to the findings of fact which were made. I would reduce the item to $30,000.
There is no merit in the other grounds of appeal. With respect, I substantially agree with the reasons of Slicer J for rejecting them.
I would therefore allow the appeal and in place of the judgment for the respondent in the sum of $66,140 I would substitute one for $46,140.
File No FCA 143/1999
STATE OF TASMANIA v JOHN ARTHUR WILSON
REASONS FOR JUDGMENT SLICER J
1 November 2000
The respondent suffered injury whilst a patient at the Royal Hobart Hospital in February 1995, following an overdose of the drug Anginine caused by human or mechanical failure. The appellant, which had not disputed liability, appeals against the award of damages, assessed in the amount of $66,140. The appeal is confined to the component of the award for loss of future earning capacity in the sum of $50,000, and a component comprising the payment of an interim pension.
The respondent, aged 56 years at the time of injury, had been employed as the Director of Nursing in Mental Health (Southern Region) with the Department of Health in Tasmania. The evidence was that prior to hospitalisation he had been in reasonable health for a man of his age. However, he had been contemplating requesting retirement due to stress in accordance with a redundancy plan being considered by the Department some months previous to February 1995. The relevant finding of the learned primary judge (Wilson v State of Tasmania [1999] TASSC 145, at par18), was "that in late 1994 the plaintiff was contemplating leaving his employment as Director of Nursing".
Following his release from hospital on 2 March 1995, the respondent continued to experience physical and psychological trauma which included sleep disturbance, panic attacks and lessened physical capability. Differing diagnoses were made by the treating and assessing psychologists and psychiatrists called on the trial, the primary difference being whether a chronic anxiety disorder had developed into a post traumatic stress disorder. The finding of the learned primary judge was that the respondent had not established existence of the latter and, accordingly, the assessment was made on the basis that the respondent continued to suffer from "an anxiety disorder not otherwise specified". On the basis of that conclusion, the approach taken was as stated at par54:
"Of these matters, the one that had the most prolonged and significant impact on the plaintiff's physical health was the cardiac surgery. Whilst the impact of the overdose incident on the plaintiff's physical health was of short duration it was a traumatic life-threatening incident. It is likely that the cardiac surgery and the overdose incident are the major causes of the plaintiff's psychiatric condition. As I am satisfied that the overdose incident is one of the causes of the plaintiff's condition, he is entitled to damages referable to the same. There being competing causes for the plaintiff's condition, one of which the defendant is responsible for, the evidentiary burden is on the defendant to disentangle the non-tortious causative factors; Watts v Rake (1960) 108 CLR 158 and Purkes v Crittenden (1965) 114 CLR 164."
General damages were assessed at $15,000.
At the time of hospitalisation, the after tax income of the respondent was approximately $37,000 per year. In 1998 he was granted a permanent invalidity benefit payable by the Retirement Benefits Board. At the time of trial the respondent, then aged 61, was receiving that annual pension of a net figure of $21,500. Had he remained in employment, his after tax income would have amounted to $41,000. The primary findings on which the assessment of future economic loss was made were stated at par69 in the following terms:
"I am satisfied that the plaintiff has not returned to work as a consequence of the anxiety state from which he suffers and for which the overdose incident is a contributing cause. I have, however, formed the view that regardless of whether the overdose incident had occurred, it is unlikely that the plaintiff would have returned to his former employment following his hospitalisation. In reaching this conclusion, I should say that I consider it to be significant that prior to the plaintiff's hospitalisation he was concerned about the stress of his work and was offering himself for a redundancy. I also consider it likely that the symptoms the plaintiff would have suffered from following his hospitalisation, regardless of the overdose incident, would have been sufficient to have enabled him to obtain an invalidity benefit. Having obtained that benefit, it is unlikely that the plaintiff would have sought alternative employment as it would have exposed him to the risk of having his pension suspended or reduced. If my views about this are correct, the plaintiff has suffered no loss of income by reason of the overdose incident. It is, of course, not certain that my prognostications are correct. They relate to hypothetical events which may or may not have occurred, regardless of the overdose incident. It is, of course, possible that the plaintiff would have returned to his former work had the overdose incident not occurred. This is a real possibility which cannot be dismissed as mere speculation. The plaintiff is entitled to compensation for the loss of this possibility. My assessment of this loss is an evaluation which defies precise calculation and it is undesirable that I seek to assess it on the footing of an evaluation expressed as a percentage; Malec v J C Hutton Pty Ltd (1990) 169 CLR 638 at 639 - 640 and 642 - 643."
