The Nominal Defendant v Lloyd, D.B

CATCHWORDS

Measure of damages - infaht sustaming injuries by negligence

of appellant which rendered hlm incapable

arranqinq for

necessary treatment and accommodation

- such servlces rendered

by hospital where fees at

a higher level than

fees charged by

nursirlq homes for equivalent servlces - llability of Infant to pay hospital fees - extent of llability of necrligent party - reasonableness of in ant remaining hospital - reasonableness of amount charged for services rendered.

THE

N O M I N A L DEFENDANT

DhMIEN BARRY LLOYD

(by his

friend) PhTRICIP. MhRY LLOYD

No. NTG 7 of 1984

Smithers, Northrop and McGregor

JJ.

\	2 April 1985
Melbourne.

-	IN THE FEDERAL COURT OF AUSTRALIA	)
)

NORTHERN TERRITORY DISTRICT REGISTRY )

NO. NTG 7 OF 19R4

)

GENERAL DIVISION

)

ON APPEAL

FROM THE SUFREME

CQURT 0-F THE NORTHIRN

TERRITORY OF .AUSTRALIA

Between:

THE NOMINAL

DEFENDANT

(Appellant)

m: DAMIEN BPARY LLOYD

(bv hls next

friend) PATRICIA

MARY LLOYD

(Respondent)

Judqes Makinq Order:	Smlthers, Northrop and McGregor JJ.
__	Date of Order:	2 April 1985

Where Made:

Melbourne.

MINUTE OF ORDER OF THE COURT

THE COURT ORDERS THAT:

1. The appeal be dismissed.

2 . The appellant pay the respondents cost of and incldental to the appeal.

(Settlement and entry of the Orders is dealt with by 0.36 of

the Federal Court Rules.)

IN THE FEDERAL COURT OF AUSTRALIA

) )

NORTHERN TERRITORY DISTRICT REGISTRY )

NO. NTG 7 OF 1984

)

GENERAL DIVISION

)

ON APPEAL

FROM THE SUPREME

COURT OF THE NORTHERN

TERRITORY OF AUSTRALIA

Between:	THE NOMINAL
DEFENDANT

(Appellant)

DAMIEN BARRY LLOYD

(by his

friend) PATRICIA

M Y

LLOYD

(Respondent)

CORAM: Smithers, Northrop and McGregor

JJ.

Date:

2 April 1985

REASONS FOR JUDGMENT

Smithers

and

Northrop JJ.: In this

matter

we take

the

liberty of referring

to the relevant facts set out in the

reasons for judgment

herein of our brother McGregor. However,

the ultimate conclusion at which we have arrived differs from

that reached considerations set forth below.

him. We have been influenced

the

In our view the principle by reference to

which, in this

case, damages should be measured is that stated by Megaw L.J. in Donnellv v. Jovce C197411 QB 454. In that case an infant

recovered the value

of nursing services provided by

his mother

who gave

her

employment

care for him. The Court

rejected the argument that In the absence of a legal llabllity to pay, the reimbursement sought was relmbursement of another person's loss. Megaw L.J. who delivered the ~udgment of the Court said:-

"The loss is the plaintiff's

loss.

The question

from what source the plaintiff's needs

have been

met, the question who has paid the

money or given

the services,

the question whether

or not the

plaintiff is or is not under a legal or moral llabllity to repay, are, so far as the defendant and his llability are concerned, all irrelevant.

The plaintiff's

loss, to take thls present

case,

is not the expenditure of money to buy the speclal

boots or to pay for the nursing attentlon.

His

loss is

the

existence

of the

need

for

those

special boots or for those nursing

services, the

value of

which for purposes of damages - for the

purpose of the

ascertainment of the amount of hls

loss - is

the

proper

and

reasonable

cost

supplying those

needs."

and went on to say:

' I . . .

it does not matter, for that purpose, whether

the plaintlff

has a legal liability, absolute or

conditional, to repay to the provider what he

has

received, because

of the general

law or because of

some	private agreement between himself and the

provider; it does not matter whether he has a moral obligation, however ascertamed or deflned, so to do. The question of legal liability to reimburse the provider may be very relevant to the

question of the legal right

of the provider to

recover from the plaintiff. That may depend

the nature of the liabllity imposed by the general

law or the particular agreement. But it is not

matter

which affects the right of the plaintiff

against the wrongdoer."

In conformity with these observations it was sald by Mason	J.
in Griffiths v. Kerkmeyer (19761 139 CLR 161 at p.192 that:-

3 .

"the plamtlff's relevant loss is

his incapacity to

look after himself

as demonstrated by the need for

nursing services and thls loss

i to be quantified

by reference to the value or cost

providlng

those services.

Stephen J. referred at p.174

to the observations

Scarman L.J.

In Davies v.

Borouqh of Tenby C19743

2 Lloyd's

Reports 469 at 479, namely:-

"The defendants' wrong has created a

need for the

services.

Nursing

and

attendance

are

services

which can only be provided by an expenditure of effort or money, or both: an estimate must be made of the capltal value of such effort and money,

past

and

future, and

compensation

awarded

accordlngly. How or

on what

terms

they

are

provided is not of crltical importance: the extent

to which

they have been, are now, and are likely

in the

future to be needed is all Important, and

the

court,

looking

all

the

clrcumstances

including the

market price of such services must

put a fair value upon them,

. . .

Stephen J. adverted

to the

clrcumstance

that although a

plaintiff is under

a duty to particularise out

of pocket

expenses and loss of wages incurred prlor

to trial those items

are speclal damages only in a special sense. From the point

of view

of substance those items are but part of

the general

damages recoverable in respect

of the incapaclty suffered by

the defendant's negligence.

The observations of Windeyer J.

in Tuebner v. Humble (1963) 108 CLR 491 at p.505 et seq

reflect a slmilar approach. See also the decision

of the Full

Court of

this Court in Hodqes v. Frost No. 89 of 1983 of 12

April 1984 (unreported).

indicated by Megaw LJ legal

liability to pay for

services rendered to an inlured person is not a condition of

his right to recover the cost of services supplied to him to meet his needs, but, where legal liablllty

has been reasonably

incurred, as

in this case, the extent thereof

1 s inevitably

the

measure

of what is

recoverable.

L " . ~

. 1 .

. c

The problem before the learned trial judge

was to assess

the quantum

of damage suffered by the infant plaintlff

(the

respondent)by reason of

the incapaclty whlch he suffered from

the injuries inflicted upon him in the unfortunate incldent

glvlng

rise to his clam. That quantum

described

Scarman L.J. as the sum which the Court, should determine having regard to "all the circumstances includlng the market

price of the services required to meet the need created	by the
injuries or incapacity".

According to Mason J. a plaintiff's

loss

is to be

quantified by reference to the value

or cost of providing the

services the need

for which is the result of the incapacity.

The problem before the learned Judge might have arisen shortly after the incapacity arose.

The quantification of the

loss	at that stage would have been wholly prospective. But

the trial of the action not comlng on for some seven years after the relevant injurles were suffered It was possible to

deal with the loss suffered during that period by reference	to
what had actually happened.

After the

first six months the nursing and ancilliary

treatment necessary for the respondent was such

as was wlthin

5 .

the capacity

of an ordinary nursing home to provide. On the

basls that

a nursing home was found which was willing to

accept the respondent the treatment therein would

have been

satisfactory to him.

The price for such treatment at nurslng

home rates would have been about one quarter

of the fees

claimed by the Adelaide

Children’s Hospital (the hospital).

As a result of the physical and mental injuries suffered

the respondent

he was rendered incapable physically and

mentally, of taking any steps

on his own behalf to seek,

arrange or negotiate for the treatment and accommodation

whlch

he required. Neither

his mother nor his

father were able to

take any steps to find a willmg nursing home.

The parents

were in

no sense agents

of the respondent in the matter of

seeking suitable treatment and accommodation.

So far as the

respondent was concerned

could

not

have been

completely lsolated in relation to taklng care	of	his own
affairs.

In all the period

of six years durlng which the hospital

rendered servlces

to the respondent the situation

was that

unless

some person supplied those services the respondent

would surely die.

was In those circumstances that the

hospital provlded for the child nursing and ancillary treatment and accommodation of a high standard, perhaps, to

some extent superior to that which would	be	supplied to the
respondent in an ordinary nursing home.

