Allianz Australia Insurance Ltd v McGrath

Proceedings in Tribunal 10The first award, made by consent, included the following orders: "1. Verdict and judgment for the plaintiff against the defendant in the sum of $140,000 inclusive of costs on a provisional basis. 2. An order that the plaintiff's rights to claim further damages pursuant to s 11A of the Dust Diseases Tribunal Act 1989 are reserved in respect of asbestosis, mesothelioma and any asbestos-related malignancy." 11The phrase "on a provisional basis" derives from the Dust Diseases Tribunal Rules, r 5, which identifies the damages referred to in s 11A(2)(a) as "provisional damages". (The term "provisional" also appears in the heading to s 11A; that heading does not form part of the Act - Interpretation Act 1987 (NSW), s 35 - but may be relevant under s 34.) The rule also requires that the order in respect of provisional damages "must specify the dust-related condition in respect of which an award of further damages may be made": r 5(4). It is the chance of such conditions arising which, the award specifies, have not been taken into account in calculating the first award. 12The term "provisional damages" may carry its own connotations in relation to the exercise being undertaken at the first stage of the assessment process. 13When the matter returned to the Tribunal in respect of the further claim, there was agreement that amounts totalling $60,000 should be awarded for domestic assistance and loss of expectation of life. With respect to the assessment of general damages, the primary judge stated at [8]: "I think the principle to be applied involves identifying those disabilities which flow from the disease originally alleged (ARPD) and putting them to one side. These were recited in the Statement of Claim and in the Statement of Particulars. What is to be compensated now are the consequences of malignant mesothelioma." 14At [20], the primary judge confirmed the approach adopted, stating: "As best I can, I will determine an amount to compensate the plaintiff for mesothelioma excluding those matters which, as best I can determine them, have been compensated by the award for ARPD." 15There was evidence before the Tribunal that the first award of $140,000, inclusive of costs, had resulted in a payment of $91,000 for damages to the respondent. There was agreement that $20,000 of that amount was attributable to domestic care services. It was therefore inferred that an amount of $71,000 had been awarded (by consent, rather than decision of the Tribunal) on account of general damages, for pain and suffering, arising from the ARPD. The first award itself did not, of course, specify any amount for general damages, identify how the amount was calculated, nor whether part of it related to past pain and suffering and part to the future.

Issues in this Court 16An appeal lies from the Tribunal to this Court where a party is dissatisfied "with a decision of the Tribunal in point of law": Dust Diseases Tribunal Act , s 32(1). The question of law said to arise in the present case was not identified with any particularity by the appellant. The relevant ground in the notice of appeal asserted that his Honour ought to have assessed the damages "by ascertaining the appropriate award in respect of the proceedings then before him (namely the notice of motion in respect of the disease of mesothelioma) and then deducting from that sum the net amount received by the plaintiff previously in respect of the earlier disease compensated for at that time." The appellant submitted that, if the appropriate assessment of general damages for the mesothelioma was $215,000, $71,000 having already been paid, the appropriate award was for the balance. (The parties ran the case, at least in this Court, on the medical assumption that mesothelioma was not a development of ARPD, but an entirely separate condition.) 17The respondent filed a notice of cross-appeal. He asserted that the primary judge ought to have ignored entirely the award of damages made for ARPD and awarded general damages for mesothelioma at a figure which was "higher than $215,000". In written submissions, the respondent asserted that the appropriate range for general damages for mesothelioma was between $250,000 and $290,000. That such a range of awards for general damages exists may be accepted for the purposes of understanding the present submissions, without attempting to assess whether reliance upon such a range is appropriate or whether the limits of the range are properly identified from the awards to which reference was made. 18The respondent submitted that, according to the findings made by the primary judge, the pain and suffering attributable to the ARPD was far less than that attributable to mesothelioma, especially for the future. His Honour had been satisfied that, following two surgical procedures and until shortly before symptoms of mesothelioma first presented "the plaintiff was able to carry out a fairly active life": at [16]. Accordingly, the respondent submitted, if the earlier award were not to be disregarded entirely, very little by way of future pain and suffering should be attributed to the general damages in respect of ARPD. If, as the respondent further submitted, the median point for general damages for mesothelioma was about $270,000, a reduction producing an award well below $250,000 must demonstrate an error of principle, resulting in gross under compensation.