The assessment took into account contingencies such as length of possible future service, likelihood of acceptance of redundancy and other possible employment.
The grounds of appeal claim error in the following terms:
"1 The learned Trial Judge erred in law and in fact in that the award of damages was excessive insofar as it included $50,000.00 for loss of earning capacity when such an award was:
(a) manifestly excessive;
(b) not justified by the evidence;
(c) against the evidence;
(d)contrary to or alternatively excessive in light of His Honour's express findings that:
(i)it was unlikely that the plaintiff would have returned to his former employment following his hospitalisation;
(ii)it was unlikely that the plaintiff would have sought alternative employment;
2The learned Trial Judge erred in law in that he failed to give any adequate reasons for awarding $50,000.00 for loss of earning capacity.
…
4The learned Trial judge erred in law in failing:
(a)to first properly assess whether the respondent had suffered any loss of earning capacity which was productive of economic loss; and
(b)upon so finding then considering whether such an award, for such loss, should be reduced to properly take into account the probability that the respondent would not in any event have exercised his earning capacity.
5The learned Trial Judge erred in law in making no reduction in the sum awarded for loss of earning capacity, to take into account the benefits paid to the respondent under the Retirement Benefits Act."
Sufficiency of evidence
The loss of income, disregarding the effect of the invalid benefit, could be calculated, as of September 1999, the date of trial, on the basis of loss of net income of $41,000 per year. The respondent was born in June 1938 and, assuming retirement at the age of 65, the assessment would have resulted (without application of discount formulae) in a calculation of 4.4 years. The figures provided by the respondent in his Particulars of Loss were:
"$792.77 per week nett
To age 65 years - 4 yrs
7% multiplier from Luntz
Table 2 183
LOSS = $145,076."
The finding of the learned primary judge was that it was unlikely that the respondent would have returned to work following hospitalisation, but not that such an eventuality was certain. Any decision by the respondent would have depended on the terms of redundancy, the amount of which was not known. An offer of redundancy might not have been made to the respondent or, if one were sought, might not have been granted. The assessment by the learned primary judge that it was likely that the symptoms suffered following hospitalisation, irrespective of the overdose was likewise conjectural. The existence of an anxiety disorder might have been the additional factor which would have entitled the respondent to an invalidity benefit. The learned primary judge had previously concluded that the psychiatric condition had no unitary cause. The known fact was that the respondent had not worked since hospitalisation and it would have been impossible to disentangle, with certainty, the contributing causes. It was upon that conjecture, albeit made with a degree of confidence, that the conclusion:
"Having obtained that benefit, it is unlikely that the plaintiff would have sought alternative employment as it would have exposed him to the risk of having his pension suspended or reduced"
was made. The conclusion is one which might reasonably be made. But it depends on the obtaining of the benefit in the first place. In matters of this nature there can never be certainty even with the benefit of hindsight. It is for this reason that the learned primary judge referred to the event as hypothetical and categorised the question of "return to work" as a real possibility. The methodology employed is similar to the earlier approach in relation to causation that "there being competing causes for the plaintiff's condition one of which the defendant is responsible for, the evidentiary burden is on the defendant to disentangle the non-tortious causative factors" (Watts v Rake (1960) 108 CLR 158, Purkess v Crittenden (1965) 114 CLR 164). The respondent was entitled to compensation for loss, and judicial methodology required assessment on the basis of "real possibility which cannot be dismissed as mere speculation". Having arrived at this conclusion, the learned primary judge was entitled to take as a commencing point the calculation of $140,000, which represented the loss of income, and apply the methodology of contingency. He did so in two ways. The first took into account the vagaries of possible outcomes which might have unfolded but for hospitalisation and overdose. The second related to the possibility of future work, length of service, future earning rates, health and similar matters. The resulting assessment might be described as one by means of "intuitive synthesis", a method inherent to the nature of the issue (Malec v J C Hutton Pty Ltd (1990) 169 CLR 638). That process can be described as a quality of judgment. In that regard, the learned primary judge was acting, within judicial constraints, in the same manner as a jury properly instructed. Once he had rejected, as a matter of law, the contention that he was required to reduce the award by the amount recoverable as a disability benefit, the award of $50,000 accorded with the evidence and appropriate methodology. The appellant has not shown that the award was manifestly excessive, was not justified by evidence or that impermissible methodology was employed. Grounds 1 and 4 have not been made out.
