Arthur Robinson (Grafton) Pty Ltd v Carter

Arthur Robinson (Grafton) Pty Ltd v Carter - [1968] HCA 9 - HCA 1968 case summary — Zoe

[16]

A lump sum is awarded which compensates the plaintiff, not only for what he has lost and suffered in the past, but also for what he will probably lose and suffer in the future. Essentially, you ask yourselves: What would this plaintiff's future probably have been if he had not met with this catastrophe? And then you ask yourselves: What will his future probably be, he having met with the injury, and you compensate him for the difference. My analysis, however, which I will put before you in the minimum of time, is to examine the two capacities that I see as having been gravely reduced, if not obliterated; they are the capacity of the plaintiff to earn his living and the capacity of the plaintiff to enjoy his life. I think you will find that caught up in those two headings there is every aspect of this case. I think it is proper to say that no precise arithmetical approach is possible. That, of course, is a truism when you realize that you have to deal with such matters as the future even on the economic aspect of the case and the damages to be awarded for the injury to the plaintiff's capacity to enjoy his life. As you have to bring back a sum of money, some arithmetical approach, of course, is necessary. The figures can only be a guide. These tables have been put before you and they have been emphasized through being put before you. The tables are to give you some idea of the present value of a sum spread over many years, and it is important that you should only take the present value into account. On the other hand, they are arithmetical calculations which make no allowance for the vicissitudes of life; they take no account of the many things that can happen to a person in the course of his progress through life, from his late twenties until the time that he ceases to be gainfully employed or until the time of his death. But they are some sort of a guide. Slavish adherence to them is not recommended; however, they should not be ignored because of their arithmetical value. Your award must be fair from the point of view of both parties. You can only give him a sum of money which you think is a reasonable sum as between the parties.

[28]

Of course, the rate of wages being earned and the rate of wage likely to be earned in the future afford a basis for assessing compensation for the loss of earning capacity. So also, expectation of working life is an element in that assessment. Because a present payment for the loss of earning capacity in some sense anticipates the product of that capacity, the present value of a dollar paid each week for the length of the estimated working life is properly evidenced to afford a guide but only a guide to judgment by those without access to tables or the ability otherwise to reckon that value. But to take the present value of a regular weekly wage paid continuously for the estimated working life and then attempt to discount that figure to allow for the many factors of which it takes no account is not to my mind a satisfactory course to take, particularly as an initial step in an attempt to calculate what is a fair compensation for the loss of an earning capacity which has or could have produced that rate of weekly wage. That reported cases appear to condone such a course may be conceded: but I question whether any case in that sense by which this Court is bound, has been arrived at after contest of the specific point and upon full consideration. The recent decision of the Court of Appeal in England in Watson v. Powles [1] , would indicate the trend in that country. Ill health, unemployment, road or rail accidents, wars, changes in industrial emphasis, so that industries move their location, or are superseded by new and different techniques, the onset and effect of automation and the mere daily vicissitudes of life are not adequately reflected by merely - and blindly - taking some percentage reduction of a sum which ignores them. The calculation of that sum has a disarming appearance of introducing some mathematic accuracy into the assessment of the compensation. But, in truth, it must eventually tend to inflate the ultimate sum awarded: and unjustifiably to do so. To begin with, it represents a calculation as to the value of the loss of wages upon an assumption which the attempt to make a discount therefrom denies. Therefore, the assessment based upon it begins with a figure which in at least a great many cases must be too high in relation to fair compensation for loss of earning capacity: and, secondly, not only does it not provide for any of the contingencies of which I have spoken but, in truth, it is so unrelated to them that it offers no firm basis on which a meaningful discount of the sum may be made. Also, and perhaps even more significantly, its use is based upon an assumption that the injured person will use the compensation to buy an annuity or at least invest the verdict at no higher rate of return than that rate which has been used for the capitalization to reach the sum of the present value of the future receipts or payments. That, it seems to me, is a fundamental error which must weaken immensely any utility the calculation of that sum might otherwise have. In the present case, can it be thought for one moment that a person in the situation of the respondent would purchase an annuity or annuities as a means of securing himself or confine himself to investment at the rate of capitalization. Such a person is free to do what he will with the damages he is paid. And in arriving at a verdict in such a case as this, consideration, in my opinion, ought specifically to be given to the question of the avenues open for investment or employment of the verdict and of how the plaintiff if successful is likely to employ his money so as to secure himself so far as the award will extend against the consequences of the disabilities for which he is being compensated. But whatever form of investment any particular plaintiff might favour, my own conclusion is to think that practically none, if any, would take the course of purchasing an annuity or of investing the verdict at the rate taken for the capitalization. In my opinion, the inappropriateness of using the present value of the future receipts or payments is not removed merely by increasing the rates of interest used in calculating that sum.

