Zheng v Cai

[2009] HCATrans 299

[2009] HCATrans 299

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S67 of 2009

B e t w e e n -

TIAN ZHEN ZHENG

Appellant

and

DEJU CAI

Respondent

FRENCH CJ
GUMMOW J
CRENNAN J
KIEFEL J
BELL J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON FRIDAY, 6  NOVEMBER 2009, AT 10.01 AM

Copyright in the High Court of Australia

MS S. NORTON, SC:   If the Court pleases, I appear for the applicant with my learned friend, MS M. FRASER.  (instructed by Brydens Law Office)

MR S.G. CAMPBELL, SC:   I appear with my learned friend, MR S.E. McCARTHY, for the respondent, may it please the Court.  (instructed by McLachlan Chilton Solicitors)

FRENCH CJ:   Yes, Ms Norton.

MS NORTON:   As your Honours are aware, this is an application for special leave to appeal a decision of the New South Wales Supreme Court of Appeal with respect to an adjustment they made to economic loss, both past and future, with respect to a lady who was injured in a motor vehicle accident.  Damages under that Act fall to be determined in accordance with the Act, but it is common ground between the parties that, with respect to this application and the appeal itself, if leave be given, it is common law principles that are relevant on this point.

What happened was the trial judge found that certain payments made to the applicant by a church of which she was a member should not be deducted from her economic loss, both past and future.  The Court of Appeal of New South Wales found that those payments should be deducted. 

I would like to start by taking a little time to take us through the actual findings made by the trial judge and some of the comments he made.  The judgment of the District Court was not an ex tempore judgment, but it was handed down reasonably quickly after the trial.  So I would ask the Court to make some allowance for that in that sometimes it is setting out - you have to go backwards and forwards a bit.

We say there are a number of very important things that the trial judge found and that are not truly challenged in this application.  The first is on the first page of the judgment, which is at 207 of the application book, at about point 30 where the trial judge made a finding:

The plaintiff appeared to be a satisfactory witness although she gave her evidence through an interpreter so at times it is always difficult to assess it.

The case became complicated as the defendant put to the plaintiff ‑ ‑ ‑

GUMMOW J:   Where are you reading from, Ms Norton?

MS NORTON:   Point 30.

FRENCH CJ:   Page 207?

MS NORTON:   Page 207, I am sorry, your Honour, 207 – between 30 and 40.

GUMMOW J:   Thank you.

MS NORTON:  

The case became complicated as the defendant put to the plaintiff that she was not telling the truth, was in effect misleading the court deliberately.  Her credit was challenged.  She was in the witness box under cross-examination for an extensive period of time.

I would like at some later stage to just take the Court briefly to some of those challenges of credit, because it is our submission that really the main thrust of the argument in the District Court was that this lady was not telling the truth.  She was in fact employed by this church and receiving wages.

The trial judge repeated the findings with respect to her credit after reviewing some of the evidence and that is in the appeal books at 215, at about 40 on the page, the paragraph beginning:

In the end I have reviewed all the material I have been given.  There is nothing there which would cause me to find that the plaintiff is an unacceptable witness.  To the contrary, I found her to be an acceptable witness.

FRENCH CJ:   The key finding is at 212, is it not, at about line 25 – that paragraph?

MS NORTON:   The key finding with respect to the application, your Honour?

FRENCH CJ:   Yes, with respect to her status with the Christian Assembly of Sydney, that she was not employed.

MS NORTON:   Yes, but I would like to take a little time, if I could, just to go through some of the other findings because they become relevant with the way the matter was approached in the Court of Appeal by saying this looks like wages.  If I could, I will move on to that.  At 216 the trial judge makes a finding at about point 10 of the page that:

The plaintiff had an excellent work record, she worked up to the time of this accident.

His next finding is at 216, 50, and that is at the bottom of that page, that:

between 11 May 2000 and 11 July 2001 she was unfit for work.

Totally unfit for work.  The next relevant finding is on the next page at 217, down the bottom of the page:

The evidence is very clear from all of the doctors and that is the plaintiff’s earning capacity has been restricted.  She cannot work in her previous employment as a seamstress.  She cannot do work which requires a lot of sitting or standing or heavy lifting.  Two doctors, one from the defendant and one from the plaintiff, say it is unlikely she would re‑enter the workforce and, as I said, the claim dates from when she returns to Australia, which conveniently is about two years ago.

FRENCH CJ:   Is not the key question here the approach which the Court of Appeal took, putting to one side the natural justice question, at 253, paragraph 41?  That went to the intent of the church in making the payments, did it not?

MS NORTON:   Yes.

FRENCH CJ:   An attributed intent.

MS NORTON:   I have had some difficulty with that paragraph working out whether it actually amounts to a finding that the payments were not beneficial, because it says:

That letter makes it clear that the payments were intended not merely to benefit the respondent insofar as her daily living and accommodation expenses were concerned, but to enable her to function more effectively as a volunteer church worker.

So it seems to me that is not a finding that the payments were not beneficial.  In fact, the Court of Appeal in oral addresses were invited to make a finding of fact, that the payments were not charitable.

FRENCH CJ:   But does this not tell us something about the test that is being applied by the Court of Appeal in its finding adverse to the applicant, namely that the payments constituted a form of compensation for her inability to obtain employment.

MS NORTON:   That is right, your Honour.

FRENCH CJ:   That is what it is all about, is it not?

MS NORTON:   Yes your Honour, but I was trying to put that into context because what is compensated, as we all know, is earning capacity, so I was just taking the time to show that the trial judge found that she had lost her earning capacity ‑ ‑ ‑

FRENCH CJ:   This was loss of earnings, was it not, during the relevant period?

MS NORTON:   In the past, yes.

GUMMOW J:   Do you want to take us beyond 218?

MS NORTON:   Thank you, your Honour.  At 219 point 6, there is a finding that she has a significant disability, but some capacity, and a finding at 221 which we say is very relevant, and that is:

People in the church seem to be very kind, they look after the plaintiff.

That is at 221, point 10.  Then, your Honour, I will return to where I was taken earlier at 212, which is indeed the critical passage.  The trial judge says there at about 24, talking about exhibit 4, which is the letter from the church:

The defendant tendered that document I have just referred to.  There was no other evidence called relating to her position with the church.  I accept what the plaintiff said.  I accept what the Christian Assembly of Sydney said and I find that the plaintiff was not employed by the Christian Assembly of Sydney.  I am satisfied they paid her an amount to assist with her rent and living expenses, that those moneys were provided by donations to the Assembly and that the plaintiff did voluntary work there, which she commenced on 19 June 2005 and has continued.

We say there are two particularly important things there.  The first is he says he accepts what the plaintiff said about this particular matter.  If you turn back to page 211, at about point 20, the trial judge sets out what she said in a sentence starting:

It was put to her that she was employed by the church, a regular amount was deposited in her bank account and as a result she had no need to look for work.  She denied that and said what actually happened was that, because of the generosity of various parishioners of the church, she was provided with her living expenses. 

So the trial judge has accepted that piece of evidence which accepts that it was the generosity of the parishioners of the church which resulted in these payments being made. 

CRENNAN J:   The passage above is also important in terms of understanding what the voluntary work involved.

MS NORTON:   Yes, your Honour. 

She did some voluntary work at the church, she attended there most days.  She answered the telephone, spoke to people who were interested in the church and at times did some preaching.  She did not have any set days she had to attend or set times and generally was present there about twenty hours a week. 

There was further evidence that she did not do any photocopying.  She had nothing to do with the preparation of the weekly activities list.  She opened the door for old people if they could not manage it.  She helped them with the photocopier if they could not manage it.  One assumes she may have even decorated the flowers.  She spoke to people who were sick or worried.  That was the kind of thing that she did.

Her evidence - and I can take you to it, but it is in the submissions – was simply that she did spend a lot of time there, but a lot of the reason for that was that she had nothing to do, and it made her feel better to go and spend time at the church with her friends.  There is no evidence that the work she did was of any particular value to the church and, in fact, her evidence was that if she not have had these injuries she would have worked and volunteered at the church.

So we say the trial judge is correct in finding that these payments were beneficial in nature and should not have been sent off against her economic loss.  There is no doubt that they are voluntary payments by the church.  There is no doubt that she does not have to attend for any particular time, or do any particular tasks to receive them.  There is no doubt that they can cease them at will, and once we got to the Court of Appeal there was no doubt that she was no employed by the church.

So the reasons given for them being deducted were that they were regular in nature and we have said in our written submissions that the fact that they are regular in nature is not really of much assistance in answering this question.  If she had paid for a sickness and accident insurance policy, those payments would have been regular in nature.  It is not anything which helps you solve this puzzle.  Similarly, if you are in receipt of a disability pension which, under principles before the Act was amended, were not taken into account in reducing damages, those payments were made regularly.

They were also made because people by and large were unemployed.  So the fact that she was unemployed and receiving payments because she was unemployed we say does not answer the question either.  The question is, were the payments beneficial, benevolent payments?  What was the intent of the church?  Did the church intend to benefit her so that she could have these payments and pursue her right to damages?  We say the answer to that is clearly, yes.  Or did the church intend to benefit the tortfeasor by saving them the responsibility of having to pay for her loss of earning capacity that they had caused?  We say the answer to that, if they had been asked, was clearly, no.

The Court of Appeal accepted a respondent’s submission that the trial judge applied the wrong test.  As I understand it, that means that he applied the wrong test when he disregarded the payments because he found they were not related to a contract of service.  We say that was a correct finding and with respect to whether he applied the wrong test or not, that was in fact the only test that he was asked to apply at the time.  The case was clearly run on the basis, this was a sham and she was an employee, and that was the question that the trial judge was asked to decide.  I will go to the references to that when we get to the second part of the argument.

The Court of Appeal then asked how the payment should be characterised, and we have no quibble with that.  They found that the real intent was that she could perform voluntary work more effectively as a volunteer worker.  Now, the issue is, is that the right test for these types of payment?  Are we really looking for what the real intent is or is something disqualified because one intent of it may be beneficial but another result of it is that there is some benefit to the giver?  We say that is the ‑ ‑ ‑

GUMMOW J:   Where does this word “intent” come from in this area of discourse in the cases?  It is an awkward word in any context, let alone this one.

MS NORTON:   It is, your Honour.  It comes from, as I understand it, the Espagne decision when both Justice Windeyer and Justice Dixon were talking about the intent of the donor.  We say the intent they were talking about was the intent about whether they should benefit the tortfeasor or the injured person.  I think it is set out in ‑ ‑ ‑

FRENCH CJ:   They were talking there, of course, about a statutory ‑ ‑ ‑

GUMMOW J:   Yes.

MS NORTON:   Statutory construction, it was ‑ ‑ ‑

FRENCH CJ:   One can talk about statutory intent, and ‑ ‑ ‑

MS NORTON:   That is the same in the case of Manser v Spry where they were trying to work out again what the statutory intent was.

FRENCH CJ:   And Redding v Lee, I think.

MS NORTON:   And Redding v Lee.  I do not think there are many private charitable cases, or at least ‑ ‑ ‑

GUMMOW J:   Well, that is what I was wondering, yes.

KIEFEL J:   Is the reference to “intent” derived from Justice Windeyer’s reference at page 600 of 105 CLR at the end of the first full paragraph, “The test is by purpose rather than by cause.”?  At about point 3 on the page.  The question is:

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.

MS NORTON:   Yes.  What they meant there by “cause” was, the fact that you are making a payment because of the injuries which are the subject of the claim for damages, that would be the cause, but the purpose is, who do you seek to benefit by making that payment, the tortfeasor or the victim of the tort?

GUMMOW J:   As the Chief Justice points out at the bottom of 600, four lines from the bottom of 600, that is then translated into the manifest policy of the Act.

KIEFEL J:   Its statutory purpose.

CRENNAN J:   I think “intent” in relation to charitable givers is discussed at the bottom of page 599 and at the top of page 600 which leads into the passage Justice Kiefel drew your attention to.

MS NORTON:   I think it is also mentioned at 599 towards the top of that page:

But as I understand the proposition it is really elliptical and means that the generous giver intended his generosity to benefit the injured man and not to affect the wrongdoer’s liability, and that, that being the nature of his gift, it would so take effect.

FRENCH CJ:   It may be that a statement of principle which tries to encapsulate both statutory payments and private benevolent payments is insufficiently nuanced.