The respondent, being unable to

d anything for

himself,

received, rather

than accepted, necessary treatment from the

hospital.

In so far as the treatment was necessary he

was

I .I

-.. I

. I .-.

~ . ..

bound to

pay to the hospital a reasonable sum therefor

and

that reasonable sum would seem

to be the measure

of the value

or cost or market price

of that treatment spoken

of in

the

judicial observations set out above. And

is entltled to

recover from the appellant that value,

cost, or market prlce.

Two questions arise.

Firstly, was it reasonable for the

hospltal

to contlnue to render services

to the respondent

after the flrst six months, and secondly, was the sum claimed

by the hospital a reasonable sum for the services rendered

It after the first six months.

The

hospital charges during

the first six months are not challenged.

As to

the first of these questions it is the case for

the respondent that it

was

reasonable for the respondent to

"accept" the services of

the hospital and for the hospital to

render those services. And

this respect the respondent

relies on

the findmgs of the learned Judge. When one

says,

as his

Honour said, that it was reasonable

for the hospltal to

render to

the respondent the services which it did, there is

implied in thls a finding that it was reasonable for the hospital to render the services and to charge for them the

normal charge

of the hospital for those services.

Also, and

perhaps

critically,

there

I s inherent in this

flndlng

findlng that as between the respondent

and the appellant it

1 .

was reasonable that those services	should be rendered to him
by the hospital and so rendered at	the rates charged by that

hospital.

It 1 s not contended that

it was not reasonable for

the respondent in his injured condition not to have obtalned alternative accommodation in a nursing home. What 1 s

contended is that the services rendered

to him by the hospltal

were of a nature and quality such that liabillty to pay at the hospital's rate of charges could not arise in the respondent.

Concernirly Lhc rcL~uonablencss

Lhc c h r y c s made by the

hospital his Honour said

"moreover I find the charges

Cof the

hospital] reasonable, consistent with the amount charged such

patients in "public" hospitals as well as in the Adelaide

Children's Hospltal". This finding of his Honour was made

after a

consideratlon of the basls upon which the charges

the hospital were made.

Hls Honour said:-

"A scheme

was

set

to give

effect to the

agreement

after

the

establishment

of medibank

which defined the arrangements

and criteria, which

classified

patients

including

"compensable"

patients who had

an entitlement under third party

motor

vehicle

insurance

and

which classified

hospitals as

"teaching

hospitals"

and

"non

teaching hospitals". Over the years regulations

have been made

under

the

South Australian

Hospitals Act

and

under

the

South Australian

Health Commission Act purporting to

fix the fees

for patients in the various categories. Whether

or not the management of the Adelaide

Children's

Hospital was by

statute bound

to charge

the

regulation fee it has clearly done so;

in fact

being a "grants" hospital and thus dependent upon

government subsidy this is not surprlsing.

The

formula utilised in fixlng

fees was essentially

based on the

calculated operating costs of public

hospitals. As

I have said whether

so defined by

statute or

not, the Adelaide Chlldren's Hospltal

has carried out the functions

of a public hospital

and has accepted and charged the regulation fees as approved by Executive Council and from time

time

advi

sed to the ho

spital by the Director

General of Health. I do n

ot propose to detail the

regulations from time to

time promulgated

(see

Exhibits P13 and P17-P22 inclusive). I am satisfied the Board of Management of the hospltal which controls its "property and affalrs" (Exhlblt

P24) has ratified and levied charges in conflrmlty

with the

regulations

and

schedules

recelved

through the government departments to glve effect to Commonwealth and State Health schemes. I heard detailed evldence from Mr. Glenn and Mr. Page as to the calculation of fees and their application

and I

am satisfied that the amounts charged and

remaining uhpaid in respect of Damien's treatment are falr, reasonable, and were reasonably

necessitated by his injuries. In fact I am charge for Damien's hospitallsation been

satlsfied

from Mr. Page's

evidence that had the

l vied on

the

basls of the hospltal's actual

'bed cost'

incurred durlng the years

he has been

a patient

the

essential costs of

his treatment would have

been considerably in excesss of the amount now claimed on his behalf (see Exhlbit P27). This

must

relevant

test

of essential

reason-

ableness. ".

It seems clear that no concluslon was expressed by the

learned Judge that it was the effect of the leglslation or the

regulations

admlnlstrative acts thereunder to create a

legal right In the hospital enforceable by

it agalnst the

respondent to recover the

charges it made for the services It

rendered. And before this Court Mr. McDonald, counsel	for the
respondent, said:-

"At no

time was

it sought to say

here under the

provisions of

the South Australian Hospitals Act

is there a legally enforceable debt in some way, but rather thls evidence was led

to show what the

scheme of affairs were and what this hospital was

and where it fitted Into the scheme of affalrs,

fitting into the scheme of affairs at a time when

Medibank had commenced and there was arrangements

and agreements

as to charging persons."

Onre it is accepted that as between the hospital and the

respondent the "official" rates of charges

were

not

9 .

enforceable as such against the respondent one is required to

examine the charges made	from the point of vlew of the general
law.

The hospital knew, when

chose

to render

those

services,

that

the

respondent

was

Incapable

of making a

contract or bargainlng m any way as to the price to be

paid

therefor. Accordingly in

order to be paid the hospital would

have to rely on the principle of law under whlch a liability is implled against or imposed upon an Infant to pay the fair

and reasonable price

of goods and servlces provided to him.

As was said by Fletcher Moulton	L.J. in Nash v. Inman C19087 2
KB 1 at p.8:-

"An infant, like

a lunatic, is incapable

of making

a contract of purchase in the strict sense of the infant or lunatic by supplymg to him necessarles.

words; but if

a man satlsfles the needs

of the

the law will Imply an obligation to repay

hlm for

the services

so rendered, and will enforce that

obligation against the estate

of the infant or

lunatic. The consequence is that the basis of the action is hardly contract. Its real foundatlon

1 s

an obligatlon which the law imposes on the lnfant

to make a fair

payment

respect

needs

satisfied. In other words the obligation arlses

re and not consensu.

It would seem that had the services rendered

the infant

after the first six months been sought from the hospital by

person sui juris and wllling to pay for

them they could have

been obtained only

the basis that

fees accordlng to the

hospltal's scale

of charges were

to be paid. And

In the

circumstances as found by the learned Judge the same situation

would have

obtalned had this infant been

a ward of the Court

10.

or in the control of trustee guardians. Also in the

case of a

claim by the hospltal against a

person for services rendered

to him based merely

the fact that such person had accepted

such services the charges made accordlng to the operation of- the system as outlined by the learned Judge might well have been found to be reasonable for the reasons stated by hlm. It

is to be observed however that the calculation of fees to be charged to an inrl~vldual patient according

to the system would

have been calculated, not by reference to the actual costs

the hospital of the services rendered to him

or to the nature

or quality

of those services, but by reference

to the pollcy

of the hospital Board acting in accordance with the policy of the Health Department of South Australia, a pollcy extending to the charges to be made by public hospitals to patients who

were accommodated therein in

South Australia.

The Adelaide

Chlldren's Hospital was

not a public

hospital within the meaning

the Hospltals Act 1934-1971

(S.A.). However, it was subsidised by the State Government a "grants hospital". But

it appears that the

Board of

Management of the hospital either regarding Itself as bound

do s o ,

or taking the

view that it was

expedient to do so,

approved as

charges to

be made by it

to Its patlents those

speclfied

regulations

or otherwise by

the

Health

Administration of South Australia

respect

public

hospitals pursuant

Government

policy

the

light

arrangements for Commonwealth participation in the funding of

those

hospitals.

The speclfied

charges

provided

for

differential rates between different categories

of patients,

I . I .

11.

namely, those wlth private insurance, those wlth Medlbank insurance, those with compensatlon entitlements in respect of motor vehicle accidents, those entitled to workers' compensation, seamen entitled to benefits under the Navlgation

Acts and persons without entltlements or insurance

any

kind. They also

provided

differential

rates

between

different classes of hospitals, namely for instance as between public teachlng hospitals and non-teaching hospitals. The specified charges in teaching hospitals were substantlally

higher than those for non-teaching hospitals.

