Zheng v Cai

[2009] HCATrans 218

[2009] HCATrans 218

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

Applicant

and

DEJU CAI

Respondent

Application for special leave to appeal

GUMMOW J
BELL J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 4 SEPTEMBER 2009, AT 5.11 PM

Copyright in the High Court of Australia

MS S. NORTON, SC:   May it please the Court, I appear for the applicant with my learned friend, MR P.N. KHANDHAR.  (instructed by Brydens Law Office)

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

GUMMOW J:   Yes, Ms Norton.

MS NORTON:   Thank you, your Honour.  This is an application for special leave to appeal a unanimous decision of the New South Wales Court of Appeal which reduced the applicant’s damages as calculated by a trial judge by deducting from both past and future economic loss moneys paid to the applicant by her church and by fiddling with the base rate that the trial judge had used with respect to calculating future economic loss.  We do not claim that that second point raises any special ‑ ‑ ‑

GUMMOW J:   The relevant evidence seems to be this letter at application book 33, does it not?

MS NORTON:   The letter that became exhibit 4?

GUMMOW J:   Yes.

MS NORTON:   Yes.

GUMMOW J:   It is not all that clearly expressed, I suppose.  What point of principle would emerge in this case other than a construction of this letter?

MS NORTON:   Well, your Honour, the Court of Appeal decision turned on the construction of the letter, but really the wider issue that is raised is that, although it has been described in other cases and texts and that what gets set off against damages is in some ways a confusing area, the one strain that has always been reasonably clear is it is money paid by charitable institutions, by benevolent funds, by funds that you had paid into to obtain insurance, was never set off.  That was the one golden thread that seemed to stay fairly clear.  What the Court of Appeal has done by this decision is to muddy that water and we say that that is the special leave point.  It does not turn just on the wording of the letter because the question becomes or the question is under the authorities, what was the intent of the person providing the money?  What fund did it come from, as well as what was it used ‑ ‑ ‑

GUMMOW J:   How significant is it that there was a quid pro quo either expected or required in return for the charitable subvention?

MS NORTON:   Well, that is the issue, your Honour, that whether there even was a quid pro quo.  That is how the Court of Appeal read the letter.

GUMMOW J:   Assume there was, in terms of principle what would then follow?

MS NORTON:   Assume there was, well, one answer to that, in terms of principle, is so what?  It is still coming from a fund of money that was provided by donations to the church.  It is still being given not in relation to a calculation of the numbers of hours worked or the type of work done.  Really, she did some volunteer work – the facts are not before us on this particular occasion – but really the amount of work she did for the church was quite minimal.  So the principle will still be there.  If someone receives a pension, but does some volunteer work, is the value of that work to be set off against the pension?  It just seems that even if it is a quid pro quo, which we do not say it is, it should not be taken into account because it comes from a charitable fund.

BELL J:   The essential reasoning I think that the Court of Appeal adopted was an inference from the letter was that the real intent behind the payments was to enable the respondent to perform volunteer work.  That is at application book 38 and it is paragraph 38 of the judgment.

MS NORTON:   That is right, that is what was said. 

BELL J:   It seems to be from something said earlier at paragraph 35 on application book 36 it would seem it was acknowledged that the wrong test had been applied by the trial judges.

MS NORTON:   I certainly do not remember accepting such a proposition and, in fact, I note it is only said, “This was implicitly accepted by the respondent.”  The only thing that we said was that this matter was never raised before the trial judge.  So, therefore, it was not that he ignored something that was raised or found something that he should not have found.  It was simply never raised before him.  The case was limited to, it was all basically a bit of a sham and she was working for the church.

BELL J:   Well, the Court of Appeal accepted that that challenge was not made good.

MS NORTON:   That is right.  So therefore she was not working for the church, it is not wages.  If it is not wages, why should it be set off if it comes from a fund that is provided by donations and used for benevolent purpose?  Even the letter itself only says, “allow her to function more effectively as a volunteer worker”.  She had been a member of a slightly different church prior to the injury, but she had done volunteer work there as well.  Her stated intention in giving evidence was that prior to the accident she had intended to go to Singapore and get these qualifications and then come back, either work in a business that she set up herself or work for someone, plus do volunteer work in the church.  So it is not that the payments are being made because she does the volunteer work.  The payments are being made because she is a member of the church and she does the volunteer work because she is a member of the church.  These just are not commercial transactions.

GUMMOW J:   What did the court say in Manser v Spry 181 CLR 428, can you remember, on this subject?

MS NORTON:   I read them yesterday.  That was about some money paid under a statute which is slightly different, but it was said to be that at page 436:

To ascertain whether a statutory benefit possesses the “distinguishing characteristic” that it is to be enjoyed independently of, and cumulatively upon, the right to damages, the court must endeavour to discover the intention of the legislature.

We say with respect to gifts, that translates into the intent of the giver.  There are three possible indicia of relevant legislative intention; the financial source of the benefit, the presence of a provision which requires a repayment of a statutory benefit out of the damages awarded or paid and the nature of the benefit.  Now, in this particular case the source of the benefit was, as the trial judge found, donations made by members of the church.  We do not know if there was any specific requirement for it to be repaid because the issue just did not arise at trial so no case in reply was called.