MS NORTON:   Is difficult to do, yes, your Honour.  They were dealing with a statutory payment there, but both the main judgments make reference to benevolent gifts as well and they use the word “intent” with respect to benevolent gifts.  It is our submission ‑ ‑ ‑

GUMMOW J:   I guess the word “benevolent” has some suggestion of bounty in a sense of intention, I suppose.  The mere word “benevolence”, I guess.

MS NORTON:   Benevolence, and in fact one of the reasons given for why this apparent exclusion to the general compensatory nature of damages is that a person is free to give charity to whomever they want.  So it is the free will, as it were, of the donor.  That is why it becomes important in some of the cases that the payments are voluntary.  With respect to some of the pensions, the fact that some of them were discretionary when you are interpreting statutes, and I accept it is a different thing, the fact that there was a discretion in someone was another indicia that the payment should not be set off against economic loss and that is, it appears, because it makes it more similar to a benevolent donation, which is completely at the whim of the giver.

So we say that the Court of Appeal, in fact, firstly did not appreciate that the trial judge had done more than just say the applicant is not employed by the church, therefore the money does not come off.  He had, in fact, found that the money was paid to her from a fund of donations and he had, in fact, found that he accepted her evidence that it was done because the people in the church basically felt sorry for her.  He also found that the church were kind to her and “kindness” and “benevolence” are two words that go very closely together.  No doubt if the trial judge had been asked to make a specific finding were these payments benevolent, it would seem his answer would have been, yes, they were benevolent, but he was not provided with that opportunity or not requested to make that finding.

So we say in a wider thing than this case, if we are to inquire into what may be secondary in some cases, or peripheral, or even overwhelming intent of the givers of benevolent donations, we are going to complicate an already complicated area of the law because there would be many benevolent payments which would relieve suffering in the person who receives the money, but also provide some benefit to the person who is making the payment.

If you have someone in your family with a particular illness you may donate more generously than other people to some foundation researching cures for that.  Does that make it not benevolent, because if they find a cure you may be benefited?  It may be the driving reason why you make the payment, but the payment is still benevolent in nature.  It is yours to give away as you will, and the intent of it is to help the people that you are giving it to, not to relieve someone else of the obligation to pay money.  You would not be giving it to it so that government does not have to fund research, you would be hoping everybody funds the research, that kind of argument.

The Court of Appeal made a second point that it replaced wages.  That is an issue with respect to certain cases, and we have gone through them in our submissions with respect to sick pay and the like, but here we have a very different situation.  This was not a person who had been employed by this church and then was injured but continued to receive payments for doing less work, or doing no work.

There are two churches which makes it a little confusing, but I do not think anything turns on that.  When she first came to Australia she went to the Roseville church, then at some stage she shifted to Marrickville.  From Marrickville she went to Singapore Bible College and then she came back to Roseville.  But at all times, so far as we can gather, that she was associated with the church, it was a church where lay people did some of the preaching.  It was a church where volunteer work was performed on a regular basis.

BELL J:   I think the evidence was there were no ministers.

MS NORTON:   In the one at Roseville there was not, in the one at Marrickville there was.  The one at Marrickville was an Anglican church and there was a minister.  The applicant actually went to live with the minister of that church at Marrickville immediately after the accident, so it did have a minister.  But she did volunteer work there, and in her application to go to the bible college in Singapore, she had pointed out that she had done various preaching work there and worked at the Sunday School, and that kind of work, so we have a person here who had a history of being involved in the church, she had a history of doing volunteer work and working as well.

She had a very good work history.  She had always planned to go and take these studies, but it was her evidence that she was not planning to be a minister.  What she wanted to do, if she had not been injured, was to get these qualifications, come back, either get paid employment or open her own small food business or sewing business, and continue to do volunteer work at the church, but she was unable.  The evidence clearly accepted by the trial judge was that her disabilities were such that she could not perform that kind of paid work, so she was left with nothing to do but the volunteer work.

KIEFEL J:   Was there any inquiry in cross‑examination as to the value to the church of the services that she performed?

MS NORTON:   No.

FRENCH CJ:   She was doing 20 hours a week, was it?

MS NORTON:   She attended the church 20 hours a week, your Honour.  That included having her lunch there everyday, the worship – one assumes – that took place there, talking to people.  She had an office there and in one question she answered that she spent the whole time in the office, but that seems to need to be put to one side because the other thing is ‑ ‑ ‑

FRENCH CJ:   It was a bit of ad hoc preaching.

MS NORTON:   Yes.  They did have a register at this church where a number of people did preach on a kind of circular basis and she was one of those, but she had done that before she went to Singapore as well at the other church.  So they had one brother, as I understand it, who did most of the preaching at the church at Roseville and other people did it as well.  That evidence did not just come from her, it came from the lady who also went to the church but who lived across the hall from her in the unit and did all her cooking for her, because it again needs to be put into context. 

They were not just paying this lady money.  Members of the church were driving her around to her medical appointments.  Members of the church were cooking her meals.  Members of the church were taking her shopping.  As the judge said, they were very kind to her.  They accepted that she had a disability and she needed help and they were providing help not just on the monetary front, but on a physical basic domestic assistance front as well.  The trial judge found that she medically could have done some of the things that the church were doing for her, but he never questioned that they were doing them. 

So it clearly is, we say, a benevolent payment and, in accordance with the principles, it should not be deducted against her economic loss.  I know it is unfashionable in some of the judgments to say so, but it would result in a windfall gain to the insurer.  They have taken away this lady’s economic loss but because of the generosity of the church she is a member of, they are relieved from the expense of paying for it.

GUMMOW J:   Yes.  I think in that consideration it may be useful to look at what Justice Deane said in Redding 151 CLR 117 at 166 if only to distinguish this case. The first paragraph of Justice Deane’s reasons there.

MS NORTON:   Sorry, your Honour, was that 166?

GUMMOW J:   Yes, 166, the first paragraph of Justice Deane’s reasons.  He puts on the one hand the insurer and the premiums and how that feeds its way into the general structure of society, then on the other hand, statutory provisions which fall upon the community.  Then says you are weighing the two, in a sense.  But your point is that the legislative intent that is being spoken about there does not fit this case which is simple benevolence.

MS NORTON:   It is simple benevolence, yes, your Honour.  The various acts that make allowances for unemployment benefits and pensions have now been altered so that the insurer would not be relieved of the obligation.  The money has to be paid but then the plaintiff has to pay it back and there is a preclusion period which stops them getting it in the future.  So that is being dealt with by the legislature, that decision about who should bear the loss, and the loss is now borne by the insurer.  Of course, this is a motor accident case, so it is a compulsory system of insurance.  We do not have to question whether there is insurance or not.  It has been compulsory since 1943, maybe earlier.

We say that these payments are clearly beneficial in nature.  They are really in the nature of private charity that the courts have accepted for reasons of policy that people should be encouraged to give this kind of assistance to other people and that if it was found that all they were doing was benefiting an insurance company then they would be unlikely to make these payments in the future.  The fact is that there is no evidence about whether or not the church would have made the payments had she not done the voluntary work.  That, I perceive, could be a possible weakness in the argument, would they have made the payments if she had not done the voluntary work but there is no evidence about that.

That brings us to the second point.  There is no evidence that they would make the payments, there is no evidence that they would not, because this was not the case that was run at trial.  The case that was run at trial was very squarely aimed at pointing the finger at her as being a person of no credit who was telling lies and that she was working and this is what she had always intended to do, even before the accident.  She had intended not to pursue any work outside the church.  It was not put to the other lady who gave evidence, who went to the church, that other volunteer workers were paid. We have no evidence whether other volunteer workers were paid.

FRENCH CJ:   I suppose the focus on the employment issue might reflect the terms of the letter, exhibit 4, which appears to have been a response to a subpoena.

MS NORTON:   It was.  We do not have the schedule of what documents or questions were asked but definitely they were answering paragraphs in the schedule in the subpoena.

FRENCH CJ:   They were dealing with the question of whether she was an employee or not.

MS NORTON:   That is right.  There was no question asked there, “Where does the church get its funds from?  Does the church have other voluntary workers?  Are those other voluntary workers paid?”  These were questions that could have been asked after this letter had been received.  If they were there is no sign of any evidence forthcoming as a result of it.

FRENCH CJ:   This is not an issue that arises out the pleadings in any way, was it?

MS NORTON:   No.

FRENCH CJ:   This was just an adjunct of cross‑examination and then this letter was tendered without objection.  That is how it went.

MS NORTON:   That is right.  To put it into context, why it would have gone in without objection was because at that time the case was squarely on the issue, was she an employee or not.  So you would not object to that letter being tendered because it says she is not an employee.  It was not put on any wider basis.  If it had have been clear it was going to be relied on in the Court of Appeal for a wider argument no doubt consideration would have been given to not without objection admitting that letter and calling someone from the church.

CRENNAN J:   Or cross‑examining in respect of it.

MS NORTON:   Calling someone from the church to cross‑examine them about these ‑ ‑ ‑

CRENNAN J:   Leading evidence‑in‑chief in relation to it, I am sorry.

MS NORTON:   Indeed, or requiring, “If you want to tender this you will have to call the maker so I can cross‑examine.”  Whichever way it would have happened we would have had more evidence but we have this hole in the evidence because of the way the case was run.  I have made a reference to it in my submissions but just to show how clearly this was is that counsel in the District Court in making submissions at page 145 at line 50 said:

There are previous few issues in the case, one of them is whether the plaintiff is employed by this church.  Can I say the way the case has been run is the defendant doesn’t say well this is money she got so it somehow has to be deducted.  They say it’s wages, if it’s wages we both agree then the plaintiff can’t recover for the period that she has been getting this money [from] the church, I wouldn’t argue otherwise but the way in which it was attempted to be proved was the letter from the church was tendered for all purposes that clearly says she’s not an employee, they haven’t got any, this is charity.  No witness is called from the church to prove the contrary, no other evidence is adduced yet it’s put to the plaintiff this church has employees, where did that come from, there’s never evidence to prove it –

So that was said in the order that the submissions went; the present respondent submitted first, the plaintiff, the applicant here, submitted it and then the defendant submitted in reply.  They did not take issue in submissions in reply, well, no, we are putting this case on a wider basis.  While we are at the addresses, it may be an appropriate time to just quickly go to how ‑ ‑ ‑

FRENCH CJ:   Sorry, just before you go to that point, I notice that in the defence at page 9 there is a specific reference to payments made under the Workers Compensation Act.  There is nothing in the pleading that raises this issue against your claim for loss of earnings and loss of earning capacity.

MS NORTON:   No.  It is said in my friend’s written submissions that there is no requirement to plead such a thing.  We have said in our submissions in reply that, in effect, it should be pleaded and the rules require you to plead something which is not otherwise proven by the pleading so far.  If it amounts to – it does not amount to a defence, I do not suppose, but it makes the claim for past economic loss untenable, so it should have been pleaded.

GUMMOW J:   I notice the cross‑examination of your client begins at page 18 and continues to page 122 over two days.

MS NORTON:   No, page 18 is still evidence‑in‑chief, your Honour.

GUMMOW J:   Page 36, I mean.  Page 36 of the appeal book, but 18 of the transcript.

MS NORTON:   It went over many days.

GUMMOW J:   It continues to page 130 of the appeal book, page 122 of the transcript.

MS NORTON:   There was matters interposed and there was the witness from the church, I think, was interposed, but her evidence in this appeal book is taken out and reproduced separately.

FRENCH CJ:   She was being cross‑examined effectively through an interpreter, was she not?

MS NORTON:   Yes, she was.  Now might be an appropriate time, your Honours, to go to what we would say the tenor of that cross‑examination and some early indications or sustained indications of what the case was, which is relevant to our second point.  At page 92 of the appeal book there was a discussion going on about whether the applicant could be asked some questions about whether she told the church of some money she still had in the bank from her workers compensation payments and the trial judge was minded to find it was not relevant, or an objection had been made that it was not relevant, and the trial judge was saying, if the church knew she had the money and was still making the payments, then “I could see how that would be relevant, but as I understand, the church, they do not” – and it was put at page 92 at about line 9:

MCCARTHY:   First of all it goes to whether she’s been frank with people who are providing gratuities for her.

Then at line 35, there is a submission made.  His Honour said:

HIS HONOUR:   But I understand the church also says they don’t employ her.

MCCARTHY:   Yes, your Honour, they say that and I’ll be making submissions about what’s really going on there in due course.