Calculation of further damages 19Section 11A does not prescribe how the Tribunal is to go about its task on the second assessment. Nor, the parties agreed, do the rules provide any guidance in that respect. Accordingly, the relevant principles must arise under the general law. They will include, no doubt, the need to avoid double compensation for a particular disability, including pain and suffering. 20There is remarkably little authority in relation to the operation of s 11A. In the course of the hearing of the appeal, counsel were pressed as to the extent of their research of the operation of similar provisions in other jurisdictions. The Court was assured that there was no assistance to be gained from such comparative research. 21As is frequently the case with conditions such as mesothelioma, the courts, like the Tribunal, are bound to act expeditiously. Accordingly, it is neither possible nor appropriate to attempt any comparative assessment of legislation varying "once only" assessment processes. An overview of such provisions in Australia may be found in Luntz H, Assessment of Damages for Personal Injury and Death (4 th ed, Butterworths, 2002) at pp 35-45. Significant changes were introduced in the UK in 2005, providing for periodic and reviewable payments in respect of future economic loss: see, generally, Deakin, Johnston and Markesinis, Markesinis and Deakin's Tort Law (6 th ed, OUP, 2008) at p 973-975. Even more recently, Victoria has introduced provisions permitting the award of "provisional damages" to persons suffering from an "asbestos-related condition": see Asbestos Diseases Compensation Act 2008 (Vic), ss 4-6. Each legislative scheme differs in significant respects from the others, so that even a comparison of statutory purposes must be approached with caution. 22As noted by the then Attorney General, the Hon Jeff Shaw QC, s 11A was based upon a similar reform in the UK, now found in s 32A of the Senior Courts Act 1981 (UK): Second Reading speech to the Courts Legislation Amendment Bill (NSW Legislative Council, Parliamentary Debates (Hansard), 31 May 1995). That provision states: " 32A Orders for provisional damages for personal injuries (1) This section applies to an action for damages for personal injuries in which there is proved or admitted to be a chance that at some definite or indefinite time in the future the injured person will, as a result of the act or omission which gave rise to the cause of action, develop some serious disease or suffer some serious deterioration in his physical or mental condition. (2) ... Provision may be made by rules of court for enabling the court, in such circumstances as may be described, to award the injured person - (a) damages assessed on the assumption that the injured person will not develop the disease or suffer the deterioration in his condition; and (b) further damages at a future date if he develops the disease or suffers the deterioration." 23This provision, introduced by the Administration of Justice Act 1982 (UK) did not come into force until July 1985. There are clear distinctions between the regime prescribed by s 11A of the Tribunal Act and its precursor in s 32A of the UK Act. Thus, the UK Act applies to all damages for personal injuries and not merely those for dust-related conditions falling within s 11 of the Tribunal Act . Secondly, the causal link is weaker in s 11A, in that the other dust-related condition must be "as a result or partly as a result of" the relevant breach of duty. Thirdly, the future development must involve "another dust-related condition", being language different from the English provision in a number of respects, including the absence of reference to deterioration in s 11A. 24An issue not dissimilar to the present case was considered in the Queen's Bench Division in Molinari v Ministry of Defence [1994] PIQR Q33 (Crowther QC, Dep HCJ). The plaintiff, who had been exposed to radiation, suffered from a serious leukaemia. He had received treatment, but there was a chance, estimated as between 12% and 20%, that he would relapse, requiring further treatment and inevitable death. In considering his situation, the Court stated: "At first sight, this looks like a classic case for provisional damages. There is a double uncertainty: will the plaintiff relapse and, if he does, will he be treated privately? If I was to assess damages for the chance of relapse now, I would be bound to get the wrong answer. If the plaintiff did relapse, he would have received wholly inadequate compensation as a result of my judgment, whereas, if he did not relapse the defendants would have been ordered to pay too much. Prima facie it would be far better to leave the matter open and let the future decide. However, this case raises a complication which does not seem to have been contemplated by the [drafter] of s 32(a) and of the Rules. They seem to have assumed that a deterioration in a plaintiff's condition could only result in an increase in the global damages recoverable by him. However, where deterioration leads to death, this may not be so. [An example was then given of a case where damages were assessed in the traditional way, having regard to the chance of deterioration and death.] If provisional damages were awarded, the position would be entirely different. The damages would be assessed on the assumption that deterioration and death would not occur. The plaintiff would therefore recovery his full loss of earnings and, if he deteriorated in the future, he would come back for further damages, notwithstanding the fact that his imminent death invalidated the basis of the original award. Section 32(a) [and] the Rules make no provision for this eventuality. They do not, for example, provide for the original award to be reopened, or for the over compensation to be calculated and off set against the further damages." 25The text of s 11A does not adopt the term 'provisional' award; rather, it provides for an award of damages in respect of one dust-related condition, based on the assumption that another dust-related condition will not develop. Although the amendment post-dated Molinari , it is likely that the drafter assumed that the development of another dust-related condition would increase the injury and therefore the loss suffered by the injured person. Section 11A, like its UK precursor, makes no provision for reopening the first award. The question is whether, in assessing further damages, any element of possible over compensation flowing from the first award can be set off against the damages claimed for the new condition. 26The appellant submitted that, when a second application was made, the only way to avoid over compensation was to make a fresh assessment based on the whole of the plaintiff's current disabilities resulting from exposure to asbestos: Tcpt, CA, 01/06/11, pp 11-12 and see p 7(31)-(37). From the total compensation so assessed, the original award must be deducted, leaving the balance of "further" damages then payable. It is clear that this approach was, in substance, put to and rejected by the primary judge, thereby constituting an appellable decision on a point of law. 27The resolution of the dispute requires the consideration of a number of countervailing considerations. Some considerations appear to favour the respondent's approach. First, the section envisages two (or possibly more) assessments, each relating to a separate dust-related condition. It does not, in its terms, envisage the reopening of an earlier assessment, yet that is what appears to be envisaged by a re-assessment of the whole loss resulting from the conditions viewed in combination. Secondly, a reassessment of the overall loss suffered by the injured person will not avoid the need to allocate particular amounts of loss to each particular condition. There is at least a possibility, if not a likelihood, that later assessment of the loss flowing from the first condition will vary from the first assessment. If it increases, however, that amount will not constitute a head of further damages because the increase will not be the result of the condition which developed later. Similarly, there will be no basis for setting off any diminution resulting from a reduced assessment of the earlier loss. 28There are considerations which support the appellant's approach. The statutory anchor for this approach must be found in the concept of "further damages", which may be awarded if another dust-related condition develops in the future: s 11A(2)(b). One effect of its argument was that the label "provisional", although not found in the text of the statute, correctly applied to the first award, which was made on an assumption that another dust-related condition would not develop. If and when such a condition did develop, the second stage was triggered whereby the injured person could claim additional (further) damages, which had not been included in the first award. The purpose of the split procedure was to prevent under compensation, or over compensation. Thus, if the further condition actually diminished his or her entitlement to damages, the injured person was protected because he or she could simply make no further application: there was no right to review the earlier award. On the other hand, where, taking the circumstances of the injured person as a whole, it could be seen that there had been under-compensation by failing to take into account the possibility (and now the reality) of the further condition, "further" damages would be awarded. 29The respondent's construction would require the Tribunal to approach separately the loss flowing from each condition without regard to the other. In relation to the first assessment, that is indeed the requirement found in s 11A(2)(a). He then says that whatever may have been the level of compensation in the first award, it flowed as a consequence from ARPD and not from mesothelioma. The proper construction of paragraph (b) requires that the second (or subsequent) award relates solely to damages flowing from the further condition, in this case the mesothelioma. There is nothing in the section which precludes full compensation for the loss flowing from that condition and no statutory basis for reducing the latter by, as it were, setting off such allowance as had already been made for the former. 30Against the respondent's approach, the fact that the ARPD was causing little pain and suffering at the time the mesothelioma developed, did not provide a basis for asserting that no amount had been allowed for future pain and suffering, on the assumption that mesothelioma did not develop. On the other hand, if his Honour were entitled to assume that some part of the award for ARPD related to future pain and suffering, to avoid double compensation, he must have been entitled to award general damages on account of mesothelioma, at a level below that which would have been awarded for mesothelioma alone. The pain and suffering which will, almost beyond doubt, result from the mesothelioma, will overwhelm any suffering which might have occurred as a result of ARPD. Accordingly, to avoid double compensation, it was appropriate to take into account some portion of the pain and suffering in respect of ARPD, already compensated, as subsumed within the pain and suffering attributable to the mesothelioma. The precise figure was an amount for determination by the primary judge.