Disclosure of reasoning process
The reasons for judgment disclose the use of narrative with particular findings of fact stated at the relevant stages. Specific areas such as causation and competing medical diagnoses are dealt with in context and subjected to separate analysis. In the assessment of future economic loss, various possibilities raised by evidence are examined and the conclusion that a real possibility had not been excluded stated. It is correct that the precise basis on which the award was made cannot be determined by reference to precise mathematical calculation but such is always a consequence of determining what might have been or might be. The learned primary judge stated the basis of calculation when he said, at par69, that the:
"… assessment of this loss is an evaluation which defies precise calculation and it is undesirable that I seek to assess it on the footing of an evaluation expressed as a percentage ...".
That statement shows the reasoning process, namely that it is impossible to use a methodology similar to that employed in determining whether or not an event had occurred (Medlin v State Government Insurance Commission (1994 - 1995) 182 CLR 1). The reasoning process and its disclosure was in accordance with the principles stated by Brennan and Dawson JJ in Malec v J C Hutton Pty Ltd (supra) in their joint judgment at 639 - 640 when they said:
"By contrast earning capacity can be assessed only upon the hypothesis that the plaintiff had not been tortiously injured: what would he have been able to earn if he had not been tortiously injured? To answer that question, the court must speculate to some extent. As the hypothesis is false ¾ for the plaintiff has been injured ¾ the ascertainment of earning capacity involves an evaluation of possibilities, not establishing a fact as a matter of history. Hypothetical situations of the past are analogous to future possibilities; in one case the court must form an estimate of the likelihood that the hypothetical situation would have occurred, in the other the court must form an estimate of the likelihood that the possibility will occur. Both are to be distinguished from events which are alleged to have actually occurred in the past."
The assessment of an award in circumstances as here, is different from disclosure of a reasoning process necessary to enable an appellate court to determine whether there had been an error of law (Pettitt v Dunkley [1971] 1 NSWLR 376). It would be impossible to disclose a reasoning process which would produce an assessment of $45,000 rather than $50,000 (Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247) or to provide a percentage calculation of probability such as discussed by Deane, Gaudron and McHugh JJ in Malec (supra). The methodology and reasoning process employed by the learned primary judge have been analysed in relation to grounds 1 and 4 of this appeal. The reasons for judgment adequately exposed the basis upon which the award was made. Ground 2 ought not succeed.
Reduction by reason of benefits paid
The disability benefit was paid to the respondent pursuant to the Retirement Benefits Act 1993 ("the Act") in accordance with the Retirement Benefits Regulations 1994 ("the Regulations"). Regulation 96(2) permits the Board to grant an interim invalidity pension if it determines that an applicant:
"(a) is unfit to perform the duties of his or her position; and
(b)is likely to recover sufficiently so as to enable him or her to perform the duties of his or her position, or such other position which he or she might be required to accept; and
(c) should not be retired on the grounds of invalidity … ".
The entitlement is determined by reference to inability to perform particular duties or their equivalent. It does not require incapacity to perform any form of work. An interim pension was paid to the respondent in 1995. In 1998, he was granted a "permanent" pension. In granting such a pension the Board was required to be satisfied that, by virtue of reg96(1), the respondent was:
"(a)… suffering from such bodily infirmity, physical incapacity or mental incapacity as to be retired on the grounds of invalidity; or
(b)… immediately before 1 July 1994 was a contributor … (was) not suffering from bodily infirmity, physical incapacity or mental incapacity as to be retired on the grounds of invalidity but (was) suffering from incapacity or infirmity as to be retired on the grounds of partial and permanent incapacity or infirmity; or
(c)a person … in receipt of an invalidity pension (who was) wholly incapacitated; … ".
The respondent was entitled to receive a lump sum benefit (reg35) or to convert that sum into a pension (reg77). The entitlement was dependent on service and calculated by reference to length of service and salary. The Board has power to suspend or reduce the payment of a pension under certain circumstances (reg85).
The nature of the benefit was that earned by the respondent's past contributions and service for an employer. It is equivalent to a policy of insurance or membership of a benevolent fund. The entitlement:
" … 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: they are the 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." (The National Insurance Co of New Zealand Ltd v Espagne (1960 - 1961) 105 CLR 569, Dixon CJ at 573).
In that case, the High Court considered the effect of the receipt of a pension awarded pursuant to the Social Services Act 1947 - 1957 (Cth) upon an award for damages. In relation to benevolent or insurance payments, Dixon CJ said at 573:
"If a fund is raised by subscription for the benefit of a badly injured neighbour obviously this cannot operate in relief of the liability of a man who negligently caused the injury. So in a contract of accident insurance; where in the absence of special stipulation the insurer will not succeed by subrogation or otherwise to the insured's right of recourse against others in the case of injury by their negligence. But for the reason given it does not follow that the negligent parties can treat the insurance as operating in relief of their liability. It was effected by the money of the plaintiff for his own benefit in the event of an accident, a benefit both independent of and cumulative upon whatever right of redress against others might arise out of the circumstances of the accident."