And those submissions were made.  When we go through to the submissions, which are at page 153, the first submission – although this extract of the submissions for the present respondent appear second in the appeal book, they were actually made first.  That is at page 153.  It is hard to know whether to refer to the big numbers down the side or the line numbers.  Is it an easier way for the Bench to do it?  It is a bit confusing.

FRENCH CJ:   I think the appeal book numbering is the big numbers.

MS NORTON:   Well, it is in between the big number 10 and the big number 20:

MCCARTHY:   Your Honour, a central theme in the case from the defendant’s point of view, is the reliability and honesty of the plaintiff.  Some allowance naturally needs to be made for a lack of English skills.

That continues when we get to 158, 158 between the 40 and 50 is where there is a discussion about what is happening within the church:

she finds herself in a role within the Christian Assembly of Sydney, a role which she refuses to concede is employment but one which has all the indicia.  It’s a role your Honour which she undertakes on virtually a daily basis.  She was slippery, in my respectful submission, about what she actually does there but when it was teased out we found a few things although no‑one from the church of course is called to collaborate any of it.

Well, someone from the church was called and her evidence was that, yes, the plaintiff does go to the church a lot but she has never actually seen her using the photocopier or doing much while she is there, so some evidence was called.  The main thrust of the argument was definitely employment.  If you go to page 160 of the submissions ‑ ‑ ‑

BELL J:   Just before that at 159 at about line 15 and following:

in my submission she gets a job and a very good one.  It’s not plausible, completely improbable that any organisation would pay someone –

et cetera.

MS NORTON:  

regular payments which look airy like income ‑ ‑ ‑

KIEFEL J:   That suggests some value to the church, but you say there was no inquiry about that.  Some value to the church by the services that she gave.

MS NORTON:   By the voluntary work, no.  No one was called from the church to give any evidence about the value of the work that she did, and the evidence of what she actually did was that she did not do very much, but it was put to her that she was just not being truthful when she said she did not do very much.  There was film of the plaintiff but it was not shown.  So one would assume over the time this case was being prepared, if she had have been burrowing away doing a lot of work at the church the defendant would have been able to prove it.

Page 160, it is now conceded that she received money in two different ways, one which was a direct transfer to her bank, another, some money in envelopes.  It is now conceded that the money that came from the envelopes is to be treated separately, but during the submissions when it was put, this is what she is earning, and that is at about between 10 and 20 on page 160:

It may be your Honour, your Honour might infer that in addition to the $600 she gets about $300 extra in these mysterious envelopes.  If that were the case her income could be as high as $900 a week.

GUMMOW J:   What is the suggestion at line 25, “getting paid a big wad of cash”?  What is all that about?

MS NORTON:   “Big wad of cash for doing it”.  There is no doubt that was – if you just look down that page, your Honour, you will see, “getting paid a big wad of cash for doing it” that your Honour has taken us to.  At the bottom of the next paragraph, “earning income far surpassing her pre‑accident income”.  The next paragraph down:

she’s currently employed notwithstanding how it is described and there’s no evidence that that situation is going to change . . . someone is employed and there’s no evidence of any particular vulnerability with respect to that employment situation . . . employment is likely to continue.

Again, at page 161 at about 25:

Whilst in my submission her employment is likely to continue and is likely to be stable –

and that was when it came to future economic loss.  So there was no doubt that that was not only the main thrust of their case, that was their case, that she was lying and she was employed, and if there is a hole in the evidence that is what has led to that hole in the evidence.

What happened was that there was a concerted attack over a number of days on this plaintiff’s credit and it was not accepted.  The trial judge accepted what she said, and I have taken you briefly to what the trial judge accepted.  But having made those findings, the payments were made out of donations to the church.  They were made to her because the church was kind to her.  They were not in any way that we can see related to the value of anything she was doing at the church.  There was no evidence that they would have stopped if she had have been completely unable to do any work at the church.

It was a different church, but immediately after her discharge from hospital she stayed a number of weeks at the minister’s home in Marrickville, doing nothing and being cared for by the church, and as I said, not only did they make these financial payments, they gave her wide‑ranging domestic assistance as well.  They were looking after her as the trial judge found, they were being kind to her, and they were looking after her, and in those circumstances it should not be taken off against her economic loss.  But for this accident, her evidence is she could have done her volunteer work and she could have earned wages in the community, and her evidence was she did not like receiving charity; it does not feel good to have to live off someone else.

Just briefly to take you to some points of how vigorous this attack on credit was, to point out that it really was a two‑pronged attack.  Her credit, and she was employed, and the two were interlinked.  One of the reasons for attacking her credit was that she steadfastly refused to admit she was employed by the church.  Over and over again she refused to admit it, and that was said to be against her credit, and it was put very vigorously.  For example, at page 61 in the appeal book, at about line 22:

Q.       We’ll return to that Ms Zheng, but just for the time being I want to press with you your evidence with respect to what you did at last week.

This was after cross‑examination about what she did at the church.

When you say you don’t remember, you’re lying aren’t you?

A.That’s not right.

Q.       You see you tell the court on one hand you spend twenty or so hours there a week, I’m just asking you to tell the court one or two things you do in that time?
A.       So whatever issues arise such as when someone is upset about something and in need of someone to talk to then I would talk to this person.

Q.       So on those occasions you act as a counsellor don’t you?
A.       No counselling, but I just listen to someone.

Q.       Do you give advice?
A.       I don’t have – I can’t really offer any advice, I just listen to them so we can take out what’s on their mind and maybe make them feel better.

Then at page 65, about line 30:

Q.       If you had a choice of things you’d much rather be doing what you’re doing now than sewing cushions in a factory wouldn’t you?
A.       No, you can’t put it that way because physically I cannot do the sewing of the cushions.

Q.       Putting aside what you say are your physical capabilities and forgetting the accident happened for a moment, you’d much rather be working with people in the congregation than sewing cushions.  Surely that is correct?
A.       You can’t put it that way.  Doing the sewing is a necessity of life.

Q.       A necessity which derived for you an income of half or even less than what you currently receive doing what you do with the church?

Then there is an objection about using the word “income”, and the witness says:

But the money you get from church is because of somebody’s love.  But the money from work, even though it is less, but I earn it through my own work.  If I can work, if I can earn the money I don’t need them to give me the money.  You have to know one doesn’t feel good when you have to take somebody else’s money.

Then she is asked what she spends it on, and then at line 40:

Q.       I’ll put this to you firstly.  When you tell the court this money that you’re receiving is just being provided out of love, that’s utterly false isn’t it?
A.       Why false, I think it’s true.

Q.       You see what you’re doing is you’re working at the church and they’re paying you just like anyone else who has a job.  That’s the state of affairs isn’t it?
A.       No.  There was them who give me money first, then I think I should offer some return.

Q.       You see there was not much incentive for you to go out and find what you would describe as a real job is there?
A.       If I’m physically able I would.

Then again she says at the bottom of the page:

This income is not exactly income, it is just given to me out of love and it’s not a long term thing because this case of mine has not finalised.  I have no source of livelihood.  They offer help out of love.

There is one final piece of cross-examination that showed how direct it was.  There was an issue that, even if she could not go back to physical work, she could do some kind of mental work because she had managed to pass this course in Singapore.  It was put to her that she was lying about the disability she had with concentration and working on computers.  At 102, about line 25:

Q.       These problems you suggest you have in sitting at a computer with your neck and your back didn’t stop you, as we know, successfully completing your theology degree, did it?
A.       Then I have to be grateful to God who gives me a blessing every day.  Many people prayed for me, including those in Sydney.  So when I graduate from the seminary and they think it’s wonderful, it’s a miracle performed by God not by human.

Q.       But why wouldn’t that assistance you get from God continue into some work you might do in an office environment?
A.       I don’t know. That’s up to God not to me as a human.

That is how strong the attack on her credit was.  So it is not surprising that when this letter came to be tendered there was no objection to it, because the case being run was that she was employed and she was lying about it.  That was simply the case that was being run.

We say that, one, there should not have been this change of focus in the Court of Appeal because it meant that the Court of Appeal was in a situation where it was for the first time, in effect, finding facts.  It was making a decision for itself whether these payments were beneficial or not, what was the real intent of the church.  These are things which could have been subject to the calling of evidence if the plaintiff down below was aware they were to be in issue.  But they were not aware.  Other than that, there are cases which go through the principles which I have gone through in the many sets of submissions we seem to have done.  I do not know if there is any more ‑ ‑ ‑

FRENCH CJ:   Incidentally, do we know whether the church is an incorporated body?

MS NORTON:   Yes, it is incorporated as a charity.  It is on the same exhibit as exhibit 4.  It says what it is.

BELL J:   Yes, it is page 197 at line 25.  It is a not‑for‑profit association incorporated on 1 November 2001.

MS NORTON:   And “endorsed from that date by the Australian Taxation Office as a Tax Concession Charity”.  That is what it is.  It would seem that when she first went to that church it may well have been an Anglican church and this was a new church that incorporated in November 2001, I am not sure.  But that was the evidence.  Is there any other evidence that the Court would be assisted by me finding?

FRENCH CJ:   No, thank you, Ms Norton.  Yes, Mr Campbell.

MR CAMPBELL:   May it please the Court.  Just while your Honours are looking at exhibit 4, could I ask your Honours to look at appeal book page 198 where your Honours will see that the corporate seal of the church has been affixed to the letter and that has been witnessed by someone called the public officer of the church and someone who has designation as the treasurer of the church.

Your Honours, I will come back to exhibit 4 because it is a critical part of our case, but may I start the argument in this way.  We respectfully submit, your Honours, that to jump straight to the important statement of principle contained in Espagne at page 600 is perhaps to go one step too far at the outset because, as we have tried to advance in our written submissions, the real starting point for the legal context in which this case occurs is the compensatory principle.

We submit, your Honours, that when one looks at how the Court approached the general principles which govern these questions in Manser v Spry, which I will take your Honours to in just a moment, the correct order in which one has to approach it, your Honours, is to bear in mind firmly, and I appreciate this is basic, so I hope your Honours will forgive me for expressing it, but you start off by saying the compensatory principle provides the basic measure of the loss that the plaintiff is entitled to recover for by reason of the negligence of a defendant.  As my learned friend, Ms Norton, has told your Honours, we agreed it, although to some extent the common law principles are modified by the provisions of the Motor Accidents Compensation Act 1999. Those modifications are not relevant in the present context.

The reason why we emphasise that point, your Honours, is because ultimately what the compensatory principle does is it provides that a plaintiff is entitled to recover for his or her net loss.  It is not, as the reasons of the Justices in Manser v Spry made clear, every benefit that has to be disregarded in application of the compensatory principle in a given case.  Can I just jump one step of myself, your Honours, to point out, as we have done in writing again, that the particular manifestation of the compensatory principle which is critical in this case is the satisfaction of the dual requirements set out by the Court in Graham v Baker at page 347.

The critical part of this case was not the question ultimately of whether or not the applicant suffered a diminution of her earning capacity.  The critical question was the second limb or the second of the dual requirements, was that likely to be productive of financial loss?  Your Honours, the case was that the receipts from the church meant that the answer to that question was to be no on the case advanced by the respondent.  That was the case advanced by the respondent at the trial in the Court of Appeal and here on this application before your Honours.

KIEFEL J:   What you are really saying is that you challenge the finding that she lost the ability to carry out her employment for reward. 

MR CAMPBELL:   May I say with respect, your Honour, not at all.  That goes to the first limb of the dual requirements in Graham v Baker.  That is to say, that there is, as a result of the negligence of the respondent, an undoubted diminution in the applicant’s earning capacity.

KIEFEL J:   But is not your approach that she has some residual – as is, I think, shown by the cross‑examination – or had some residual ability to earn in terms of past economic loss?

MR CAMPBELL:   Yes, your Honour.

KIEFEL J:   And she did that for the church.  Now, that is to approach the matter, as perhaps the Court of Appeal did, by reference to assessing her ability to work and the payment for the work that she did rather than to view it from the point of view of the purpose for which the church was giving it or perhaps the two overlap. 

MR CAMPBELL:   Could I answer your Honour’s question in this way.  Firstly, it was not just the Court of Appeal who took the view that, can I say neutrally, the activities performed at the church had some value.  The learned trial judge himself accepted that the nature of the activities being performed at the church were evidence that there was some residual earning capacity which in the future may produce some earnings.  It was for that reason that for the future his Honour did not give the applicant the full value of his assessment of her earning capacity but gave her a reduced value. 