[29]

Whilst in the light of entrenched usage it cannot now be said that the amount presently required to provide a weekly sum for a stated number of years cannot be of any assistance in the assessment of damages for personal injuries, if introduced into a case, unremitting care should be taken, in my opinion, by the presiding judge to warn the jury as to its many and critical limitations even as such an assistance. They ought to be told, as a judge trying a case himself would readily apprehend, that such a figure is the merest guide and insusceptible of forming the basis of a calculated amount. Emphasis should be placed upon what is to be the subject of compensation, namely, the loss of earning capacity and upon the many factors which may have influenced its effective use in the future as well, of course, as upon the likelihood, if it be evidenced, that the product of that earning capacity might increase in the future. It is preferable, in my opinion, that the jury be invited to consider directly what global sum in their judgment represents fair compensation for the injuries than that they be asked to work out separately the compensation for each of the elements of the compensation which they should have in mind. In particular, they should be discouraged from taking the present value of the future receipts and thereafter attempt to discount that sum for the so-called vicissitudes of life of which it takes no account. If allowed to take the latter course, there is likely to emerge a tendency to treat the pluses and minuses of life as cancelling one another out which is certainly not the usual experience of mankind. The assessment of the global sum of compensation is a matter of judgment, bearing in mind all the facts and circumstances. Whether this assessment be made by jury or by judge alone it is not, in my opinion, a matter of mathematical calculation. The use of the present value of future regular payments, in my view, is more likely to divert the mind from the elements which should go to affect the judgment of the proper sum than to assist the assessment of the fair compensation to be awarded.

[30]

When, as was done by the Supreme Court in this case, one such sum is added to another, not merely is the danger of overlapping present, but the undesirable features associated with the use of such a sum are compounded. Perhaps the dangers of the course taken can best be appreciated by the result it produced in this case, when the amount of the verdict is placed against the circumstances of the respondent's injuries in order to consider whether it can be said to be unreasonably disproportionate. Invested on first mortgage of land without seeking the highest rate currently obtainable, the amount of the verdict would produce at least $11,000 gross annually without resort to any of the capital: that is something in excess of $210 per week. Before the accident the respondent was an illiterate miner, without prospect of signficant advance economically or otherwise, and subject to the uncertainties of employment, of travel and of life generally. With the sum and its income he would be financially independent and secure with a surplus of income over expenditure on his nursing and other needs rated to the highest and most expensive level which the medical practitioners thought desirable - indeed, ideally desirable - considerably greater than the full amount of the wages he could have earned. Allowing always, with no niggardliness of view, but with warm sympathy, for what I have called the shattering disabilities to which the respondent is now condemned I am quite unable to regard that result as no more than fair compensation as the law knows that concept. In my opinion, it is unreasonably disproportionate and ought not to be allowed. It has been brought about largely, in my opinion, by the unwarranted use of the capital sums representing - not the loss of earning capacity - but the wages which would have been earned in ideal circumstances and of expenditures which would be ideal in a situation where money was no object and which, in my opinion, it could not be found that the respondent was likely to make.