The rates so fixed were varied from tune to time. Those rates of fees charg~ahl~=

wprp

arrivd at by calculatlon and

administrative

judgment. In the

first

Instance

there

was

deducted from the total cost

of conducting all the relevant

hospitals in treatment. The remainder

the

year

the

cost

of outpatient

was

divided

the

number

occupied bed days for that year as recorded

by the hospltals.

There was

thus ascertained the average cost per occupied bed

day.

The sum ascertained by this process was charged

certain patients. But by adminlstrative decislon based

~udgment or policy,

patients

teaching

hospitals

were

charged at different

rates

from

those

on-teaching

hospitals and patients of

the different

categories

were

charged at rates different from each other. Thus

the approved

daily fee

applicable in the year 1976-1977 for

a particular

category of

~ inpatient in a

teaching hospital w a s

$115 but a

similar category

patient in

a non-teaching hospital was

charged $60 per day.

Those without any insurance were treated

12.

free. Those with private insurance were charged a particular rate, those with rights to compensation at common law or

workers' compensation were charged at

relatively much higner .

rates.

There was an approved rate for long term patlents

which was relatively

low but according to the regulations and

the policy

of the hospltal it

was not available to the

respondent because he had rights to

compensatlon against the

appellant.

With respect to the perlod from 16 December 1982

onwards,

the charge for a long term acute medical patient

wlthout rlghts to compensation was $38.20

per day while that

for a patlent with such rights

was $115 per day at the

commencement of that period and by the end of the

six years

the respondent's accommodation In	the hospital it had rlsen to
$280 per day.

m'is does not suggest that

$38.20 per day was a fair and

reasonable rharge fnr

the servirp rendered to

a long term

patient. It does indlcate however, the wide disparity between charges made for the same service to patients

different

categorles

and it emphaslses that the charges made

to any

particular patient pursuant to the hospltal system had little

or nothing to do with the nature and	extent of services
rendered to that patient.

The fixed is outlined in the following extracts

procedures by which charges against patients were

of evidence given

Speaking

reference to which the relevant South Australian Medlcal

authorities proceeded with a view to the assessment of the

about

the

basic

information

at the

trial.

13.

fees payable by patients,

Mr.

Glenn, special advisor to and

Executive Offlcer of the South Australian	Health Commisslon
said:

"MR. McDONALD: On 1 July

1975,

was

there

agreement

entered

into

b tween

the

Commonwealth

and

the

State

South

Australia, a sharing agreement,

with respect

to recognised hospltals?

--- Yes.

...

Was the Children's Hospital - was it listed as at

that time? --- A recognised hospltal.

...

What was the effect of this agreement? Was thls

part of

the Medibank Scheme or what was the

situation? ---

It was the origlnal Medibank

Scheme

and

the

part

was

whereby

the

recognised hospitals provided free treatment

to hospltal

patlents

return

for

the

Commonwealth costs-sharing, with the state,

the net operating costs	of the recognised
hospital system.

And did that also provlde for

a classification of

what was referred to as compensable patients?

--- Not in those words.

It provided for a

classification of patients,

motor

vehicle

third party, workers compensatlon and seamen,

under Navigation Act,

of 1912.

...

At or about that time, dld you do any work or

calculations to ascertain the dally

fee equal

to the daily average in-patient costs

teaching hospitals in South Australia for the

prevlous financial year?

--- Yes.

...

HIS HONOUR: You didn't

average

all

teaching

hospitals? --- Yes, sir, it is an average of

all teaching hospltals.

So if one hospital's

costs

are

greater

than

another

teaching

hospital's

costs,

the

ultimate recommended or required payment will

be averaged? ---

The average of all

hospitals, sir.

14.

Speaking of the

procedure

for

assessing

fees

charged

patients of

the hospital Mr. Page the hospital's acting

revenue officer said:

"Well, we received

an advice from what was the

hospital's department,

and of late, the South

Australian Health Commission.

The advlce contalns

a schedule of fees that

to be applied in

recognlsed teaching hospitals of which we are one

_-_

...

This advice would go to the board

of management

for their ratlfication. Upon their ratification,

the actual fee In the computer would be changed as

from the date that the new is to apply, and

thereafter, accounts produced would be at the new

rate.

As indicated above it was

not put on behalf of the respondent

that the provlslons of the regulations or any adminlstrative GovernmcrlLdl regulations operated by law

to impose on the

respondent a liability to pay the rates speclfied	or approved
therein.

It was said however, that by reason of the charges prevalent throughout the hospltal system

South Australia

and adopted as

a matter of pollcy by the hospltal there

was a

market price In South Australla for the kind of services in question if supplied by a teaching hospital to a person in the category in which the respondent was, namely, a person havlng

rights to compensation for hls injuries. There

is of course

no suggestion that that

so called market price was established

by reference to

the

nature

and

quality

of the

services

rendered or which might be rendered to any lndlvidual

or,

. .

I .

1 5

except in the most general way, to the cost to the hospital of providing the particular services rendered to any indivldual.

It was a price fixed per bed for persons in each particular category by the process referred to above. And the same

fee

was payable whether the patient required extensive, minimal or

no medical treatment.

No doubt

there was justification in social policy for

the

adoption

of the fee structure

stablished

the

regulations.

But

in the instant case the receipt

and

“acceptance“ by the respondent of

the services rendered by the

hospit.al had nn significance in law i n rP’Lat.inn to the quantum of fees chargeable to and payable by the respondent. The

respondent was not only

Infant but

was for practical

purposes non compos mentis and could not make a contract. Nor

could

any

contract be implied against hlm on the basis of

knowledge of any of the facts of the situation. What

was

required

therefore

was

the

stablishment

according

commercidl I L L C L U K S d what was fair and reasonable payment for

the services rendered. It would perhaps have been difficult

but far from impossible for the hospltal to have established a

fair commercial price for

the services rendered. It would not

have been required to prove

Itemised terms the value

every

service.

would

have been practicable

for an

assessment to have been made of the value

of the space

occupied

by the respondent, the nursing hours involved in

tending to him, the food consumed and

the like. Appropriate

allowance for overheads

and

management

could

have

been

assessed. This process was not adopted, no doubt because the

I .

16.

view was

taken that the charges made were

reasonable in the

operatlon of the

hospital in the context of the system

as a

whole, in the environment set by the

Government. But, in the

absence of a law in	an	Act	or regulatlon,	the	_legal- .	.-	~,
. .

relationship between the hospitals and this infant could only

be established by reference to the general law relating	to the
liabilities of infants.

It is apparent that the charges made

by the hospltal to

the respondent were charges that would

have

been made by any

other

publlc

teaching

hospital

the

respondent

the

services rendered to him

by the hospltal had been sought from

and	rendered by it. It was accordingly argued that those

charges were the market price

for those services. It was not

to the point,

so it was

said that the charges for services

the same kind if rendered by a nursing

home would be much

lower. On the

findings of the learned Judge that market was

not available.	It is only the available market	which is
relevant.

Lord Selborne said in Canada Southern Railway

Co.

International Bridqe

Co. (1883) 8 AC 723 at 732 and 732:-

"It certalnly appears to their Lordshlps that the

principle must

be,

when reasonableness comes in

question, not what profit it may

be reasonable for

a company

to make, but what it is reasonable to

charge to the person who

is charged. That is the

only thing he is concerned with. They do not say that the case may not be imagined of the results to a company being so enormously dlsproportionate to the money laid out upon the undertaklng as to

make that of itself possibly

some evidence that

the charge is unreasonable, with reference to the person against whom it is charged. But that 1s

17 .

merely imaginary. Here

we have got a perfectly

reasonable scale of charges in everything whlch is

to be regarded as material to the person agalnst whom the charge is made. ... That being so, it

seems to their Lordshlps that it would be a very

extraordinary thing indeed, unless the Legislature

had expressly said

s o ,

to hold that the persons

using the brldge could claim a right to take the

whole accounts of the company, to dissect their

capital

account,

and

dissect

thelr

income

account, to allow this item and disallow that, and, after manipulating the accounts in their own way, to ask a Court to say that the persons who have projected such an undertaking as this, who have mcountered all the original risks of

executlng it,

who are stlll subject to the rlsks

which

from natural and other causes every such

undertaking 1 s

subject to, and who may possibly,

as in the case alluded to by

the learned Judge in

the Court below, the case of the Tay Bridge, have the whole thing swept away In a moment, are to be regarded as making unreasonable charges, not

because it is otherwise than

fair for the railway

company using the bridge to pay those charges, but

because the bridge company gets

a dividend which

1 s alleged to

amount, at the

utmost, to

15 per

cent.