The second answer to your Honour’s question, may I respectfully submit, and can I put it in this context, that we always accepted at the trial and in the Court of Appeal that there was that diminution of earning capacity.  What was said was that the receipts from the church had to be brought to account in measuring that diminution of earning capacity in accordance with the second limb of Graham v Baker.

KIEFEL J:   But you can only do that in the approach to compensation that you have referred to by critically showing that she had residual earning capacity which she exhibited by carrying out work for the church and that the church paid for those services which implies that the services have some value.  So you have to prove both limbs, do you not?

MR CAMPBELL:   Could I say with respect, your Honour, that we did not have to prove both limbs because the onus of proof at all times in respect of this issue, like all other ultimate issues in the case, did rest upon the applicant.  So what the applicant had to do was she had to prove the measure of her loss.  She had to prove then, we respectfully submit, whether in measuring that loss these receipts from the church, to put it again neutrally I hope in the present context or for now, whether these receipts were relevant to that measurement.

KIEFEL J:   Did not the evidentiary onus shift to you once she showed on medical evidence that she was unable to carry out her work with the cushion manufacturers and was that not what the cross‑examiner was undertaking?

MR CAMPBELL:   To answer both questions, your Honour, may I say, no.  We say we had no evidentiary onus in that regard other than an onus of raising an issue and it being an issue that went purely to the assessment or measurement of damages, it was sufficient that we raised in the course of the trial and in cross‑examination.  Secondly, although the cross‑examiner was putting his case to the applicant in this regard, he was doing that because of his obligation to lay a foundation for the submissions that he was going to make rather than strictly assuming a responsibility for an evidential onus which we respectfully submit he did not have.

FRENCH CJ:   The way the case is now or was being run, in effect, in the Court of Appeal is that you accept her loss of earning capacity?

MR CAMPBELL:   Yes, your Honour.

FRENCH CJ:   The receipts from the church do not in any way diminish that, that is the first limb issue?

MR CAMPBELL:   Yes, your Honour.

FRENCH CJ:   They simply go to the question of how much loss is to be attributed financially to that loss of earning capacity which you accept?

MR CAMPBELL:   Yes, your Honour.  We say that that is how it was put at trial.  It is certainly true that in the language used in the trial by counsel for the respondent we spoke about a contract of service and the like, but that was not the critical issue that the trial judge had to determine any more than it was the critical issue that the Court of Appeal had to determine or any more than it would be the critical issue that your Honours would have to determine if your Honours granted special leave to appeal in this case.  The critical issue was to be formulated in terms of ‑ ‑ ‑

GUMMOW J:   I think you have to be prepared to say all you want to say.  We are not going to go away and reserve on whether we are going to grant special leave.

MR CAMPBELL:   I did not expect your Honours would, may I say, with respect, and if my language suggested that, can your Honours take it that it was not my purpose to convey that idea.

FRENCH CJ:   The employment issue was the fulcrum on which the question whether these receipts could be brought to book was determined in the District Court, is that right?

MR CAMPBELL:   Yes, your Honour.  It was put and perhaps, may I say a little narrowly in relation to what the true issue was between the parties or the true issue for the judge to determine in the District Court, that it was put, as I have said already and may I repeat myself, in the language of a contract of service.  But what counsel was doing at that point in time, using that language, was inviting the judge to look at the reality of the situation between the parties and that, strictly speaking, to determine – and this is not attributing to what was said at the trial, this is my submission, now – but, strictly speaking, the nature of the relationship between the church and the applicant, that is to say, how you categorise an arrangement between them, was not critical because obviously for the purpose of applying at the second limb of the dual requirements in Graham v Baker it was enough that the receipts bore a character which was in respect of or in exchange for services actually provided to the church by the applicant.

It did not matter, of course, in this context whether it was a contract of service or whether it was a contract for services or whether it was some other arrangement bearing a contractual character, all that mattered was the character of the payment.  I have perhaps jumped ahead of myself a little bit now, your Honours, because I am using the word that Justice Windeyer used at page 600 of Espagne.

GUMMOW J:   Just a minute.  Is this complexion you are now putting on this litigation something that is reflected in the favourable decision you obtained in the Court of Appeal?

MR CAMPBELL:   Yes, your Honour, it is.

GUMMOW J:   Where do we see that?

MR CAMPBELL:   At paragraphs 38 to 41, your Honours, which we find starting at 251.  Your Honours will see paragraph 38.

GUMMOW J:   “[T]he intent behind the payment was to provide financial support”.

MR CAMPBELL:   “[T]o allow her to function more effectively as a volunteer worker”, your Honour.  We say that was a critical part of the understanding of the intent of the donor.

GUMMOW J:   Real intent.

MR CAMPBELL:   Yes, your Honour.

GUMMOW J:   What does that mean?  What is the difference between an intent and the real intent?

MR CAMPBELL:   With respect, I do not suppose there is, your Honour.

GUMMOW J:   When we are talking about benevolent payments.

BELL J:   Are two concepts being conflated here?  You refer to the second limb of Graham v Baker and in doing so you are referring to the requirement that the loss of earning capacity be productive of financial loss, and that is in the context of a discussion in that case of the characterisation of payments for sick leave.

MR CAMPBELL:   Yes, your Honour.

BELL J:   The issue in the way it was fought at this trial was that in reality the respondent was employed by the church and the payments recorded in the schedule to exhibit 4 were wages.  There was not at trial, was there, a consideration of the characterisation of the receipts from the church on any view other than that they represented wages?  So when one turns to a consideration of the characterisation of the receipts, which is how you are putting it now, surely it was necessary, and some of the reasoning in the Court of Appeal reflects it, to consider the principles in Espagne?

MR CAMPBELL:   Yes, your Honour.

BELL J:   Those principles acknowledge that there will be certain payments that people receive that, I suppose, on one view you might say show that whatever reduction in their earning capacity has not been productive of loss because they have received benevolent payments.  But that does not belie the principle that was explained in that case.

MR CAMPBELL:   No, your Honour, and may I say, with respect, I was not trying to submit that it did.  Can I put this submission.  The logically anterior question to determining whether or not the principle discussed in Espagne applies is to determine whether or not these are benefits within the context of that discussion in those cases.  That is to say, before you get to a question about whether Espagne means that you exclude certain payments from the calculus, you need to get to the question of characterising them as a benefit and then when they are a benefit, you ask, well, are they a benefit of a type which you exclude from the calculation or are they a benefit of a type which is relevant to the calculation.

BELL J:   Indeed.  Now, just taking up your submission that all of this was in play at the trial, where do we find any examination of those considerations?

MR CAMPBELL:   Your Honour finds it – and I will take your Honours to the book in a moment – in the contest that was had at the trial where it is put that these are really, in reality, whether they are called this or not, wages.  I would say, your Honours, they are in the nature of wages was necessarily implicit in that submission.  On the other hand, the submission of Mr Lidden for the applicant at the trial, that my learned friend Ms Norton has taken your Honours to, where he says these are charity.  So there you have, your Honour, the joinder of issue, as I put it, as to whether the compensatory principle requires they be brought to account or whether there was an exception in play here as constituted by the decision in Espagne.  So that is where it comes out, your Honours.

KIEFEL J:   Is the nub – I am sorry, you may not have finished.

MR CAMPBELL:   Yes, your Honour, I beg your pardon.

KIEFEL J:   Is the nub of the Court of Appeal’s conclusion to be seen at the top of page 252, at the end of the paragraph that Justice Gummow was asking about the references to intent where the Court says:

It gave to the payments a quality which was more analogous to a payment for services.

MR CAMPBELL:   Can I answer your Honour’s question by saying yes, but may I, with respect, remind your Honour that what is contained in paragraph 38 is a summary of the submissions that we advanced in the Court of Appeal, and the ultimate acceptance of that argument is at paragraph 41 on page 253.

KIEFEL J:   Yes, thank you for that.  But that is really the approach it took, and that required the consideration of her ability to carry out meaningful work for reward and the intention of the church to pay for those services.

MR CAMPBELL:   Your Honour, I cannot answer that question by saying “yes” or “no”, I am sorry.

KIEFEL J:   In the first place, the first step is the consideration of what she has lost in terms of her ability to earn income.

MR CAMPBELL:   Well, it did, your Honour, and yes, we made a concession that there was a diminution of earning capacity, but it was necessarily implicit in what we said about it that that was not extinguished; that there was still something valuable that could be used in the labour force which, as I have said to your Honours, his Honour Judge Garling also accepted when he assessed future economic loss by reference to, in part, what she was doing at the church having some value.  That is one of the reasons why he said – I withdraw that.  I did not mean to, by using the personal pronoun, be offensive but that is why he said that the applicant had some prospect of getting work in the future because what she was doing at the church was evidence, to his mind, of residual earning capacity, capable of being turned into returns, if I can put it that way, in the market place, the labour market.

KIEFEL J:   But everything has some value, every action, even volunteer work in a church.  But here to make sense of the notion of a payment for services, you would have really have to be in a position to conclude, would you not, that from the church’s perspective, what was done was something truly of value in the sense that it was worth what they were paying for it?  There would have to be quid pro quo.

MR CAMPBELL:   Yes, your Honour.  Of course when you are dealing with a church or other charitable institution or organisation, then it is hard to put an economic value on the services provided.

KIEFEL J:   I am sure the churches are capable of doing that if they want to.

MR CAMPBELL:   May it please the Court.

CRENNAN J:   Just going back to paragraph 41, if I may.  It seems as though his Honour there recognises that the payments at least partly are beneficent because of the structure of the third sentence.  That letter makes it clear that the payments were intended not only to benefit the respondent, he is really saying:

but to enable her to function more effectively as a volunteer church worker.

His Honour seems to be characterising the payments as having a beneficial aspect.

MR CAMPBELL:   I accept, with respect, your Honour, that the language is capable of bearing that meaning, that it had a dual character.

GUMMOW J:   That may be reflected in this notion of real intent.

MR CAMPBELL:   Yes, your Honour, it may be.

GUMMOW J:   Some sort of further process of characterisation.

MR CAMPBELL:   Could I say this, though, your Honours, and I hope this is not unduly trite, but I suppose even an employer might intend to benefit his, her or its workers by the payment of them to wages.  An employer certainly might think that he, she or it is doing the right thing, to use a vernacular expression, by paying a fair wage to the employees.  Indeed, if I can just move away from the church for a moment only, if you think about a well motivated employer who takes back a seriously injured worker into light duties after injuries sustained in a road accident, that employer might be motivated in part by ultraism as well as anything else, but no one would seriously suggest, may I respectfully submit, your Honours, that the wages paid in respect of the performance of that light work should not be brought to account in the application of the second of the dual requirements in Graham v Baker.

Going back to a question your Honour Justice Kiefel asked me about the economic value of the services to the church, could I submit, your Honours, that in more structured familiar churches, of course, one of the experiences of life that your Honours might think would tell one that there are many positions filled by people who receive what might be called a stipend or something else which obviously go to the performance of core business on the part of the church.  Like, for instance, if you were an ordained or licensed minister of religion and you got paid something every week, in the discretion perhaps of a bishop or some other superior in the church, no one would seriously suggest, we respectfully submit, that after an accident if you went back to your office as a clergyman you should not take that into account in assessing the damages.

Likewise, your Honours, we say the same is true here because as we have submitted before, as we submitted on the first stage of the special leave application in Sydney, the nature of the work that – and I will use the expression “work” neutrally for the moment – the nature of the work that was being done by the applicant, my learned friends may wish to play it down or suggest it is not significant, was the sort of thing you would expect to fall within the core business of a church.  It was church work.

FRENCH CJ:   Is there a tension between the finding of the Court of Appeal at 41 and the subsequent conclusion that the likely scenario is the church – which appears at 47 on 255:

the Church would cease making such payments to the respondent –

after the conclusion of the respondent’s case?  That had nothing to do with any change of arrangements between her and the church in terms of volunteer work or anything else, did it?

MR CAMPBELL:   No, your Honour, it did not, and there is attention there but could I say this, your Honour.  To the extent to which there is attention, it is adverse to my client and favourable to the applicant.  With respect, in the light of the findings made at 41, it was a very favourable finding from the applicant’s point of view, but we do not complain about it.

KIEFEL J:   His Honour was perhaps drawing a link there with the payments and the accident.  That was probably the intention, but in doing so, may have gone a little further in his expression.

MR CAMPBELL:   Perhaps your Honour is correct, with respect.  Of course, part of his Honour’s reasoning process which led to the conclusions at 41 was Justice Handley’s reasoning process set out at the foot of paragraph 40 from Marinko v Masri in terms especially at paragraph 47 there, your Honours, in terms of the discretionary nature of the payment not being decisive by reference to what Chief Justice Gibbs said in Redding v Lee at page 127.