Conclusions 31It is by no means clear that one particular approach is correct in all circumstances and the other wrong. The present case was concerned only with assessment of general damages. In order to avoid double compensation, it was necessary for the Tribunal to determine, as best it could, whether any amount had been allowed in the first award for future pain and suffering and how allowance should be made for that amount in assessing pain and suffering resulting from the subsequent condition. Some such assessment was necessary because the concept of "further damages" at least by implication, if not in express terms, is inconsistent with an award of double compensation for a particular item of loss. 32The appellant was correct to say that the further award should not be made in total disregard of the first award. That approach accords with a purposive construction of the statute. First, it is clear that the provision for split awards was intended to avoid the inevitability of either over or under compensation in circumstances where a chance of a further condition developing had to be assessed and allowed for in proportional terms. Secondly, the reference to "further" damages provides a link back to those already awarded. The second award was not, therefore, to be made in total disregard of what had happened before. However, it does not follow that there must be a reassessment of the whole of the dust-related loss suffered. In some cases (of which the present is one) the judge making the second award can reduce general damages otherwise available for the second condition, by the amount of the first award attributable to the period of overlap. 33Even if the appellant's approach were legally correct, it does not follow that the appeal should succeed, although it does follow that the cross-appeal must fail. One assumption underlying the appellant's conclusion was that his Honour had assessed the general damages attributable to the ARPD and the mesothelioma in a sum of $215,000. That assumption should be rejected for two reasons: first, his Honour expressly rejected the appellant's proposed global approach and, secondly, the figure is so far below the previous recent awards for mesothelioma alone as to render the inference implausible. 34The second assumption was that, had he assessed a global figure for pain and suffering, he should have reduced that figure by the full amount of the $71,000 previously awarded for general damages in respect of the ARPD alone. That would have been to deprive the respondent of any amount on account of ARPD alone, despite the fact that some, perhaps much, of the pain and suffering flowing from the ARPD had been attributable to the past, prior to the onset of the mesothelioma. 35The logic of the appellant's approach is that the respondent should not be compensated twice for pain and suffering from the onset of the mesothelioma. That would have required the Tribunal to reduce the compensation for pain and suffering resulting from the mesothelioma by a proportion (probably a modest proportion) of the damages already awarded. The appellant has failed to demonstrate that the primary judge did not do that. 36Whether or not, as a matter of legal principle, he should have awarded damages for mesothelioma in the range proposed by the respondent, as a practical matter, the fact that he awarded a lower amount allows the inference that he reduced that which he might otherwise have awarded for mesothelioma alone, in order to prevent double compensation for future pain and suffering. To have reduced the starting point by the full amount of the damages awarded for ARPD would itself have been erroneous, but there is no reason to infer that he in fact took that step, being a step which he had expressly rejected. 37It does, however, follow from the approach accepted above that the cross-appeal must be dismissed. The cross-appeal could only succeed if the respondent demonstrated that, in reducing the amount payable by way of general damages to avoid double compensation, his Honour had made an erroneous decision in point of law. The need to take that step was not erroneous but correct, and was implicitly required by the reference to awarding "further" damages. 38It remains to note that his Honour did not spell out in his reasons how he reached the figure of $215,000. It was not necessary that he do so. While it is apparent that he sought to exclude "those matters which, as best I can determine them, have been compensated by the award for ARPD", and thus may have reduced the amount of general damages for mesothelioma from that which would otherwise have been awarded, neither the starting point nor, therefore, the amount of the allowance, was specified. It is possible that he made too great an allowance for that which had already been compensated, by noting the appellant's submission that the appropriate assessment should be reduced by the full amount of $91,000 constituting part of the earlier award attributable to damages. The legitimate figure to be taken into account was, as the appellant conceded in this Court, $71,000. Nevertheless, his Honour's reference to the appellant's submission before him was correct, there being some confusion in the course of argument as to the appropriate figure. While it is far from clear that his Honour erroneously took into account the larger sum, even if he did, that did not involve an error with respect to any question of law. 39It may thus be seen that the actual amount awarded for general damages in respect of the mesothelioma, namely $215,000, revealed no erroneous decision on a point of law. Accordingly, both the appeal and the cross-appeal must be dismissed.