Applying the words

of hls Lordship to thls case, the

question would

be what was the reasonable charge

to be made to

the person who was charged. Here the person charged

was an

infant who could not and did not make a contract. His liability to make a fair payment for the services rendered was implied or imposed by the law. It is a payment for the

services rendered which is in questlon.

may well be that

the assessment of the cost

to the hospital of provlding the

relevant services together

with a fee for management or profit

would be

a sum much less than

the fees charged by the

hospital. And it remains true that the charges recoverable may only be the Court's assessment of those reasonable as between the hospital and the infant for the services rendered.

For a payment to be fair in respect of such services it would

18.

seem that it should be a payment calculated or assessed with respect to those services, that is to say the actual services

rendered to the individual. It becomes necessary to identify

what, for the purposes of the exercise,. is the proper

. .

characterisation of the

relevant services. From the infant's

point of view they were full accommodation with necessary skilled care. From the hospital's point of view they were the occupancy of a bed to be serviced in relation to accommodation

and nursing care and any necessary skilled medical treatment

the infant might require.

To provide these things for the

infant the hospital operated

as a unit in a communlty hospital

system designed to

serve not only persons whose medical needs

were

minimal but persons whose medical needs

were maximal.

The system

was

designed

maintaln,

wlth government

assistance, the financial viability

each

of the units

whilst meeting the needs

of the members

of the communlty

according to their financial circumstances. These principles

based on considerations of fairness as between the members

the community had

been worked out and were applied throughout

the system.

It 1s said that although thls meant that some

patients pay more than others

for

actual medical services

rendered, or even for

bed occupancy, those differentiations

are not made capriciously but

are all the result

of the

application of reason. And it is not shown that, looked at

a social instrument, the system

is lacking in reason and

fairness. There is nothing unfalr in thls sense in a person who has the means to pay being charged more than a person without such means. This is a principle whlch has operated

and no

doubt still operates In

a private enterprise medical

19.

system in this country. Similarly,

as was urged in this case

if one engages the services of a top ranking surgeon

to remove

a splinter which a more lowly medical operator could

have

easily removed one expects

pay the surgeon at the rullng

rates for his services whlch will be

much higher than those' of

the alternative operator. Thls is of course true.

In this case whatever may

be said about the merits or

demerits of

the system it did operate in South Australia and

th? hospltal

was part of ~t

at a l l matprial tlmes. And the

rates of

charges at which

it and the other hospitals In the

system

were prepared

to accept and treat patients were the

product of

the system.

The

respondent recelved the services

of the hospital In circumstances in which

they were vital to

hlm.

He did not choose them but they were

available to him

only

on the basis that they

were delivered to

him

in the

course of

the operation of

the system in which the hospltal

operated. Any other hospltal In the system would have charged

the rates charged by

the hospital.

For the purpose

of identifylng, as between the appellant

and the respondent, the inevitable cost to the respondent of the services necessary to meet the needs created by the negligence of the person for whose conduct the appellant bears

the financial

burden, it is of

critlcal importance that the

respondent was,

because of

that negligence, at all times

immobile, intellectually impotent and unable to take

any part

in choosing the accommodation and other treatment he required.

He received

these

things

because

of his needs from an

2 0 .

lnstitutlon actidg reasonably in supplying them but willing

supply them only at rates applicable, under

the system, to any

person in the respondent's category to whom such services were

supplied.

It is wrapped up in the findings of the learned

.. .

trial judge that it was only in the system that the servlces could be obtained. That was the view of the learned judge on

the balance of probabilities. And

for two

reasons that is a

finding based on the evidence.

First the efforts

the

hospital, acting as

a sort of agent of necesslty of the

respondent,

to find alternative suitable accommodation and

services for the

relevant

period

were

quite

reasonable.

Second, the respondent by reason

of his injuries was incapable

of maklng any such efforts and could not in any event be held responsible for the failure of any person, not in fact his agent, but busying himself in the matter, to make adequate

efforts. Had the respondent been

able to think and

to walk

and to talk

it is quite possible that

he mlght have found

suitable alternative accommodation. But

as matters stood the

injuries of the respondent for which the appellant was financially responsible led to the receipt by the respondent of the services rendered by the hospital.

In the

circumstances it can be seen that although the

market for the servlces required by the respondent and which existed in South Australia was a very

narrow and llmited one,

namely, services supplied by

a teachlng hospital to a patlent

with rights

to compensation at common law, it

was

a market

which did exist and was the market in

which, havlng regard to

the learned ~udge's findings,

it would have been reasonable,

21.

for the respondent, if sui jurls, to

have sought the services.

It is that market which provided the measure of liability of the respondent to the hospital and at the same time of the

liability of the appellant

to the respondent.

It would

strange that in circumstances where the

hospital supplied services

the respondent in response

his presslrlg

needs the law would impose on the respondent a

liability to pay for

those services less than would

have been

payable had the services been rendered pursuant to an ordinary patient/hospital relationship if negotiated on behalf of the

respondent by persons lawfully acting

for hlm.

modern

social

organisation

it was

reasonable

conduct

ahospital

system

designed

cope

with the

complicated requirements

of a whole State community where

charges against lndividuals

are not calculated by reference to

the value or costs of the services rendered to them, but by governmental policy operating over the whole of the patients treated in the system or even in any particular hospital by

reference to conslderations

of soclal equity. In that system

it inevitably occurs that the charges made agalnst particular

individuals who

have received a minimum of medical treatment

subsidise the costs incurred by the hospital

In rendering

sophisticated and expensive treatment

of other individuals.

In other words those individuals

who receive but a minimum of

medical treatment

are, in effect, charged for treatment they

have not

recelved. It was

put

Mr.

McDonald

for the

respondent:

22.

"Looking at the average type figures

here, because

they were calculated on a daily

fee equal to the

detail average

of teaching hospital, whereas the

- . _.

average fee 1 s relevant, if for some perlod of

time you were to say how much does it actually

- .-_.

- .

. . -

- .

._._._.

- -. I_

cost to keep that patient alive

on a fespirator in

an intensive care ward wlth a doctor or a speclal

nurse sittlnq by him with a

doctor on attendance

to him perhaps 24

hours a day, one could say

$300

a day was cheap, was enormously cheap.

Whereas

at the other end of the scale where

person

1 s in bed and belnq

fed you

might say,

well, that is

dearer for that person. What

being put here was that what the hospital

is doing

in renderlnq this claim, the only practlcal way to

deal with

those fees is, what

1 s the average? We

come to say,

well, because this boy is in the

hospital whirh provides the facilities, the broad range of facillties from the exotic CAT scans to

mundane

thlngs

changing

nappies,

relevant to take the average cost

of those in

saying

what

fair

and

reasonable

for

any

particular patient."

No doubt organized to meet social demands must pay the charges set by

persons taking advantage of the hospital system

the

hospltal

where

they

are

treated.

And

Mr.

McDonald's

contention is sound

so far

as their liability is concerned.

True it is that under the system there is

assessment or

calculation

of costs or charges by

reference to the actual

services rendered to the respondent.

A determination

as a

matter of official ~udqment referrable to classes of hospitals and cateqorles of patients as to what fees, having regard to

the calculation of the total costs

of runnlnq the system,

should be paid by Individual patients is not an assessment of charges by reference to the treatment given to any lndlvldual patient or any evidence of what IS a reasonable charge to be

made against him.

Once

the

category

the

patient

was

determined his charge was s o much per day whether

he was in an

2 3 .

iron lung or as in the case of the respondent lying on

a bean

bag or whether he was a

long term or short term patient. But

when according

to the hard realities of

the day the servlces

required by the respondent were

- available

- .

and only available

- .

to a

patient of his category at a

particular price then that

price is for the purpose

of the judicial observations referred

to above, the value cost or market price and, in the relevant

sense, the fair price for the servlces

In question.

In this particular case, the extent of the appellant’s liability, being the cost or value

of providing the services

the need

for which

was the result

of the incapacity, couid

best be established by the actual cost whlch the infant

necessarily

incurred In having that

need

satisfied.