GUMMOW J:   Should we look at Marinko v Masri?

MR CAMPBELL:   Yes your Honours.  Before we get to that, with respect to your Honour Justice Gummow, could I just pause for a moment and try and put my submissions into a nutshell, as it were, as to what the gravamen of our case is, and that is this, your Honours.  The compensatory principle was the primary principle that had to be applied.  It is subject to exceptions.  One of the exceptions is Espagne.  Not every benefit is covered by Espagne.  If a benefit is not covered by Espagne, then it is brought to account because the compensatory principle demands that you only get compensation for your net losses.  So, your Honours, we say, as I have said already, may I repeat, that it was critical to characterise the payment. 

Now, to go back to your Honour Justice Gummow’s question about should we go to Masri, we submit yes, because even to the extent to which this might be characterised as a benefit or it may have a dual character, if I can refer it to the question your Honour Justice Crennan asked me before, then you have got to work out, with respect, is it inside or outside the Espagne formulation.  Your Honours, Masri was a case about a lot of different things and ‑ ‑ ‑

GUMMOW J:   What is the citation of it?

MR CAMPBELL:   I beg your Honour’s pardon.  We have given your Honours the unreported decision, but we are aware, your Honours, that it is in the Australian Torts Reports.  I think your Honours ‑ ‑ ‑

GUMMOW J:   We have got it in (2000) Australian Tort Reports 81‑581.

MR CAMPBELL:   Thank you, your Honour.  I just did not have it at my fingertips.  Your Honours will perhaps all know the facts, but your Honours will see that ‑ ‑ ‑

GUMMOW J:   Well, I do not know the facts.

MR CAMPBELL:   What happened, your Honours, was that the decision in Marinko v Masri concerned the claim by a husband for nervous shock following the receipt of serious injuries by his wife.  The wife, your Honours, had obtained a substantial sum of damages for her catastrophic injuries, including substantial damages under the heading of Griffiths v Kerkemeyer damages.

When the husband brought his claim for nervous shock, your Honours, he included in that different claims including a claim, of course, for damages for diminution of earning capacity on the basis of his nervous shock.  Part of what he had been doing, following his wife’s accident, and during that incapacity, was to provide some of the services to his wife which were the foundation of the allowance made for Griffiths v Kerkemeyer damages in her case.

In respect of that, your Honours, the office of the Protective Commissioner, who became the manager of the wife’s estate under the protected estates legislation as it then was in New South Wales, paid out a payment to him by way of maintenance, and it is that matter, and that particular payment which is the subject, your Honours, of the extract that we have referred to on our list of authorities, and as is set out by the Court of Appeal, your Honours, at paragraphs 44 to 47.  It is in that factual context that Justice Handley made these observations.‑

GUMMOW J:   He said the payments were not properly characterised as gifts made from motives of charity or benevolence.  That was his starting point.

MR CAMPBELL:   Yes, your Honour, that is the starting point.  I am sorry if I have been longwinded in going through it, but we say that is the proper starting point when one is asking the question whether or not Espagne is engaged.  You have to characterise the payments.  I accept there is something of circularity about this, but by the time we get to – may I say – 2009, then there has been a lot of water under the Espagne bridge in the meantime, and the Court has looked at these questions in different context over the space of, getting on for 50 years since the decision was made.

So that what Justice Handley said is, as your Honour Justice Gummow reminds me, these payments are not properly characterised as gifts made from motives of charity of benevolence.  His Honour goes on to correctly refer, with respect, to the principles.  Then he says this:

These payments were made pursuant to the powers of the Commissioner to apply the wife’s estate for her benefit and the benefit of her family.

There is a reference to the Protected Estates Act 1983. His Honour then says, as I have pointed out already, your Honours, that the fact that the Commissioner had a discretion under that legislation did not require the payments to be disregarded of itself. So it is not a decisive consideration. He refers, your Honour, to Redding v Lee, and that is from the dissenting judgment of Chief Justice Gibbs at passage 127, but with respect, it has not been doubted as a matter of principle, and his Honour Chief Justice Gibbs did draw upon what Lord Reid said in Parry v Cleaver about that as we have pointed out in our written submissions.

GUMMOW J:   The next sentence beginning “Since these payments” in paragraph 47 of Marinko, may explain paragraph 41 that Justice Crennan took you to in this case at 253.

MR CAMPBELL:   With respect, it does, your Honour.  We can get that, your Honours, directly from page 253 of the appeal book inasmuch as that having referred expressly to that passage, Justice Hoeben then expresses the conclusions in which the other members of the Court of Appeal agreed.

GUMMOW J:   What is the support for this (a) a dual characterisation and then latching upon one of the two characterisations as fatal?

MR CAMPBELL:   Do you mean the evidential support, your Honour?

GUMMOW J:   No, the doctrinal support.  Where does it come from?

MR CAMPBELL:   It comes, your Honour, it can only come directly from Espagne.  It also comes, your Honour, from what was said by Justices Mason and Dawson in Redding v Lee, or rather, Evans v Muller about payments in particular paid in relief of unemployment, but the starting point must always be Espagne, your Honours.  We would submit, your Honours, that the doctrinal basis for it is the passage at pages 599 to 600 of Justice Windeyer’s decision.

Your Honours have it, of course. It is (1960) 105 CLR 569 and the passage is at 599. The whole of that passage from the start of the final paragraph on 599 to the end of the paragraph on page 600 and a little beyond needs to be read, we respectfully submit, in context. Can I say this, your Honours, that Justice Windeyer expressed this conclusion after an exhaustive review of the case law preceding it, but ‑ ‑ ‑

GUMMOW J:   His Honour is assuming that the universe is divided between A and B, is he not?

MR CAMPBELL:   This particular corner of the universe of discourse, your Honour, yes, he is.

GUMMOW J:   And it seems to be if you get within B, that is a favourable result for the plaintiff.

MR CAMPBELL:   Yes, your Honour.  I need to acknowledge that.

GUMMOW J:   This reasoning in Marinko does not proceed on that basis.

MR CAMPBELL:   In my submission, it does, your Honour.  There is a reference to it.  Can I say, as I have said already, that one gets to it by looking at not just the statement of principle but how the statement of principle has been applied over the years.

CRENNAN J:   But in the final analysis Justice Handley finds the relevant payments are compensation for unemployment.

MR CAMPBELL:   Yes, your Honour, he did and that was the point I was going to by reference to Redding v Lee. Your Honours have that there. It is (1983) 151 CLR 117 and the relevant passage is at 138 and 139 and we submit that is part of the majority reasoning in the case given the apparent agreement of Justices Wilson and Deane with part of the reasoning of their Honours.

We have said in the written submissions about this that there are three categories.  We submit that although their Honours only talk about another category, when one looks at what they have said about the categories, there are three, but nothing turns on that.  Your Honours will see that the passage commences with the penultimate paragraph on the page, “Our experience since Espagne enables us now to say” and then the first category, may I say, is “pension and superannuation benefits”.

GUMMOW J:   And “benefits arising from benevolence”.

MR CAMPBELL:   Yes, your Honour.  That is so, your Honour.  Then the second category ‑ ‑ ‑

GUMMOW J:   This divides the world into A, B and C.

MR CAMPBELL:   It does, your Honour.

GUMMOW J:   It does not explain what happens if particular facts seem to straddle more than one of the categories and how you then decide to push it into one rather than the other, or whether you do push it into one rather than the other.  That is what I am agitated about.

MR CAMPBELL:   Your Honour, with respect, I have to accept what your Honour says is correct in relation to these authorities.  I would submit this, your Honour ‑ ‑ ‑

GUMMOW J:   We see this all the time when we are construing the Constitution of attempts to erect particular exclusive forms of characterisation and it has not worked.

MR CAMPBELL:   Could I say – and perhaps it is not for me to say – but in fairness to, say, Justice Windeyer, he did point out that it is very difficult to come up with a dictum which will ‑ ‑ ‑

GUMMOW J:   He was speaking at an age where single characterisation was the fashion in constitutional law.

MR CAMPBELL:   Indeed, your Honour.  Could I say that with C, your Honour, then we get - can I read the second category which we say is really a third category:

The second category comprises benefits provided to the plaintiff which are a substitute, or partial substitute, for wages.

The clearest example, of course, is sick pay, as per Graham v Baker.  Even though there might be a doctrinal difficulty in how we make one size fit all or fashion a rule which can be readily applied to every case that comes before the courts in Australia, once you have got into this recognised category ‑ ‑ ‑

GUMMOW J:   I would have thought, though, that if you are in category one, which is benevolence, bearing in mind what Justice Deane said in Redding v Lee, which is all about balancing the public purse – you are not balancing the public purse when you have benevolence of this category – that you would give greater weight to that if you had to come up with some exclusive categorisation of A, B or C.  I do not think that is addressed in any of these cases.

MR CAMPBELL:   With respect, I would accept what your Honour says for the purpose of my argument.

GUMMOW J:   At the bottom we are talking about damages and we are talking about the policy of the law.

MR CAMPBELL:   Yes, your Honour, or perhaps identifying the principle ‑ ‑ ‑

GUMMOW J:   We are in the area of the common law and what the policy
of the law should be in these matters.

MR CAMPBELL:   Yes, your Honour.  Could I say that no one has questioned, in the nearly 50 years since Espagne was decided, the correctness, so far as they go, of the dicta of Chief Justice Dixon and ‑ ‑ ‑

FRENCH CJ:   But do we have any cases in which the focus is actually on a benevolent payment of a voluntary character rather than a statutory entitlement or the sort of thing that happened in Marinko v Masri, which was a payment for employment?

MR CAMPBELL:   No, is the answer to your Honour’s question. 

GUMMOW J:   Well, that sounds like a special leave point, at any rate.

FRENCH CJ:   There was a case about a defendant actually supporting the plaintiff, was there not?

MR CAMPBELL:   That was Kars v Kars, your Honour.

FRENCH CJ:   Yes, that is right.

MR CAMPBELL:   That was in the Griffiths v Kerkemeyer context and it had some different considerations, as the court pointed out in Medlin v State Government Insurance Commission, although some of what was said in Medlin bears upon – at page 4 of Medlin the Justices who wrote the joint judgment said that if a friend gives you some money whilst you are unemployed, well, you would not take that into account in diminution of the Graham v Baker damages, can I put it that way, but that was, of course, obiter in that case.  The purpose of the judgment in that case was to emphasise and to reject an argument that had been put on behalf of Professor Medlin in that case that just like Griffiths v Kerkemeyer all you had to prove was the first requirement of Graham v Baker and then you are entitled to damages.  The purpose of the Court in Medlin is to emphasise the dual requirements.

GUMMOW J:   Getting back to Redding v Lee and what Justice Deane was talking about, we do know here, do we not, that this body is endorsed as a tax concession charity?

MR CAMPBELL:   Yes, your Honour.  I am conscious of what the Court decided in Word International in relation to the investment activities of a company that was proposing to get an exemption but was refused because it was going to give all its money to another charitable institution.  The fact that it was going to make its money on the stock market did not mean it was not a charity or it did not detract from its charitable objects and purposes.

Could I give your Honours an example here, though.  There is a danger in a case like this of an elision of fact of a critical type to say, as we have argued in writing, that because the church is a charitable institution and because it acts for charitable purposes, then every payment it makes is an act of charity.  For the purpose of this rule in Espagne, the two do not go together, with respect, your Honours.

Could I give your Honours an analogy.  If the church has a leaky roof and a carpenter comes along to fix the roof, be he or she a member of the congregation or not, and the carpenter is paid for his services in relation to fixing it, then certainly that payment goes in furtherance of the charitable objects of the church and therefore has a charitable purpose, but no one would say that the payment to the carpenter was an act of charity for the purpose of the rule in Espagne.

For instance, if that carpenter had been the victim of the negligent driving of a motor car and had a case pending in the District Court of New South Wales, then, we respectfully submit, no one would seriously suggest that he should not bring that payment to account in the assessment of his damages for economic loss in accordance with 126 of the Motor Accidents Compensation Act.

GUMMOW J:   In category A we are dealing with a payment which is said to be a gift motivated from charity or benevolence to another party.