Windeyer J took an identical view stated at 598:
"The benefits of benevolence do not reduce damages recoverable. That may be accepted. Why is this? It is not the result of a distinction between benefits given voluntarily and benefits paid for. Indeed one reason given for disregarding insurance moneys is just the opposite, namely that they have been paid for by premiums : and, relying on this as an analogy, a distinction has in some cases been made between contributory and non-contributory pension schemes that are incidents of contracts of service. That distinction, however, seems unsound, for the right to have a pension or the chance of having a pension from his employer is part of what a servant earns by his labour.",
concluding at 599 - 600:
"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."
It makes no difference that the appellant was both the employer and the authority responsible for the operation of the pension scheme. The moneys payable were those set aside in the past and calculated according to a formula based on service already performed (Smoker v London Fire and Civil Defence Authority [1991] 2 AC 502, State of New South Wales v Davies (1998) 43 NSWLR 182).
There remain limitations to the type of payments already received in respect of the injury suffered, such as leave entitlements paid in accordance with an industrial award (Graham v Baker (1961) 106 CLR 340) or compensation paid by way of workers compensation legislation (Manser v Spry (1994) 181 CLR 428), since such payments are made as ordinary incidents of employment. But there has been a consistent approach in relation to payments made pursuant to a scheme to which a person has made contribution, or which are made in accordance with general legislation and, in particular, benefits in the nature of accident insurance, pensions and superannuation (Jones v Gleeson (1965) 39 ALJR 258, Redding v Lee (1982) 151 CLR 117). In Oakley v McIntyre [1984] Tas R 44, Neasey J determined that account ought not be taken of payments made through a medical benefits policy or under the Health Insurance Act 1973. The Police Regulation (Superannuation) Act 1906 (NSW) provided for the payment of benefits to a member upon certification of incapacity in the discharge of duties of office. Police officers were required to make contributions to the scheme which was comparable to the Retirement Benefits Act 1993 (Tas). In State of NSW v Davies (supra) the New South Wales Court of Appeal applied the principles stated in Bradburn v Great Western Railway Co (1874) LR 10 Ex 1, Smoker v London (supra) and Redding v Lee (supra) to the legislative scheme and determined that payments made could not be taken into account in the assessment of damages for future economic loss.
Different considerations arise in relation to the payments made by an interim invalidity pension. Ground 5 of the appeal was expressed in general terms but counsel confined its basis to payments made between 1 January 1996 and 1 January 1998. Those payments were made at the discretion of the Board in accordance with the provisions of Pt 9 of the Regulations which permit the Board to determine whether:
"95 (1) If a question arises as to -
(a) whether any payment periodically received by an employee is to be regarded as part of the employee's salary for the purposes of these regulations; or …"
Regulation 96(1)(d) affords power to determine whether:
"(d) the health of a person who is in receipt of an invalidity pension is such that the person is able to resume duty …"
or may grant an interim pension if it is satisfied that an applicant:
"96 (2)
…
(b) is likely to recover sufficiently so as to enable him or her to perform the duties of his or her position, or such other position which he or she might be required to accept; …"
The Board is entitled to suspend or reduce interim invalidity pension in the event that the recipient is:
"85 (1) If an invalidity pensioner or an interim invalidity pensioner -
(a) is offered suitable permanent employment in the service of an Agency; or
(b) accepts a position as an employee; or
(c) engages in employment otherwise than in the service of an Agency; or
(d) engages in any business or occupation on his or her own account; or
(e) is restored to health -
the Board, if it thinks fit, may suspend the pension payable to that pensioner or reduce the amount of that pension to an amount that, in the Board's opinion, the circumstances of the case warrant, or may suspend that pension for such period, or until the happening of such an event, as the Board determines."
The scheme, as applied to the respondent, was an ordinary incident of employment and must be taken into account in an award for damages (Manser v Spry (1994) 181 CLR 428).
In the reasons stated by the learned Chief Justice the effect of those provisions is to provide a substitution for all or portion of salary foregone by reason of temporary incapacity. I agree with both his reasoning and conclusion that payments received ought to have been deducted from the award. I agree that a sum of $12,500 is the appropriate amount.
Conclusion
I would uphold the appeal in relation to ground 5 as argued and reduce the award to the amount of $53,640.
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