The

infant being shown

to be liable to pay the charges claimed by

the hospital the extent	of the relevant value	or cost	1 s
established.

Having

regard to the foregoing the appeal must

dismissed with costs. The appellant

to pay

the

resporldent’

S costs of the appeal.

McGreg~r

*T .

THE

NOI.lIW.&L

DEFEIKANT

1 d e f e n d a n t i

has

appea led

a g a i n s t p a r t

the

judqment

of the Supreme

Cnurt

of the Nor the rn

T e r r i t o r y d e l i w r e d

F e b r u a r y

1 9 8 4

i n

a n

actlon

f o r damarJe.5

f o r

p e r s o n a l

in!l.tries

whereby

TTerdict

was

e n t e r e d

i n

favmir cf

DqMIEN EARRY LLnYI?

r p l a l n t l f f ) I n the slum of

$1,028,rl81.

2 .

There is no djspute about the facts sllrroundlna the

entitlement to damaqes .

Interlncutnrp jlldament r m 4 entered

aqainst the defendant and the	matter came bpfnre	the C011rt t o r
assessment of damaaes only.

movement

fincrers

and

the

to prevent

clac~lncr.

Physiotherapy 1 s a substitute for exercise which cannot he self

motivated. He must be fed and qiven flllida: nurslna v l q 1 l a n r ~ tn

. . .

prevent chokinrr

1 s requlred.

The learned primarTr Judcrct quoted

of nurslnq care by persons experienced In

Mr. Slmpson

that

the

plaintiff

ne045

total

the

evldence

the handllncr of

brain

damaged

children.

His Honour

found

that

was

quite

impracticable for the plalntlff to

be cared for ntherwlse than In

a hospltal

or other lnstltution where

24 hour nursing care was

available and that

he was totally and permanently dependent nn

surveillance and active nursinu.

These flndlnas have

nnt been questioned

csr challenued In

t.his appeal.

His Honour noted that effcsrts InltTcted by Mr. Slmp=on

to have the plalntiff transferred elsewhere

- to A l i c ~

SprinTs.

to Victorla,

Rua R u a Hnspltal ln

Adelalde

had

been

unsuccessful. The fallure to have the plaintlff transferred had nothing to do with the plaintlff and could not be attrlbuted t@

his parents.

Hls Honour found that no facilltles In the Northern

Territory for care of the nature required by the plaintiff were available and the fact that he had been m?ured In the Northern Territory seemed to have weiahed wlth the administrators of other

establishments in refusmu requests for his admlssion.

There

were no

famlly funds available for transport or similar support

and the cost

of travel has llmlted the parents' npportunlty nf

seeinq their child, let alone providlnu for his hospitalisation

elsewhere.

components -

Hospital

expenses

to date of trial

Allowance for future care and trpatment

550 ,

l-lo~l

Damages for loss of earnlng capacity

.rlrlo

Loss of amenlties and expectation

of life

4 ,OOCI

damaues

Special

lT'1

sufferi

and

Fain

1-1 1 1

$1.0:8

, i l B l

The sum of $408,E90 represents the amount

charrrerl h y the Arlelalde

Children's Hospltal

f o r the plaintlff's treatment over a period

of 2.483 days from the date of admisslon until the trlal date

the

current charue from time tn tlme for

patient In

the

Adelaide Chlldren's Hospital classlfied	as having a Motor 17ehlcle
Third Party eligibility. That charge	at the time judqment was

qiven was at the rate

of $280 per day.

In the hmended Notice nf Appeal, urounds upon which

th?

prlmary Judue 1 s said to have erred were stated

as fnllow5 -

"1. Faillnu to flnd as a mattpr nf fact and law

that

levying

n f daily t-ates hy the

Adelaide Chlldrens Hospital was invalid and

not in accordance with the	assessment	or
gazettal of such charues.

2.	Failing to flnd	as matter of fact and law that
the Defendant's	liability be confined to

payment of reasonable

fees, the test heins the

reasonable cost of services required by the Plalntlff's condition and the treatment that his iniuries necessitated.

5 .

3 . Fallin? to find as a matter of fact that ~t was unreasonable for the Plaintiff's rare,

prlor to trial.

t o have been cnnt1nued bp the

Adelaide Chlldrens Hospital.

Failinq to find

as a matt?r

~f fact that th?

charues

the Adelaide Chlldrens Hn?pltal

were not fair or reasonable nor reasonably

based

the

treatment

requlred

by the

Plaintiff's

iniuries.

Hls

Honour

ouuht

t o

have assessed the cost

of the treatment on the

ba 's is of charges made

by homes or instltutlons

that

provlded

the

type

care

reasonably

required bp the Plaintiff.

5. Flnding that the

charues

levied

by the

Adelaide Childrens Hospltal were approved

the Board of Manauement or based on actual

costs.

6. Receivlnrs evidence -

(a1 Relatinrr to an arrreement between

the

South

Australian

CGovernment3

and

Commonwealth of kust ralia.

db)

Relatln? t o

the averaue bedlday

c o s t at

the AdelaI.de Childrens Hospltal.

( c ) Relatinu to advice

o r rllrections

nf thP

South

Australian

Director-General

cl€

Health,

adelalde

Chlldrens H8ospltal

respect of fees to be charqed."

Senior counsel for the defendant In aruument before

us.

sought to challencre the	assessment only so far	as it related to
the sum of $408,890.

The Orders souqht are that that part of the ludgment of

the learned primary Judge

which

allowed the sum of

$408.890 by

way of

hospital expenses to the date of trlal be set

aslde and

the sum allowed for hospital expenses be reassessed

in accordance

with the evidence called

at the trlal.

The learned primary Judge noted In

his Reasons that it

was not contended at the trial

that no assessment should be made

to a charge for past hospital expenses to the date

t r l a l :

but

rather the defendant complained

of the rate of charue employed

arrlve at the sum of $408,890.

The argument for the defendant at

first instance included submissions that hospitallsation

in the

Adelaide Children' S Hospital at the rates It has charued from timp to time, rather than in an equivalent nursinu home, was extravagant and unreasonable.

Senlor counsel for the defendant before

1.1s submitted

that a plaintiff could recnver

a sum by way nf damaTes for

medlcal treatment supplied only if he coluld

prove he incurred a

legal oblrqation to

pay for that treatment.

He referred

Beckmann v . Haddv C19593 S.A.S.R. 11:

Blundell

T T .

[luscrrave

(1956) 96 C.L.R. 7 3 (Blundell); Griffiths v . Kerkemever fl?i6) 139 C.L.R. 161 [Griffiths). Thouqh he conceded that such a leaal obligation could be shown bp provinu a statutory liability to pap

the fee charued (Tvrrell

v. Tvrrell 25 S.A.S.R.

7 3 ) . in rhe

absence

such

a statutory llabillty the amount which the

plaintiff was leually liable

to pay was a reasonable sum for the

services actually provided

(1.e. nursin? care

services) and not

for full hospltal treatment. He submitted that this proposltlon

had been accepted by the primary Judge. The plalntiff had falled

to prove a statutory obligation to pay fees at the rates charued

by the Hospital.

Further,

the proof offered by %he plaintiff In

respect of reasonable

costs

was.

heubrnltted,

malnly

inadmissible but in any event showed only why the amount charqed

was charued and did not prove Its reasonableness. He rontended

that the proper wav of assessing

the

reasonable rosts

nf t h e

nurslnq care from

1 July 1977 lhavlncr reqakd'tn a rnncessl&n that

he made and from which e

did not resile before

11s. that for the

first six months the plaintiff needed full hospital treatment

might be conside,red to need such treatment) was to

ascertain by

way of

an "industry survey" the prices charued and allowed

institutions which

in fact provided such care:

that

care, he

submitted, was upon the evidence all that was

require? and, in

fact.

given

by the Adelaide Children's Hospital. He sald that

the onlv admissible evidence of the reasonable cost of

the care

and treatment required by the plalntiff

had,

in fact,

been

provlded by the defendant. On that evidence the amount awarded

to the plaintiff for

his

treatment in the Hospltal should have

been of

the order of $100,000 instead of

$400.000. Later thes?

figures were, by agreement, otherwlse modified.	I refer to this
later.