MR CAMPBELL:   Supposing that your Honour is an employer and that the injured worker that I spoke about earlier does not really have a job to do in your factory, but out of a feeling of benevolence or charity towards him and his family, you have him back along and you make up jobs for him to do and you pay him for doing them, then again no one would suggest that those payments for that service were not to be brought to account in accordance with the general compensatory principle.  It would be outside the Espagne exception, and the fact that it had the dual characteristic would not make, in our respectful submission, any difference.

CRENNAN J:   Irrespective of the motives for doing it, are you still in an employment context in that example?

MR CAMPBELL:   Yes, your Honour.

CRENNAN J:   Does the employer/employee relationship, there would be the payment of tax in respect of income earned.  It is really not to the point that the employer ‑ ‑ ‑

GUMMOW J:   There would be a pay as you earn obligation on all the rest of them.

CRENNAN J:   Yes.

MR CAMPBELL:   There would be, your Honours ‑ ‑ ‑

GUMMOW J:   Workers’ compensation requirements and so on.

MR CAMPBELL:   When one looks at exhibit 4 in this case, there does seem to be an idea running through the church’s appreciation of what it says there that because they are a charitable institution and everyone is a “volunteer worker” who performs services or discharges functions for them, that there is no obligation in that regard.  Whether that is right or wrong is a matter of law ‑ ‑ ‑

BELL J:   That is challenging, is it not, the factual finding which was against you, Mr Campbell.  We are not in the area of a relationship of employment.

MR CAMPBELL:   No, your Honour, we are not, but as I have said already, the relationship of employment does not exhaust all the possibilities of all the things that have to be taken into account in application of the second limb of Graham v Baker.

BELL J:   But is not the difficulty when one comes to that, the absence of any attention on that in the way the matter was run.  It is really only a single line from the letter, exhibit 4, that touches on the question going to the characterisation of a payment, if it is accepted that the payment is not by way of wages.

MR CAMPBELL:   I say, with respect to your Honour Justice Bell, there is not a lot of evidence but you really have to look at that whole paragraph, or that whole page in context, because there are a lot of important things which go to this, and one of the important contextual elements is the fact that they say that we have no employees, we only have volunteers.  We know that from the letter itself that there are people who discharge offices in the church because they have signed and witnessed the affixation of the seal to the letter, so you are starting from a premise.  Nobody is really a worker, they say, but we do make some payments – at least in this case, we have made payments to the applicant, not to alleviate her suffering, not to relieve her impecuniosity, but to enable her to operate more effectively as a volunteer worker.

FRENCH CJ:   How does that work as a matter - I mean, what is the causal connection between the making of a payment, and the effectiveness of her functioning as a volunteer worker?

MR CAMPBELL:   Your Honour, all I can say is there must be some connection between it because she is relieved of some of the ordinary cares of life, putting a roof over her head and finding sustenance and therefore she can devote herself to God’s work.  That might be one way, or an inference it would be open on that letter in that regard.

May we submit, your Honours, that that is a clear statement of intention from the church, not from a member of the church or from people at the church, not from the brothers and sisters, from the church itself.  This was their intention.

CRENNAN J:   Why does it not alleviate her suffering if she has a position at the church where she can come and go as she pleases and undertake what is essentially pastoral style of work?

MR CAMPBELL:   It may alleviate her suffering, your Honour, in a sense, but that is not the purpose of the payment, is my submission.  The purpose the payment is to enable her to do the pastoral work.  It is not primarily a benevolent purpose in this regard.  Your Honours, there is another factual matter which I have been overlooking referring to and could I refer to it.  We have argued that our learned friends make this allusion because it is charitable it must be charity.  We say that is wrong.  The other aspect, your Honours, is the failure to make the important distinction between what individual members give and what the church as a corporate entity pays.  We do not say that the money in the envelopes or the money that the applicant received while she was studying in Singapore are to be brought to account in accordance with Graham v Baker.  We accept that they are purely gifts.

FRENCH CJ:   Does that mean that there is a causal disconnection?

MR CAMPBELL:   Not necessarily, your Honour, and could I say to your Honour the Chief Justice that, as Justice Windeyer said at the conclusion of that passage on pages 599 to 600, his view was that we should disregard the causal connection analysis of these payments as providing a satisfactory explanation for why there is an exception and we should look to the purpose test, as his Honour put it.

FRENCH CJ:   That is a lot easier when you are talking about statutes.

MR CAMPBELL:   Yes, your Honour.

FRENCH CJ:   No body has actually examined, with all respect to the Espagne decision, as you have accepted the application of that principle and how it really works for benevolent payments

MR CAMPBELL:   Yes, your Honour.  I have accepted that, your Honours, and I do not resile from it and all of the cases do tend to come up.  The three categories seem to be contracts of accident insurance or pensions of a similar kind and statutory benefits and all the cases concern that and I accept that this is against me ‑ ‑ ‑

FRENCH CJ:   Just going to basic principle.  You are starting off with a proposition that damages are compensatory and that what we are looking at is quantification of a loss from loss of earning capacity, so it is loss caused by, et cetera.  Then the question is whether that is to be offset by a benefit which is connected in some way with loss of earning capacity.  I am not sure that one can necessarily say that causal connection has nothing to do with it.  The question is, what is the policy basis upon which you disregard any causal connection and say this is outside the universe of quantification?

MR CAMPBELL:   In relation to the last part of your Honour’s question, it is fair to say that what his Honour Justice Windeyer was concerned about was the artificiality of a distinction of rating the importance of causes as a way of ‑ ‑ ‑

FRENCH CJ:   Yes.  Maybe you accept it is all causally connected.  You have just got to say bluntly – one approach might be to say bluntly there is a policy basis for excluding certain categories of payment.  On the other hand, there are others like the ad hoc gift which has on no view any causal connection except that – well, it might in a very broad sense, but it is the spontaneous response of people who want to just help out in a general way.

MR CAMPBELL:   Yes, your Honour, or the individual parishioners out of a feeling of goodwill giving a gift to someone who performs pastoral work in the church.  There is always a difficulty, of course, in reading even an important passage in a judgment like this dictum of Justice Windeyer in Espagne as though it were a statute but we do get some idea of what the principle is.  I respectfully submit if one looks at the end of the paragraph at 600 in context your Honours will see that having explained categories A and B his Honour says:

In both cases, the decisive consideration is, not whether the benefit was received –

and, again, it has to be identified as a benefit –

in consequence of, or as a result of the injury, but what was its character –

His Honour then – I know your Honours have read this many times but if your Honours will suffer me to do it again – we get an idea of the things which inform that anterior question about the character of the benefit by what he subsequently says and there accepting the difficulties he says:

that is determined, in the one case by what under his contract the plaintiff had plaid for –

That is not this case, your Honours, of course –

and in the other by the intent of the person conferring the benefit.

Then when we wonder about what this intent means, does it add anything to character, we get to his pithy conclusion:

The test is by purpose rather than by cause.

So that you have – bearing in mind, your Honours, we are applying a principle of the common law and not the words of a statute, you get the parameters within which you have to make what will essentially be an evaluative judgment which will depend upon the facts and circumstances of any given case.  Not a very helpful formulation by me, your Honours, but sometimes that is the best we can do.

GUMMOW J:   We have been given the fourth edition of Professor Luntz’s book.

MR CAMPBELL:   Yes, your Honour.

GUMMOW J:   Is there any particular assistance to be gained from ‑ ‑ ‑

MR CAMPBELL:   Your Honour, there was something in relation to what your Honour has asked me about in relation to what Justice Deane had to say in Redding v Lee about the public nature of certain benefits.  May I say, Professor Luntz sets out at paragraph – I am sorry, your Honours will see that [8.1.2] on page 424 he has a paragraph headed “Uncertainty of law”.  Then at [8.1.3] there is “Policy solutions”.  He sets them out and then discusses each of them as to how you could resolve what are the perhaps tensions in the law.

At (c), for instance, your Honours will see, “Thirdly (reimbursement)” and then there is the idea at the end of that subparagraph:

the plaintiff would not be over‑compensated and the loss would be shifted from the other source to the defendant or the defendant’s liability insurer.

Then he goes on to evaluate the various of them, at [8.1.4].  Your Honours, at the foot of page 427 and given that what Justice Deane had to say was in some respects about loss distribution it could be said, your Honours will see from the middle of the page, Professor Luntz discusses some of those ideas, and for instance he says, perhaps two‑thirds of the way down the paragraph, your Honours, about halfway along the line, a clause commencing “since the Courts cannot compel”.  Do your Honours see that:

since the courts cannot compel reimbursement, it may be hoped that by apparently over‑compensating the plaintiff . . . the ultimate aim will nevertheless be achieved through the plaintiff voluntarily reimbursing the collateral source.

Bearing in mind there is a tension of two policies here, one of them being the policy of the law against double or overcompensation, and that is expressed in the compensatory principle:

Thus charitable donors may be poor loss-distributors and their activities are, perhaps, to be encouraged, whereas a negligent enterprise may be a good loss-distributor -

His Honour goes on to discuss the matter.  He then talks about the example of:

medical benefits insurance may be an excellent loss-distributor, comparatively cheap to administer, and speedy in effecting payment; whereas motor car liability insurance may be no better as a loss‑distributor, may be comparatively expensive –

We seem to have left out 428, your Honours, but it is my recollection of it that his Honour goes on to – I withdraw that.  Professor Luntz goes on at the top of page 428:

may be inordinately slow in achieving settlement and may do nothing towards accident-prevention; if so, the fifth solution must surely provide the answer here.

That only goes to the policy.  Could one say this though, your Honours, and I think this paraphrases ‑ ‑ ‑

GUMMOW J:   Does he deal with any benevolent cases?

MR CAMPBELL:   I have to answer that by saying not that I have identified, your Honour.  The classic, I suppose, benevolent case is of course the case my learned friends referred to, of Redpath which is the public subscription for distribution to the victims of the railway accident.  We would only say about that, your Honours, that given that it proceeds on what was the preferred approach in the United Kingdom at that time of cause rather than purpose, perhaps some of the reasoning in it would not survive what Justice Windeyer analysed in Espagne and of course Redpath is one of the cases he did refer to, in that regard.

Your Honours, it could be said – and I think Professor Luntz comes closest at one point – that given that we are dealing in a case like this, say, with compulsory third party insurance, those who make charitable subscriptions may not be put out if the result of their charity led to a reduction in the premium that they had to pay as a compulsory matter when they had their motorcars registered.  Perhaps, your Honour, that is – I said it only slightly glibly – but it does show that it is often very difficult to work out what the community standard might be that should inform the policy of the law in an area like this.

GUMMOW J:   The Chief Justice refers to page 458, the whole section, is it not?  Page 458 of Professor Luntz’s book.

FRENCH CJ:   Under the heading “CHARITABLE GIFTS”.

MR CAMPBELL:   Yes, your Honour.

GUMMOW J:   There are a number of cases referred to there.

MR CAMPBELL:   In 458, your Honours will see 211 is the Kars v Kars Case.  That is Griffiths v Kerkemeyer.  At 212, your Honours, is New South Wales Insurance Ministerial Corp v Wynn and that is about the vicissitudes and the doctrine that should be made in that context.  That would also be, may I say, with respect, your Honours, a Griffiths v Kerkemeyer type case because that aspect of it goes to the provision whether or not a car should be modified or the defendant should pay for a modified car.  So it falls into, again, an analogous place to the Griffiths v Kerkemeyer type case.  Your Honours have referred to those.

As I have submitted, your Honours, although there is a reference expressly to Redpath in the next case and that is, as I have said, the public subscription for the victims of a railway accident, the reasoning in that case may not stand up in modern Australia, having regard to what Justice Windeyer said about the rationale for the rule in Espagne, although Espagne, of course, was not a case about charitable benefaction.  Both Justice Windeyer and Chief Justice Dixon refer to that aspect and, of course, the passage from Chief Justice Dixon is at page 573.

Your Honours, may I simply go to two more things.  Could I do what I said I would do when I think I got to my feet and take your Honours just quickly through Manser v Spry and how the principle works, because I want to submit that that might provide the answer to the particular question that your Honour Justice Gummow has been taxing me about, how do we deal with cases that do not fit neatly into the rules?  I am going to submit to your Honours that if it does not fit neatly into – I will say categories A, B and C following Redding v Lee rather than categories A and B following Espagne – the recognised exceptional categories, then the dominant rule applies and the dominant rule is the compensatory principle.