Costs 40In the course of the hearing in this Court, senior counsel for the appellant accepted that the proper construction of s 11A was a matter of concern to the insurer, being a concern extending beyond the circumstances of the present case. The insurer being anxious to obtain guidance from this Court as to the correct legal approach, even in the event that there was little variation in the award, on instructions, he accepted that the insurer should pay the costs of the appeal in any event. Because the appeal has been unsuccessful, the appellant should pay those costs in accordance with the general rule. 41There remains a question as to the costs of the cross-appeal, which has also been unsuccessful. There are a number of reasons for concluding that the insurer should pay the costs of the respondent in this Court, including the costs of the cross-appeal. First, it seems unlikely that the respondent would have initiated the cross-appeal, if not brought to answer the appellant's challenge. Secondly, as appears from the reasoning set out above, the respondent's answer to the appellant's argument on the appeal was in substance the same as his argument in favour of the cross-appeal. Thirdly, and perhaps flowing from the last point, no additional time was taken by the cross-appeal over and above that necessary to deal with the appeal. Although no reference to the cross-appeal was made in the undertaking, it is unattractive to think that the effect of the undertaking should be reduced, in circumstances where the appeal failed, because the cross-appeal also failed.

Orders 42The Court should make the following orders: (1) Dismiss the appeal. (2) Dismiss the cross-appeal. (3) Order the appellant to pay the respondent's costs of the appeal and the cross-appeal.

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