Senior

counsel

for

the

plaintiff

referred

to the

fundamental principle to be applied

by a Court in

assessmu

damaqes occasioned by loss and damaqe suffered in consequence

negligence. viz.

that the plalntiff should

be awarded such sum

of money

as will nearly

as possible place

h m in the same

position as if

he had not sustained the Injury.

He referred t o

Todorovlc 17. Waller: Jetson v. Hankin

(1981) 150 C.L.F. 402 per

Gibbs C.J.

and Wilson J. at

p.412.

He noted that the evidence

established that the plaintiff was admitted to the hospital on	F;
January 1977 in a deeply unconscious state and remained there constantly until the date of the trial. Thls. he submltted. was

not disputed.

He dld not contend that

It had

been proved that .

the plaintiff had incurred

a statutory obligatlon to

pay the

hospital

charges

the

rate

claimed.

He referred

the

following facts. whlch he sald had been found	by the learned
primary Judge -

That it was impractlcable for the plaintiff

t n

he cared for otherwise than In

a hospltal or

ot.her institutlon where	24 hours a day nursina
rare was available.

The plaintiff was

totally

disabled, hls

In]urles created a need €or total nursina care

whlch need had existed absolutely since	hls
admlssion.

In all the

circumstances

was

not

rmreasonable for the plaintiff's care to have

continued at the Adelalde

Chlldrm's Hospltal.

There

was no 7ustlflcation for findlng upon

the evidence that it

was unreasonable for that

hospital

continue

with

the

plalntiff's

treatment and care throughout.

The plaintiff's contlnued treatment

"in the

hospltal", being

the

Adelaide

Children's

Hospltal,

was

necessary

and

reasonable

fulfil the need for care consequent upon hls

Injuries.

In summary, he said that the learned primary Judae had found

as a

fact that the injurles sustalned created a need for total nurslna

care: that in the circumstances it

was reasonable for such need

to have been met and satlsfled by the plaintiff

rernalnlncr In the

Adelaide Children's Hospital. These findinqs

fact, counsel

submitted, were open to

his Honour upon the evldence. Further.

9 .

he contended that on appeal the defendant

was obllsed to take the

evidence most favourable to the plalntiff in support

of findlnqs

of fact.

referred

Australian

Iron

Steel L t d ,

Greenwood ( 1 9 6 2 )

107 C.L.R. 3 0 8 ;

Tavlor v.

Mlller C19693 'd.&!.

987: Puiick v. Savic C19713 V.R. 632: Hodcres 77. nest (198.1) 53

ALR 373 per Klrby J.

He drew attention to evldence which he claimed supported

the findings, vlz. -

(i) As to the plaintiff's condition. treatment and need for treatment. the vldence of the

wltness, Simpson,

at pp. 23. 30,

32. 3 7 . 40,

50	( A . P . ) .

(ii) The evldence of the

witness, Dinninq, p.212

( A . P . ) .

(ili)The

evidence

the

witnesses as to the

plalntiff 'S

nursina

treatment

and, In

particular, that of

the wltness. Slster Dunn.

pp.127, 128-130

( A . P . ) .

(iv) The evldence called by the defendant as to the

nursinq needs of the plaintlff dld not

dispute

the evidence called on behalf of the plamtiff particularly that of Sister Lockwood who uave evidence (on behalf of the plalntlff) as to

the nurslnq needs of the plaintiff:

Ex.D 34

at pp.612-614 (A.P.).

Counsel referred to the unsuccessful attempts to

have

the plaintiff placed in

instltution other than

the Adelaide

Children's

Hospital.

Having

reqard

to the

learned

primary

Judge's findmqs

as to the plaintiff's needs, he submitted that

in the

circumstances It was not unreasonable that such needs

satisfled by the plaintiff being

a patient at that Hospltal

during the period

from 5 January 1977 to the date of trlal.

10.

referred to Griffiths; Hodues

Frost (supra). The contention

that it was unreasonable for the plaintiff to remain a patient at

the Adelalde Children's Hospltal was. counsel said. akln to

arqument that the plalntiff falled to mltiqate hls

loss bp not

becominq a patient at some other institution or nursinq home. It

was.

he submitted, for the Court

to determine what In the

circumstances was reasonable; insofar as the defendant contended

that the plaintlff had not mitisated

his

damages the onus

establishlng thls lay on

the defendant; Watts

v. Rake (1960) 108

C.L.R.

158 per Dlxon C.J. at p.159;

Purkess v. Crlttenden ( 1 9 6 5 )

114 C.L.R. 164 at pp.167-8: Karabotsos v. Plastea Industries C19817 V.R. 675 per Kaye J. at p.687. The learned prlmary Juriqe.

he said,

in determininq thls question, took lntn account facts

and matters which were relevant.

viz.

the plaintiff's

aTe and

conditlon, the endeavours of

Mr. Simpson and Mr. Fenqillp to

obtain other facilities for the plaintlff. the

situation of the

plaintiff's parents. He submitted that the test

of reasonableness

in the circumstances

this case was one

to be

determined by

considering what a reasonable person In the plaintlff's situation

would have

done in the clrcumstances. takinq Into account

his

aqe, capacity and mental condition.

He referred to Glavonilc v.

Foster

C19797 V.R. 536 at p.537;

Karabotsos

77.

Flastex

Industries (supra). He submitted

that

the

flndlnqs

the

prlmary Judge on this issue, whlch included the findinu that the

charges made by the Hospltal for the treatment of the plaintiff

as necessitated by his inluries were falr and reasonable. should

not be disturbed.

Such findinqs of fact. he submltted. were open

11.

to the learned primary Judge

on the evidence, viz. that of the

witness, Glenn,

whose position as

special adviser to the South

Australian Health Commission related to both finance and

pollcv.

. ..

. .

- -

- .

.. .

. .

. .-. -

that the hospital was not a public hospitai under the Hospitsls

m. 1934-1971 (S.A.) but was a srants and teaching hospltal. He

noted that in the early 1970's the Hospital was dlrected to

charge the same fees as

those gazetted for public hospitals. A s

from 1 October 1976 there was flxed with

reuard to compensable

patients in recognized hospitals. e.g. teaching hospitals which

were also public hospitals within the meaning

the Hospltals

Act a daily fee equal to the average inpatient cost for the prior

financial year

which was first fixed at $115 per day. He referred

to the progression

of the dally rate from 1977

up to 1983.

Further, he submitted the

fees claimed by the Adelalde Chlldren's

Hospital

as appearlng

in Exhlbit 15

were appropriate for that

Hospital. Having regard to the status

the Hospltal

aE a

grants and teaching hospital and performing the role

of a public

hospital, he

submitted that the fees

fixed for public hospitals

under the Hospitals Act were relevant to be consldered by the

Court

in order

to determine whether the fees claimed by the

Hospital were reasonable. whether or not

it had been directed by

the approprlate authority to charge such fees.

He submitted that

by such evidence the Court was

able to consider what was

"standard fee" for a recognized teachinu hospital treating a

compensable patient as an lnpatient of such hospltal.

72.

I have not attempted to restate completely all arquments

of counsel.

A consideration of the issues in this case will

assisted by a reference to the principles upon whlch damages for

personal in~urles

are

assessed. See e.g. Todorovic

v. Waller

(supra) per Gibbs C.J. and Wilson

J. at p.412.

It 1s well-established that an assessment of damaqes must always be tested agalnst the "touchstone

of reasonableness".

If there

over-provision

then

appealable

rror

map

demonstrated. In Sharman v. Evans (1976) 135 C.L.R.

5 6 3 at p.566

Barwick C.J. referred to an amount for expenses for the treatment

received bp the plaintiff which had been included	in her award	of
damaaes. He said -

"The first qround of error. in my opinion. was that his Honour allowed the c o s t of provldlng premlses

at the respondent's mother's house

and of nursing

attention

durinq

those

periods

which the

respondent might choose to sojourn in that house

part of the award. It seems to me that	it was not
reasonable to make the appellant pay	for these

costs.

They were not reasonably necessary

in any

real

sense for the

treatment

and

care

the

respondent.

As I read the Chief

Justice's judqment, he was referring

the

estimation

of future

expenses

rather

than

to past

expenditure: but the principle is the same. The same approach

was taken by Glbbs J. (as he then was) and Stephen J. at p.573

where they said -

1 3 .