Your Honours, most of what is said in Manser v Spry (1994) 181 CLR 428 does not really concern us here because it concerns a question about firstly, whether or not the South Australian workman’s compensation legislation required repayment in certain circumstances which their Honours held it did not, and then the question which is analogous to the present area of debate is whether, given that the statute did not require reimbursement, did the common law require that the payment of compensation be brought to account.

This starts, your Honours, at page 434, under the heading “The general principle”, and your Honours will see the reference to the restatement of the general principle in Haines v Bendall (1991) 172 CLR 60 at 63. I do not want to read that to your Honours – we have referred to this in the written submissions - but can I emphasise the importance of the general principle. You will see in the first line that it is referred to as the “settled principle”. These descriptions, your Honours, are very important, we submit, in terms of working out what you do if it does not fall squarely within one of the exceptions. This is the “settled principle”. Your Honours will see down the page by ‑ ‑ ‑

GUMMOW J:   That is not what I was putting to you.  It is not a question of whether it falls within any of them; the question is what happens when it falls within more than one of them?

MR CAMPBELL:   What I was going to do, your Honour, was say if it does not fall squarely within one of them, my submission is that the cardinal principle applies.  If it falls wholly within more than one of them, then the exceptions must apply, but if it is not wholly within one or more exception, then my default rule, your Honours, is that the cardinal principle applies.  Your Honours will see then the reference to the dictum of Justice Windeyer in Skelton v Collins, the one principle that is absolutely firm.  Their Honours then go on to say at 435, and this is how we submit it operates, your Honours:

However, as Walsh J.A. pointed out in Adams v. Ascot Iron Foundry Pty. Ltd., the settled principle does not solve the problem whether a benefit to which a plaintiff is entitled is relevant to – that is, whether it goes in reduction of – the damages which a tortfeasor is to pay for the loss or damage caused by the tort.

Then, your Honours ‑ ‑ ‑

BELL J:   I think that again was in the context of trying to discern the intention of a statutory scheme.

MR CAMPBELL:   Yes, it was, your Honour.

GUMMOW J:   That is very plain at the bottom of 438, is it not?

MR CAMPBELL:   Yes, there is not doubt about it.  This concerns statutory workers’ compensation, so it does not really get us where we are going, but to the extent to which it deals with general principles and the common law in Australia is ultimately founded upon principle, not policy, as your Honours pointed out in Moody v Sullivan, then we want to answer the question and we answer it by reference, we would respectfully submit, to these general principles, which is why I am labouring the point and I have nearly finished labouring it, your Honours, and if your Honours will suffer me to do so for another 20 seconds, I will be finished, but ‑ ‑ ‑

FRENCH CJ:   It took you 20 seconds to say that.

MR CAMPBELL:   Then their Honours go on and discuss the principle.  They refer to other cases, including Redding v Lee, towards the foot of page 436 and this is what we have emphasised in writing.  It is at page 437.  I have gone beyond the 20 seconds no doubt, your Honours.  But this is it, this is what we say the answer is:

Finally, if all indicia of intent –

your Honours see the word “intent” –

fail, the “settled principle governing the assessment of compensatory damages” . . . must be applied.

That is a fairly robust and emphatic statement by, with respect, your Honours, five Justices of this Court – “must be applied”.  So if it does not fit and there is no one size fits all, then the general principle must be applied.

FRENCH CJ:   Was that the principle applied by the Court of Appeal?

MR CAMPBELL:   Yes, your Honour.  In my respectful submission, sub silentio that was the principle that was applied by the Court of Appeal because ‑ ‑ ‑

FRENCH CJ:   Sub silentio?

MR CAMPBELL:   Yes, your Honour, because the Court of Appeal recognised, as it was put to them in argument in the Court of Appeal, that Espagne was an exception to Graham v Baker.  Both parties relied on Espagne for different purposes, as their Honours set out and if you were going to disregard the payment by the church, then it had to come squarely within the exception.  For the reasons rehearsed, culminating in the decision at paragraph 41, it did not come squarely within the Espagne exception, therefore the general principle applied and it was taken into account.

FRENCH CJ:   You take comfort from the words “constituted a form of compensation for her inability to obtain employment”?

MR CAMPBELL:   I do, your Honour.

FRENCH CJ:   It is that that invokes the general principle?

MR CAMPBELL:   That, your Honour, and also the opening words of paragraph 41 where their Honours expressly accept the submission that they have summarised at the end of paragraph 38.  Now, the second thing which I wanted to do, your Honours, before concluding this was to then turn to what your Honour the Chief Justice has referred to as the natural justice point.  I have already addressed this in some respects already earlier in my address, but I wish to just say a few things in addition to what we have said, your Honours, in our written submissions about it.

Your Honours, I did not want to go through the tedious exercise of asking your Honours to look at the transcript of the addresses in the Court of Appeal, which I believe your Honours have now been given by consent of both parties, but when counsel starts an argument that way, your Honours, then it is inevitable I am going to do it a little bit.  Could I just give your Honours some references to it.  The purpose of this, your Honours, is to say that this point was but faintly taken in the Court of Appeal and, with respect, your Honours, was not pressed in the Court of Appeal.

Now, we have in writing set out how we say the submission we made in the Court of Appeal was consistent with what we argued at trial by reference to correct identification and application of the principle in Graham v Baker.

BELL J:   Are you going to take us to where in the proceedings before Judge Garling the matter was identified, because the point that is taken against you is this whole question of characterisation could have been dealt with in evidence at the trial had it been in play?

MR CAMPBELL:   Your Honour yes, I am going to – to answer the first part of your Honour’s question, yes.  The second part of your Honour’s question to me is this – no one has ever identified, accepting the importance of this principle, that is to say, you are bound by your conduct of your case, no one has ever identified at any time what the possibility was of evidence being given that might have contradicted exhibit 4, given, as I have taken your Honours to, the solemnity with which exhibit 4 was prepared and provided to the Court.

It could not have been displaced, your Honours, by calling a member of the church to give their own opinion about why the church itself, as opposed to that particular parishioner, was paying money to the applicant, and to a large extent, your Honours, the argument my learned friends put about the failure of the collateral attack at the trial is not to the point, because the applicant’s own opinion about why these payments were made to her is not any evidence of what their character was, your Honours, what the intent was, your Honours, or what the purpose was, your Honours, to use the trilogy of words used by Justice Windeyer in Espagne.

Those matters, we respectfully submit, like any contractual or quasi‑contractual question that arises in court, had to be determined objectively by reference to all the circumstances of the case, and when you had a statement from the church itself saying “This is why we made these payments”, then that evidence was, not as a matter of law, but as a matter of fact, your Honours, likely to be conclusive of the question. 

Now, what it meant was, of course, a matter for normal judicial inferential reasoning and once one made a finding of fact about it then you had to apply settled principle to that finding of fact to work out whether you deducted the payment or you did not but, your Honours, there is just no possibility, we respectfully submit, of there having been any evidence led that could have contradicted that, or was likely to have contradicted it sufficiently for the principle in Holcombe v Coulton and like cases to be invoked.

To answer the first part of your Honour Justice Bell’s question, my learned friend, Ms Norton, did take your Honours to some of the argument, I am sorry, and I need to go over some of that ground.  It does start, your Honours, at 158 of the book, and as I have said your Honours will recall that the plaintiff’s counsel at the trial frankly referred to charity.  We referred to these payments as being wages, or may I say, your Honours, in the nature of wages.

BELL J:   Could you take us to a submission?

MR CAMPBELL:   Thank you, your Honour.  If your Honours go to 158, as I have asked your Honours to do, your Honours will see, and we submit that founded upon the cross-examination that the submission should be understood in a general sense because it was not – the emphasis I put, your Honours - at 158, 45, I would emphasise your Honours the reference to:

It’s a role your Honour which she undertakes on virtually a daily basis -

the reference to that.  At 159, at about 15, there is a reference to “the courts should conclude” - put in the negative - that “someone who passed a degree” was going to do something with the skill.  Then, your Honours:

So having undertaken a course of study and successfully gained qualifications, in my submission she gets a job.

A job is an ordinary English word your Honours, and we are talking about and we have always spoken about the provision of services in respect of which or in return for which someone gets paid.  That is all it means, your Honours.  It did not have to turn upon the characterisation of the relationship between the plaintiff and the church as being a contract of service rather than some other arrangement between them.

Your Honours will see that counsel went on to say – it says “airy like income” but I think probably “eerily like income”, and reference made to the characteristics, not so much the legal indicia of a contract of service but the characteristics of someone who is getting paid in the modern age for the performance of services.  You will see the reference to:

performing duties on behalf of the church as all employees do on behalf of their employers, yet not consider that arrangement to be one of master and servant.

This is an important part, your Honours, at about 25 –

it is a job notwithstanding the arrangement in place between her employer and her which does not involve the payment of tax –

or other matters.  What counsel is submitting, your Honours, is that the reality of the situation is that this is in the nature of an employment relationship.  That is the gravamen of it and we submit that that submission was calculated not to stand on its own but to engage, as I have said, too often no doubt, your Honours, the second of the dual requirements in Graham v Baker.

CRENNAN J:   Can you have an employment relationship with a person in the position of the employee who is not required to turn up unless they feel like doing so?

MR CAMPBELL:   Usually, your Honour, of course, an obligation to provide service is an indicia, and an important indicia, a duty to work of a contract of service properly so-called, but you can have arrangements that look like an employment relationship and perhaps in a church or the – I hesitate to use the phrase “the church sector” – those type of arrangements might well be more familiar than they are in the general industrial or commercial setting, that what, say, a priest or a minister or some other religious person gets paid by a church would strictly not turn upon the performance of any particular work or they may have an obligation pursuant to their vows to perform certain activities and what they get paid would be entirely in the discretion of their superiors. 

That type of thing, your Honours, would be entirely common and it would still, in the context of which we presently speak, be fit to be called a job or work because those plain English words, stripped of their legal connotations, bespeak an arrangement where somebody provides service and gets something in return for it.  He gets paid something for doing so.

FRENCH CJ:   How does it sit with the Court of Appeal’s conclusion, going back to paragraph 41, that the payments “constituted a form of compensation for her inability to obtain employment”?

MR CAMPBELL:   Not very happily, your Honour, but it is in the same territory, given what Justices Mason and Dawson said about the nature of unemployment benefits in Redding v Lee and Evans v Muller, that they run together, just like in Graham v Baker the sick pay for which no work was performed – this is an established category as well, of course – also falls into the same category as the receipt of earnings.  Your Honours, over the page on appeal book 160 just after line 20 there is a reference again to:

from an economic point of view, the interruption to her life has been fortuitous because she’s found herself in a position –

we are not claiming a credit, your Honours –

she has found herself in a position –

other than for what she is paid –

where she’s working in an enterprise which she loves clearly, applying the knowledge and skills which she diligently obtained in Singapore, helping in a mission environment which as she said is her obligation and duty, and getting paid a big wad of cash for doing it.

Which was a perhaps unfortunate rhetorical flourish, as your Honours will have observed earlier on.

At the same time, your Honours, you can see the elements there of something which is broader than a contract of service in an industrial setting, in an enterprise which she loves, applying knowledge and skills, diligently obtained a degree, helping in a mission environment, fulfilling an obligation and duty.  They are all based upon the evidence she gave, your Honours.  I mean we are talking about the performance of religious or church work, pastoral work.  It is different from an industrial setting, but all of these things were put forward in the way the submissions were put in the court at first instance.

BELL J:   Surely, this was an invitation to accept the challenge that had so squarely been raised, namely to reject her evidence on that topic?

MR CAMPBELL:   Well, your Honour, it certainly was that and I do not resile from that and it was an attempt which failed, as such attempts sometimes do and sometimes do not.  But that did not fully exhaust the relevance of either the evidence, your Honour, or the submission.  Once you have rejected the submission that you should not believe what the applicant said about it, but you accepted it, then you are still left with the legal question, what do you do with the payments and how do I characterise them?  Is Espagne fully engaged?  On the one hand his Honour had a submission, “Well, you bring them to account” and on the other hand he was put with the submission, “You do not bring them to account because they are charity”. 

Now, neither counsel, with respect to them, made any mention of Espagne expressly.  But it was clear, your Honours, that the issue between them centred around that area of dispute and it centred around whether the principle established by Espagne applied or not.  So when it got to the Court of Appeal it was not, with respect, to raise any new point or change the ground to say well, this is how it was put.  But we have got to understand the nature of the legal process in which we are engaged and we have to understand, what is the principle that was called into play by the findings the trial judge made.  He expressly accepted the contents of exhibit 4.  So, that being so, what inferences do you draw from the facts he found?  What law do you apply to them and what conclusion do you arrive at?