GUMMOW J:   Who bears the onus in these wrinkles in damages assessments?

MS NORTON:   Well, the ultimate onus would always rest on a plaintiff to prove their damages.  This is not a statutory defence, as such, but that does not help as much in the present case because these matters were not raised at trial.  If they had been raised at trial – as I tried to say in my submissions in reply – if they had been raised at trial then there are avenues, such as calling someone from the church to say, “Well, yes, we are giving her this money, but if she gets her own fund of money, the payments will stop”, which is one thing that is relevant to future economic loss, or, “Because she is a member of the church, of course, we will expect her to continue to do the volunteer work and to make donations to the church so we can help out other people when they are in financial difficulties”.

That was the very nature of the relationship.  It was not an employee relationship.  So it was not like those cases where it is under the definition of sick pay or any of those things.  So the indicia, according to Manser, was the source of the fund, whether there is a requirement to repay and the nature of the payment.  The Court of Appeal in this case focused very heavily on the nature of the payment, saying it was like wages, but, in effect, it was not because it was not calculated in accordance with the amount of hours she did.  It was calculated in accordance with her need to pay rent and living expenses.

BELL J:   It seemed to me that one strand in the Court of Appeal’s reasoning was that the intent of the church was to ensure that she performed better as a volunteer and therefore was not the benevolent intent of the sort that Justice Windeyer had in mind in the National Insurance Company of New Zealand Case.

MS NORTON:   But, again, that is a benevolent intent.  The work she was doing at the church was work of talking to people who came with problems, answering phones, it is a charity.  It is quite simply a charity and it is not the most established church, but it is an accepted church.  No claim was made that the other volunteer workers were somehow doing something they should not be doing in working for nothing.

GUMMOW J:   Now, can we just look at the draft notice of appeal on page 58.  What you have been addressing us is covered, I think, by 2(a).  Is 2(b) ‑ ‑ ‑

MS NORTON:   Well, 2(b) was thought to be necessary to answer some of the points that arose today like, why was there not evidence of this, who has the onus, and that was why 2(b) was in there.

GUMMOW J:   I see.  And 2(c), that is the same, is it not?  That is a further elaboration, is it, 2(c)?

MS NORTON:   Ground 2(c) seems to have dropped off mine.

GUMMOW J:   

The Court of Appeal erred in allowing the respondent to raise a new argument on appeal which was outside the focus of the evidence at trial ‑ ‑ ‑

MS NORTON:   Yes that is the same, just me wording it a slightly different way.

GUMMOW J:   When you say under “Orders Sought”, “Decision of the New South Wales Court of Appeal be reversed”, would there be a complete reinstatement of the result of the District Court?

MS NORTON:   The draft notice of appeal did not put in it the question that was put in the special leave questions, that is, that there was a change of $600 a week down to $500 a week for calculation of future economic loss.  If we put that back in, then the result would be the District Court judge’s decision.  If it was decided that we should not be allowed to argue that point, well then there would be that calculation.

GUMMOW J:   Where is that point in the grounds at the moment?

MS NORTON:   It got left out, your Honours.  It turned up in the first document I drafted and then slipped off.

GUMMOW J:   I think it might stay ‑ ‑ ‑

MS NORTON:   I am sorry 2(b).  When your Honour was talking ‑ ‑ ‑

GUMMOW J:   Is that covered by 2(b), is it?

MS NORTON:   When your Honour was talking to me I was looking at the application for special leave instead of at the draft notice of appeal.

GUMMOW J:   That is what I thought.  It is (a) and (c), is it not?

MS NORTON:   It is (a) and (c), yes and (b) is the one that if that ‑ ‑ ‑

GUMMOW J:   If you get a grant with (b), it might be a different matter.

MS NORTON:   If we get (b) included, then the decision of the District Court would stand.

GUMMOW J:   I follow.  And if you do not, then you would need some other form of order.

MS NORTON:   Recalculation.

GUMMOW J:   All right, thank you.

MS NORTON:   Yes, your Honour.

GUMMOW J:   We will hear from Mr Campbell.

MR CAMPBELL:   Thank you, your Honours.  Could I just say that that last question that the Court asked of my learned friend that there would never be a situation where it would be the same judgment as in the District Court because that would overlook the defence that we were allowed to raise in the Court of Appeal for the first time based upon the provisions of section 151Z(1)(e) of the Workers Compensation Act.  So the result would have to be the 300‑odd thousand less the 155‑odd thousand.

GUMMOW J:   That is what I had in the back of my mind, yes.

MR CAMPBELL:   Your Honours, could I say this.  The ultimate issue in this case turned upon questions arising out of the second limb of Graham v Baker, that is to say, there was no issue about the diminution or impairment of the applicant’s earning capacity.  The question was, was that likely to be productive of financial loss?  It was in respect of that matter that we argued – and may I say, with respect, both at the trial and on appeal – that the moneys received from the church had to be brought to account just like, may I interpolate, the receipt of the sick pay, for instance, in Graham v Baker itself.