"Where the plaintiff is to

cared for in the

future will not only directly affect the extent

nursing

and

medlcal

expenses

which

are

compensated for;

it will also bear upon the extent

of her loss of the amenities and enloyment

of llfe.

a lifetime substantlallv spent

1 ~ 7

hospital.

.- .:.-

greatly aggravate that

loss.

In c,ur vlew the

medical evldence in this case does not 7ustlfy the

conclusion that the defendant should be requlred

compensate for future nursing and medical expenses

on any basis other than that the plalntiff's future

will be one substantlallp spent

in hospital.

The appropriate

crlterion

must

that

such

expenses as the

plaintiff

may

reasonably

incur

should be recoverable

from

the

defendant:

Barwick C.J. put It

in Arthur Robinson (Graftnnl

Pty. Ltd. v. Carter (19Ez@1 122 C.L.R. 649, at p.661) "The question here is not what are the Ideal

requirements

but

what

are

the

reasonable

requirements of the

respondent". and s?e Chulcuunh

Hollev, per Windeyer

1 1 9 6 8 ) 41 A . L . J . R .

3 3 6 .

at p . 3 3 8 ) . The touchstone of reasonableness in the

case of the cost of provldinu nurslnq and medical

care for the plaintiff In the future is, no doubt,

cost matched against health benefits to the

plaintiff. If cost is very great and benefits	to
health slight or speculative the cost-involving

treatment will clearly

be unreasonable, the more

if there 1 s available an alternative and relatively

inexpensive mode

of treatment, affordinq equal or

only slightly lesser benefits."

To a similar effect are the words of Neuus

J. in Moss v.

C19641 W.A.R. 244 at p.24R.

His Honour was there deallna

with damages claimed by a quadripleglc plaintiff. in partlcular the claim for estimated future expenses as an inmate of a

hospital andlor for nursing attendance. Referrinq

to an araument

that had been put forward as to the basls upon which that part

the damages should

be calculated, his Honour said at pp.24P-249 -

"Much as

I think plaintiff ought

t o be treated as

generously as possible,

I would not regard that

fair to defendant.

I aTree wlth counsel

for

defendant, that

plaintiff

must

choose

the

alternative a reasonable man would choose

if he had

no claim for damaues.

I am not satisfied that

plalntiff's sufferings, mental

otherwise, will

increase or change at all if

he becomes an inmate

of Cthe hospitall.

In Griffiths,

Gibbs J. (as he then was) said at p.164

"Of course the services must have been reasonably required by the plaintiff because of his physical condition attributable to the accident, and the

plaintiff could not expect to be awarded more than

it would have cost

the

services

had

been

provlded by

a qualifled person on

a commercial

basis because he

must mitigate his damaue."

I do not overlook that where expenses are provided in

award of damages for a plaintiff in respect

of his treatment they

are

not necessarlly

to be on a minimum scale; cf. Wvld

Bertram C19707

S.A.S.R.

1 per Bray C.J. at pp.6-7.

To these

authoritles I add a reference

to O'Brien v. McKean (1968) 11R

C.L.R. 540 per Barwick C.J. at pp.548-549.

It seems Dixon C.J. and Fullagar J. in Blundell ( e . 4 . at

p.79) were of the

view that

plaintiff is not entitled

t o

recover an

item of damages consistinq of expenses not yet pald

unless he

is legally liable to

pay them

(Dixon C.J. consldered

that a "moral and soclal obligation" mlght be sufficient).

(And

see discussion of Gibbs J. (as he then was) of this case in

Griffiths at p.167).

In England, the Court of Appeal ennunciated

different principles to govern recovery where nursing, hospital

or medical services

are gratuitously provided. In Donnelly

~ 7 .

Jovce C19743

Q.B. 454 (Donnelly) it was held that the relevant

loss to be compensated was the existence	of the need for such
services. Megaw L.J. said at p.462:-

15 .

"The	question from what source the plaintiff's

needs have been met. the question who has paid the

money or given the services, the question whether

or not the plaintiff is or is not under a lemal or

moral liability to repay, are, so far as f h P

defendant and

his Iiahllitp are :concerned. 311

irrelevant.

The

plaintiff's

l o s s ,

take

this

present case, is not the expenditure

of money

buy the speclal boots or to

pay for the nursinq

attentlon.

His loss is the existence

of the need

for

those

special

boots

or for

those

nursing

services, the

value

which for

purposes nf

damaqes -

for the purpose of

the ascertamment of

the

amount of his loss - is

the

proper

and

reasonable cost of supplyinq those needs."

In Grifflths at p.164 Gibbs

J. considered that

"this

statement of principle

may

require a little

qualificatlon".

Although of the view that

Blundell

should not

be applied

where services are voluntarlly provided by relatives

or frlends,

in his opinion the Court should not abandon the principle that a

plaintiff whose injuries have created a need for hospltal or

nursing services cannot recover damages in respect

of that

need

unless Its satisfaction is

or may be productive of

financial

loss. Grifflths was concerned

with,

inter alia. whether a

sun

representing the value

of services rendered to

a plaintiff and to

be provided for

him by his fiancee and members

of his famlly was

recoverable. Gibbs

J. said at p.165 -

"In

opinion it is not right to sap that

plaintiff who suffers inluries that create

a need

for

medical

hospital

treatment.

nursinu

assistance or

pharmaceutical

supplles

thereby

necessarily

suffers

loss

that

calls

for

compensation by way

of damages

.....

my opinion. in cases of this kind

also, the

plaintiff is entitled to damaqes only to the extent

that the need thus created is or may be productlve

of financial loss. If, for example, the state will

provide the necessary servlces

free, the plaintiff

will.suffer no loss and can recover

no damaqes."

16.

Mason J. In Grlffiths

was of the view that

the principle

formulated by the Court

of Appeal in Donnellv was correct

"Enough has been

said

in the cases which have been

decided more recently to indicate that the

old vlew

based on

the proposition that a plaintlff is not

entitled to recover from the defendant the servlces

provided to him unless he can show that

he 1 s under

a legal liability to pay for them, is

longer

acceptable. That

view proceeded upon the footlng

that the relevant loss was the legal liability to pay for the service. It is now recognized that the true loss is the loss of capacity which occaslons

the

need

for

the

service.

consequence

the

existence of a legal llabllity

to pay i s not the

dominant consideration."

(p .193)

Later, referring to an issue in Donnellv as to whether the waues

given up

by the mother so that she might provlde nurslng services

for

the

plalntiff in that case. were a proper measure

the

damages,

his Honour said at p.193

"In Donnellv v. Jovce the value of the

nurslng

services prcjvided

bv the mother was calculated bv

reference- to the waqes which she had sacrlficed

alving

her employment and the damaaes were

assessed on this footing. But the case does not

decide

that

this

is the

true

measure

the

relevant head of damage.

The decision is. I thlnk.

to be explained on the qround that the case was

conducted on

the footinu that if the

damaqes were

recoverable

respect

the

nursing

services

provided by the mother they were

to be calculated

by reference to the wages which she had sacriflced.

In general the value

or cost of provlding voluntary

services will be the standard

o market cost of the

services -

see Tavlor v. Bristol Omnlbus

Co. Ltd.

C19751 1 W.L.R.. at p.1058

.... l '

Counsel for both partles proceeded

on the basis

tha't

Adelaide

Children's

Hospital

could

maintain

a claim for

necessaries against the infant plaintiff In respect

of hls perlod

there. Whether such a claim is contractual

or quasi-contractual

1 7 .

need not be resolved here. The better view seems to be that the foundation of an action for necessaries auainst an Infant

person

suffering

disability contract) is an obliuation imposed by the

(affectlnq

his

capaclty .to

. .

law against that person

to "make a fair payment in respect of needs satisfied" (see

v . Inman C19083 2 K.B. 1 per Fletcher Moulton L.J.

at p.8;

Cheshlre &

Fifoot, The

Law of

Contract, 4th Aust. ed.

( 1 9 8 1 ) .

pp.735-736).

But

this

analysis

correct,

whllst

liability which thus

arises

is not

contractual

(i.e.

not

"consenu") it need

not follow that

it is quasi-contractual (see

S.J.