In our respectful submission, that is not to change the ground.  It might be to develop it and evolve it or to refocus it in its proper area, but it does not mean that we have changed horses and run an entirely separate case.  As I have said, your Honours, with the greatest respect to my learned friends, that when it was put in the Court of Appeal my learned friends but faintly put these submissions in relation to this matter.  I will leave out, your Honours, how we put our case, but if your Honours look at it at page 47 of the transcript in the Court of Appeal at line 35 – and, with respect, this is relevant, your Honours, you will see that the complaint was not really formulated in terms of the authorities.  Your Honours will see the reference, “not really how the case was run below.”  Then at line 45, your Honours:

just a question of whether this was really put down below in the same way as it was now.

There is the assertion at 48, line 40 that evidence of an unspecified type “may have been called”, or could have been called.

BELL J:   Justice Basten raised specifically whether it was suggested that there was evidence that could have been called and that really was not pressed.

MR CAMPBELL:   That is so, your Honour.  With respect to my learned friend, when Justice Basten checked that with her she said, “Well, I put it but lightly”.  Why was the Court of Appeal supposed to think that the principle had been invoked and tosses out on that ground?  It is not as though, your Honours, the Court of Appeal was not alive to the proper performance of its statutory duties in regard to this appeal by way of rehearing, because their Honours did not let us run one aspect of the case that we wanted to run an appeal on that very basis.  That, your Honours, can be found at page 249, paragraphs 32 and 33.  With respect, your Honours, I will not give your Honours the references but if your Honours looked at the transcript that was something which their Honours asked us about.  I was going to say “hammered us with” during the course of argument.  In my submission, the second ground just does not run.

Your Honours, I am about to conclude, but would your Honours allow me to just remind you of two cases in this area.  Could I have leave to do it, your Honours, although it is not on our list of authorities?  The first case, not chronologically, your Honours, is Water Board v Moustakas (1988) 180 CLR 491. The passage commences in the joint judgment of Chief Justice Mason and Justices Wilson, Brennan and Dawson at page 497. Your Honours, we have photocopied an extract. I hope we will not be criticised for doing that. It sets out a review of the authorities from 497. I wish to emphasise from their Honours’ joint judgment:

In deciding whether or not a point was raised at trial no narrow or technical view should be taken.

Could I hand that up, your Honours?  Are six copies sufficient of that?

FRENCH CJ:   Thank you.

MR CAMPBELL:   Finally, could I give your Honours a reference to and an extract from Green v Sommerville (1979) 141 CLR 594. Again, your Honours, we have an extract from the judgment of Justice Mason dealing with this question. It commences at the foot of page 607. That was a vendor and purchaser case, your Honours. The defendant’s defence related to rescission. They sought to argue they were entitled to rescind on one ground. Ultimately, this Court held they were entitled to rescind on another. Concerning that point, at page 607:

The trial was fought on the footing that the rescission was in issue.  The ground on which I have held the rescission to be ineffective was not specifically pleaded.  However, as the rescission was in issue and as the ground which I have taken does not depend for its validity on findings of fact not litigated at the trial, I consider that the matter comes within the rule that the judgment appealed from may be supported on a ground not previously argued.

His Honour goes on to refer to the well‑known statement that –

When a question of law is raised for the first time, even in a court of last resort, “upon the construction of a document, or upon facts either admitted or proved beyond controversy, it is . . . expedient, in the interests of justice,” to decide it –

and the reference to the usual authorities.  This case, in an alternative basis, could be characterised, we submit, in that way.  Could I have the leave of the Court to hand up six copies of that extract.

I said that was my last point.  Your Honours, can I just add one final point about pleadings.  We join issue with our learned friends about the pleadings.  This was a question which solely related to the measure of damages.  Under the rules in New South Wales it was not required to be pleaded unlike the defences we specifically raised under section 83 of the Motor Accidents Compensation Act (1999) and under section 151Z(i)(e) of the Workers Compensation Act (1987) which were expressly required to be pleaded by the rules, relying as they did upon a statutory defence.

If your Honours grant special leave and if the appeal was allowed, it would be necessary for there to be some recalculation of the damages, because presumably this point would go not only to the $52,000 that was deducted in respect of past economic loss, but it would also go in respect of the extra 25 per cent that was deducted from future economic loss ‑ ‑ ‑

FRENCH CJ:   That goes on the assumption of a discount of the probability of the church continuing to support her.

MR CAMPBELL:   Yes, your Honour, on the Malec type approach, there would also be a small increase in the consequential allowances for superannuation.  We have done some calculations, your Honours, but the Court might think it best to leave that and the parties could bring in some short minutes if that was appropriate, after your Honours make a decision.

FRENCH CJ:   Yes, thank you, Mr Campbell.

MR CAMPBELL:   May it please the Court.

FRENCH CJ:   Yes, Ms Norton.

MS NORTON:   Thank you.  Could I just firstly – doing them in reverse order – the pleading point, we made a reference in our submissions to the Uniform Civil Procedure Rules, 14.14(2), which says:

In a defence or subsequent pleading, a party must plead specifically any matter:

(a)that, if not pleaded specifically, may take the opposite party by surprise; or

(b)that the party alleges makes any claim, defence or other case of the opposite party not maintainable, or

(c)that raises matters of fact not arising out of the preceding pleading.

The matters raised made our claim for economic loss, past and future, not maintainable, and we say it should have been pleaded.  Great assistance is gained by pleading these simple things, as they said in the case that was just handed up by my friend of the Water Board v Moustakas.  Pleadings will ordinarily be of assistance.  They let everybody know where the playing field is at the beginning.

FRENCH CJ:   Sometimes they lose you.

MS NORTON:   Sometimes they move, and then the cases say, if they are moving, what you should do is go back and make amendments of them, but the next point – going back up – is the criticism that I did not object loudly and strongly enough in the Court of Appeal and I shall make the point not to be so polite in the future.  I did try, in my submission, to make it clear that I thought we were prejudiced and I thought something could have been done down below, but given the pressure of the situation, I just was not quick enough to think in very precise terms about what it was we could have done ‑ ‑ ‑

CRENNAN J:   You submitted that there was prejudice, is what you mean.

MS NORTON:   Yes.  I did that at page 49.  Justice Giles says:

Your side had every opportunity to put whatever evidence they wanted on.  This arises at the stage of submissions, you have to say to us that because no submission was made squarely raising what is sought to be raised now you are prejudiced.  That’s what you have to say.

NORTON:   We are prejudiced.

GILES JA:   Why are you?

NORTON:   Because even at any time prior to the determination of the judge if it had have become obvious in submission that this was being done then evidence could have been put in reply.

To my detriment I did not say what that evidence was.

GILES JA:   So that really means that because your predecessors didn’t realise the way the case could be put they are prejudiced.  That’s not a great basis.

Justice Giles and I were not agreeing that day –

NORTON:   That’s the basis and the major attack down below and why it took so long was an attack on credit which has been but vaguely raised here in oral submissions although strongly raised in written submissions.  So again that may be relevant to questions of costs –

I had said earlier that we would maybe have pulled somebody from the church.  It had not occurred to me then that what we simply would have done – or the counsel running it, it was not me – would have been to object to the tender of that letter without the maker of the letter being called so he could be asked some questions.  That is what would have been done.  With respect to the major thrust of the argument, I think I did say at some stage there were no cases on charity, but the Luntz has now been handed up, and there was that English case about the railway accident which was ‑ ‑ ‑

GUMMOW J:   Northern Irish case.

MS NORTON:   The Northern Irish case, sorry.

GUMMOW J:   Which I see Lord Wilberforce seemed to accept in Parry v Cleaver [1970] AC 1 in his discussion, which is quite a forceful one, if one may say so, at pages 38 to 42 of Parry v Cleaver.

MS NORTON:   It has flowed through, and there was a reference in our submissions to a reasonably recent law reform type commission report into the question in England where they decided to leave charity alone.  We put Redpath v Belfast and County Down Railway on our list of authorities, but that was faxed down.  If the Court does not have copies, I do have copies here.

FRENCH CJ:   We have copies, thank you.

GUMMOW J:   That result was partly put on grounds of public policy I noticed.

MS NORTON:   Yes, that people would stop donating money basically.  The other case that turns on charitable type principles that is being considered by this Court was the case of Kars v Kars (1996) 187 CLR 354.

FRENCH CJ:   This was some assistance from the defendant case, was it?

MS NORTON:   Yes, that was an assistance from a defendant, but the judgments do touch upon these charitable type principles at page 361.  It talks about voluntary services to the plaintiff, which is what the case was about, at about halfway down.  Then at the bottom of page 361, it says:

In Australia the starting point is National Insurance Co of New Zealand Ltd v Espagne where the problem which confronted the Court was identified –

Then we have the passages from Justice Dixon set out again.  Then over at page 362:

The provision of gratuitous services to an injured plaintiff by a friend or relative is, to my mind, clearly to be categorised as an act of benevolence where there is no intention that it should result in the reduction of damages recoverable by the injured person.

Then it refers to the judgment of Justice Windeyer in Espagne.  So, although it relates to provision of services, it accepts that – or what we say is the submission – that the primary question to be looked at is whether or not the payment is beneficial.  If it is beneficial, if it has some peripheral benefit, then that should not be enough to take it out of this category of being a beneficial payment, especially when it is made from a charity or charitable purposes.  Page 379 is where the Court there was discussing the principles where, if you have to draw a line that you have not drawn before in these types of cases, how should it best be done.  I will not read them because there is quite a lot of them, but the starting point is at page 379 with:

1.        The starting point to explain our conclusion is a clear recollection of the principle that the Court is not concerned, as such, to quantify a plaintiff’s loss or even to explore the moral or legal obligations to a care provider.

They then set out seven things to be considered which, in summary, are the aim of the damages is to compensate the plaintiff, and we put that in our submissions as the first point.  Two was to reduce damages because care was provided to the defendant and would be a windfall to the defendant.  Anomalies arise whichever course is adopted, so you should choose the outcome which has the least number of anomalies.  There was no trust obligation to recompense the provider of the service.  That is a matter for the plaintiff.  Here we echo that kind of argument by saying because she is a member of this church, if she were covered to the stage where she could earn income then no doubt she would start making donations to the church.

It is a getting together of people to assist each other.  If appropriate different family members would enter into legal arrangements to get around the results and the next two are basically confined to the provision of gratuitous services type argument.  They say the tortfeasor is not having to pay twice, and that is quite true here.  The tortfeasor is not being asked to pay something twice.  It is only being asked to pay what would be normal compensatory damages.

So we say the primary question which the Court of Appeal did not ask, or did not place enough emphasis on, was what was the source of these funds that were used to pay the plaintiff?  The source of the funds was donations to the church.  So to be deductible it has to be really some evidence that they were paid in response to her services or service, and they were not – it was held it was not an employment situation.

I cannot see how it can be argued she was an independent contractor in some way.  These payments were not made for either services or service.  They were made, as the letter clearly states, to pay her rent and her living expenses.  That is not how you calculate what she paid for either services or service.  It is more relevant to the benevolent part of the gift.  The benevolent part of the gift is to enable you to live near your church and continue to attend your church.  That was the purpose of the payments.  It was not income and she did not have a job.

Now, the plaintiff gave evidence that she was not working for these wages.  Her evidence was that the payments were charity and they did not relate to the work which she did or time she spent at the church.  The church’s letter does not say they relate to the time that she spent at the church or the work that she did at the church.  The most they say is that so

she will be better able to do what she does when she is there.  It is a difference.  The receipt from the church – there was no evidence called that other voluntary workers got paid so if it was only her ‑ ‑ ‑

FRENCH CJ:   It is a bit of an oxymoron, is it not, the notion of a paid voluntary worker?

MS NORTON:   It seems to be a strange concept to me, but we do not have evidence that the other voluntary workers were not paid.  But we know that before the plaintiff was incapacitated and she did voluntary work there is no suggestion she was paid.  So she is not being paid for her work is my simple point.  She was being paid because she was injured and they felt sorry for her and they had no intention of benefiting the insurer.  That brings them within the first category of being benevolent payments and therefore it does not matter if there is some collateral benefit to the donor.  Those are my submissions.

FRENCH CJ:   Thank you, Ms Norton.  The Court will reserve its decision.  The Court adjourns to 10.15 am on Tuesday next, 10 November.

AT 12.35 PM THE MATTER WAS ADJOURNED