Now, can I say at this point in time, your Honours, before I go on to what I want to say for the substantive argument, we submit there was no new ground raised on appeal.  Mr McCarthy had argued, with respect to him, at the trial that this was, in effect, a contract of service.  Now, that argument was rejected by the trial judge, but the ultimate issue was the same, that is to say, that the diminution of earning capacity was not likely to be productive of financial loss because of the receipt of these moneys.  So, on appeal by way of re‑hearing the argument was refined somewhat and we put it forward on three separate bases.

The basis upon which issue was finally joined in the judgment of Justice Hoeben, and in which the others agreed, was this point based upon, can I put it this way, a combination of the reasoning, firstly, in Espange and, secondly, your Honours, in the Court of Appeal’s own decision in Masri, which we have given your Honours.  So far as that is concerned, your Honours, the only passage which we wish to rely upon from the supplementary materials we have given the Court are at page 28, and it is what Justice Handley said in paragraph 47 which goes over the page, that is to say, that in the circumstances applying what Chief Justice Dixon had said at page 573 of Espange and applying what Justice Windeyer said at pages 597 to 590, looking at the facts of that case through the prism of that reasoning, that one could see that in that case the benefit paid by the protective commissioner was an unemployment benefit to enable the husband, who was the plaintiff in the case, to discharge his moral and the obligation he had taken on to render care to his severely disabled wife.

BELL J:   I think Professor Luntz has pointed out that this is an area where the law is in a state that is not settled and there may be distinctions to be drawn between payments made by the protective commissioner and payments made by an organisation, such as a church out of motives of charity, the very sorts of issues with which Justice Windeyer was concerned in Espange.

MR CAMPBELL:   Could I say in answer to your Honour Justice Bell’s observation that, yes, there may be differences according to whether you are talking about a statutory right, a benevolent subvention or something else.  We accept that, your Honours, but we submit that the principle established by Espange is clear enough and is capable of application directly in this case.  That is why we have said, your Honours, that this is a case that really involves no more than the application of that settled principle to facts that when we got to the Court of Appeal were no longer in dispute.

Could I just say something about the facts, your Honours.  It is important, may I say, with respect, to bear in mind that there are two aspects to the moneys paid by the church.  The first aspect, of course, is the money that was put into the collection by the parishioners which varied from week to week and there was no issue about that.  That was obviously the type of thing, your Honours, that was caught by the benevolent subvention, if I can put it that way, principle.  No issue.  Then there was the regular payment, your Honours, of a fixed amount week in and week out which went up a bit as time went on which was paid according to the only evidence in the case, exhibit 4, to enable the applicant to more effectively perform her work as a volunteer worker.

The church had no employees apparently, your Honours, according to the evidence.  It only had volunteer workers and all offices and functions in the church were filled by volunteers.  Now, if you look at what the evidence disclosed, your Honours, about the type of volunteer work that the applicant was performing, your Honours might think that it is the type of work that you would describe as church work.  The applicant was performing pastoral work.  She had a bachelor of theology.  When I say pastoral work, she was seeing parishioners, talking to them, listening to their problems.  She was preaching and she was visiting the sick and, your Honours, she also did administrative work in the church office for the ordinary functions of the church. 

Now, when one looks at the distinction between the two payments and looks at the nature of the regular payment and compares that to the type of volunteer work that it was said on behalf of the church was their object to

allow the applicant to perform it more effectively, then one can see how that principle expressed by Justice Handley at paragraph 47 in Masri, we respectfully submit, comes into play, your Honours.

Could I say something, one final point, your Honours.  The final point relates to what is put forward by our learned friends as the special leave point, that is to say, that if this decision below stands, then members of the public will not respond to public appeals.  Now, of course, your Honours, there is nothing in that point or a point like that.  That point is directly within the principle expressed by Chief Justice Dixon at page 573 and by Justice Windeyer at the start of the longer passage extracted in Justice Hoeben’s decision in the application book.  May it please the Court.

GUMMOW J:   We will take a short adjournment.

AT 5.32 PM SHORT ADJOURNMENT

UPON RESUMING AT 5.38 PM:

GUMMOW J:   We do not need to hear counsel any further. 

We will refuse leave on ground 2(b) as it appears at page 58 of the application book.  We would refer grounds 2(a) and 2(c) of the application into the Full Court for further hearing by an enlarged Bench.  The parties should be prepared to argue the case on that continued special leave application as if it was on an appeal.

MS NORTON:   If the court pleases.

GUMMOW J:   It would be a half‑day case, I imagine.

MR CAMPBELL:   May it please the Court.

GUMMOW J:   Is that clear?

MS NORTON:   Yes, thank you.

GUMMOW J:   The Court will now adjourn to 10.15 am, Tuesday, 22 September 2009 in Canberra.

AT 5.39 PM THE MATTER WAS CONCLUDED