Stoljar, The

Law of Ouasi-Contract. (1964). pp.178-180).

Whatever the true nature of the plalntiff's obllqation, It would

seem that he

is liable to pay the Hospital a reasonable sum for

the services rendered

him (as is. In fact, common ground) -

reasonable, that is, in

terms of what

was

undertaken

and

provided. (see qenerally Cheshire & Fifoot, pp.416-419). It may be that the Hospital could sue the plaintiff on

a quantum meruit,

seeking a reasonable sum for its services

the plaintlff. In

Horton v. Jones (No. 2 ) 39 S.R. ( N . S . W . )

305 at p.319 Jordan C.J.

discussed the action

for quantum meruit -

"If a person employs another to do work, or agrees to buy goods from him, nothing being said as to the wage or the prlce, the law implies a promise to pay

a reasonable wage or a reasonahle price, and

action map be maintained for

a quantum meruit.

. . ."

However, in disucssing the circumstances in

whlch an action for

quantum meruit may

be brought. the learned Chief Justice referred

only to cases where there

is or has been an express contract,

implied contract

a purported contract which

1s void. See

18.

generally Cheshire

Fifoot, pp.12-13. p.730; Hall

v. Busst

(1960) 104 C.L.R. 206 per Windeyer J. at p.241 et seq.

- ._ .

- ..

The basis of a plaintiff's entltlement

to recnver'frnm

a defendant his costs

of hospital treatment

1s referred to by

Wells J. in Tvrrell v. Tvrrell (supra) at pp.87-88, where he

said :

"Mr. Perry's araument was dellvered

against

the

background of Blundell v. Musurave and it is. therefore. approprlate to examine it. That case

has been the

sublect

extenslve

comment

and

re-appraisal by the

High Court in Grifflths v.

Kerkemever, but I should not wlsh It to be supposed

that this judgment represents

attempt on my

part, at this prlmary level, to resolve the several matters of controversy that have been canvassed by

their Honours. I

am, having regard to the vlew of

the legislation that

I have taken,

prepared to

approach the instant case on the assumption that the "old view" still obtains, namely, that the

plaintiff

not

entltled

recover

from

the

defendant the cost of the services provided for him unless he can show he is under a leual llabllity to

pay for them: at

least, I am safe

In assertmg

that, provided

the

expenses

were

asonably

incurred as a consequence of the

injury, they are

certalnly recoverable as speclal damaues

If there

1s a legal liability to pay, even though there

1 s a

possibility that the debt may be forgiven

by the

hospital.

However, that was a case where the judgment was arrlved at after

a "close scrutiny of the

legislation", vlz. of the Hospitals

m, 1934-1971 ( S . A . ) and Regulatlons. Here it is conceded that

the Act and Regulatlons do not themselves impose a liability on

the plaintiff for the amount in question sought to be recovered

as damages from the defendant. The decision in Beckmann v. Haddv

(supra) 1 s of some assistance as it decided that parents who had

made no express agreement to

pay

hospltal charges for their

child's treatment were under an

obligatlon to pay

to those who

rendered services to the child at the hospital a reasonable sum

for such services. See per Ross J. at p. 15.

Nor do I qree tylat ...

. . . -.-

. ..

_ _

the cost

of maintaining a

hospital bed is a yardstick by which

the sum charged may be measured as reasonable or otherwise. That cost, on the evldence in this case, is determlned artificially, without reference to the particular cost, e.q. of maintaining the

plaintiff's bed;

or calculating the value

of services provided

for him.

I do not suggest that hospitals should have to 7ustify

their charges for patlents by a

separate consideration of each.

In most cases a situatlon such as we have here will

n o t arlse.

Usually, there would be some evldence

of an acceptance bp an

adult of an obligation to pay at the rate stlpulated by the

Hospital by

lmplicatlon

otherwlse:

an obligation by

statute or

agreement to pay what the

hospltal would propcse ts

charge.

But here the circumstances

are qulte slnuular. In my

opinion, if the hospital sued the plaintiff. it would not be

able

to recover in

an actlon more than

an amount calculated by

reference to the reasonable cost of

nursinu care.

If it

were sought to estimate the amount to

whlch the

plaintiff was entitled In terms

of Donnellv or Grifflths then we

would seek to ascertain the plaintiff's need; the reasonable

cost of

meetmq this need would be the measure of such damages.

So the amount recoverable would be the cost

of provldlnq nursinq

care and not

of full hospital treatment. And if the principle is

that the plaintlff's injuries are compensable only insofar

2 0 .

they had been or were likely to be productive of financial loss, then only to that extent are they compensable. The findinqs of

the primary Judge recognize, though negatively, that nursinq

home

care

would

have

b en

adequate

assuming

emergency.

Uncontradicted evidence given

by Mr. Simpson in the plaintlff's

case was to thls effect

"....Mr. Simpson, I'm obviously at cross-purposes,

but all that was necessary for Damien after say the

first

6 months after his accident was the qood

nursing

and

physio

treatment

that

you're

recommending for

him now?----Yes.

And that was all that he needed?----Yes.

And basically all that he uot

the Children's

Hospital?----Yes.

To calculate the entitlement to damages for

the expense

pre-trial treatment by employing nursing home rates

is, of

course, identical with the method of calculation adopted by the learned primary Judge for post-trial nursing care: yet the needs of the plaintiff have not altered durinq the period since his

accident

(leaving

aside

the

flrst

six months). This is

consistent with what

his Honour said:-

"Whilst I

have found that in the clrcumstances to

date

his

treatment

the

Adelaide

Children's

Hospital has been entirely reasonable. it would be unreasonable on the evidence to treat this type of

hospitalisation as necessary

the

long

term

future.

I doubt if there is really much dispute

about this. His condition is now basically static.

I have received a wealth

of evidence as to the

availability of modern nursins homes, as to the

facilities and care

that

can be provided in them

and as to present costs."

Some

reference

has

been

made

mitigation.

This

subject is referred to in e.g. H.

Luntz, Assessment of Damases,

2nd ed. (1983). p.196. We were reminded in

aruument that the

onus Of proving

failure to mitisate

lay upon the defendant.

proceed upon the basis that

plaintiff cannot re-cover

for

"avoidable loss".

See McGreuor on Damases, 14th ed. (l~fiO!,

p . 1 5

et seq.

So here, it is said, if the plaintiff had moved into

nurslng home, he would have avoided a loss consequent upon beinq

a patient at the Adelaide Chlldren's

Hospital, represented by the

difference between the amount charged by the Hospital and what

would have been charged

by a nursing home. Yet, as I understand

the issues

here, the plaintiff's only liability

1s to pay a

reasonable sum for the services provided.

A s these were nurslnu

care services,

he has not incurred any llablllty to pay the sum

of $408,890 calculated usinu the Hospital rates.	So no question
of mitigation arises.

From the authoritles and the flndlnas

the primary

Judge and evidence

and arsument to which we have been referred,

the following propositions seem to emerue

The plaintiff

not

under

any

statutory

obllgation to pay the amount of $408,890.

The plaintiff is under an obllgatlon to pay a

reasonable

sum

for

his treatment

Adelaide Children's Hospital.

22.

After the first s1x months of treatment the

rate

charge

that

should

be adopted

calculating damages

in this case

i s the rate

ordlnarily and reasonably charqed for nursinq

care treatment.

If the'measure of his damaaes m this area is

to be assessed by reference

to the plaintiff's

"needs" then the

same result will be reached,

i.e.	the need was for nursinq care services
only.

This cost is, as established by the evidence, materially less than the charge made. In fact it has been agreed by counsel for the

plaintiff that if, against his submissions,

this court came to the

view that the proper

charge was one for nurslng care, there should

substituted a fiaure of $124,000

for

$408,890.

In my opinion the appeal should be upheld and the ludsment set aside. In lieu thereof there should be substituted for the

component $408,890 a figure of $124,000.

(This flgure appears to

have been agreed upon by the parties

as the proper one

substitute in the event that the appeal is upheld;

if it is not

correct, the partles may exercise liberty to apply

to supply the

2 3 .

appropriate figure). Judgment should be entered for the plaintiff

for a total sum of $743,191.

... ~

. .

The plaintiff is to pay the defendant's costs.

[1985] FCA 118

2 Apr 1985