[32]

The matter is somewhat different in the case of disbursements which are decided to be reasonably necessary for the continued life and health of the respondent and which flow from the injury inflicted upon him. In connexion with these, it can properly be said that they must be regularly and continuously disbursed and that the respondent must have the ready cash to disburse them. Yet the sum to be awarded in compensation is not calculable by any mathematical process. At best, it is and must remain a matter of judgment. First, the range of the recurrent amount likely to be reasonably required must be considered. The question here is not what are the ideal requirements but what are the reasonable requirements of the respondent. The jury must be warned, in my opinion, against blindly accepting the views of the medical practitioners. What is reasonably required is a matter for the jury - or for the judge if sitting alone. As in the case of life expectancy dealt with in Thurston v. Todd [1] - with which I agree in this connexion - the jury are no doubt to hearken to the evidence - all of it including those opinions of the medical practitioners which they are qualified to give but, having done so, to come to their own conclusions on the question, not being bound to any opinion, however expert or apparently expert any witness expressing it may be. The jury, in my opinion, should be told to consider what the respondent, on the assumption that he was spending his own money, and assuming that he had sufficient to do as he would and was well advised and reasonably careful for his own welfare, would be likely to expend in protection of himself and his condition. It is neither fair nor just to award a sum which might be expended by others in different circumstances but which it is realized the injured person will not spend for the purposes in question. Is it likely that placed and housed as he was, he would engage a trained nurse full time and an experienced nurse full time? Some reference was made in the case to the position of his wife and it was suggested that the damage should be estimated on the footing that she would not be able to continue to assist him. Nothing seems, however, to have been thought or said about the burden which would be placed upon his wife by having to attend upon and to the nurses. Of course, the contingency that his wife might abandon him, or fall too ill to take her part must be contemplated and allowed for. But this does not mean that the compensation should be determined upon the footing that she will at no time play her part. In this connexion, such intermittent expenditures as travel to hospital or calls by a medical practitioner ought not, in my opinion, to be reduced to a recurrent weekly sum and capitalized but rather a sum judged fair should be included in the global amount to cover these contingencies. But it would, in my opinion, even in relation to these reasonably necessary disbursements, be an error to begin the assessment by including an amount to produce the recurrent sum.

[41]

In cross-examination Dr. Selecki was asked: "But isn't it because of a grave risk of infection that you consider that he (the plaintiff) should be under constant supervision and constantly checked?" The answer to the question was: "This is a matter of nursing and care, but if this is satisfactorily done with the up-to-date methods we have at hand in the 1960's, I think his life expectancy and the life expectancy of these people today is a normal one." Then the witness was asked: "But when you have a case of those grave risks even with the best of care things go wrong don't they?" His answer was: "Again, the risk is comparable to many other risks we run in our lives, quite comparable, and if good care is taken it has no bearing on life expectancy and this can be corroborated by reference to literature and by reference to rehabilitation centres, where these people have been controlled for twenty, or thirty or longer years." Another question addressed to Dr. Selecki and his answer to it (in cross-examination) were respectively as follows: "He (the plaintiff) is subject to a special grave risk, because of this special condition?" "If there is neglect in management." The jury were not competent to disregard the conditions governing the opinion of Dr. Selecki as to the plaintiff's expectancy of life. In any case, the evidence did not afford any basis on which they could find that the conditions would probably be fulfilled throughout the lifetime of the plaintiff. In my opinion there was no explicit estimate of the plaintiff's expectation of life based on a particular evaluation of his condition and circumstances: cf. Szumczyk v. Associated Tunnelling Co., Ltd., and National Coal Board [1] , quoted in Kemp & Kemp, The Quantum of Damages, 2nd ed., vol. 1, p. 366, at p. 368 . It was not enough to act upon statistics applicable to quadriplegics as a class "regardless of individuality" (Wigmore on Evidence, 3rd ed. (1940), vol. IX, p. 464). "An estimate of prospective loss must be based, in the first instance, on a foundation of solid facts: otherwise it is not an estimate, but a guess" (Munkman, Damages for Personal Injuries and Death, 3rd ed. (1966), p. 37). This proposition clearly applies to an estimate of prospective expenses for nursing and like services. I think that it is a probable inference from the amount of the verdict and the evidence that the award of general damages contains an excessive and mistaken computation of such expenses.

[51]

It was pointed out to us that the actuarial calculations were appropriate to cover these items for a period of only thirty years and that it may well be that he will live considerably longer than such a period. This circumstance, it is said, is more than sufficient to counterbalance the necessity of discounting the resultant figures because, in the ordinary course of events, he might have died at an earlier age than sixty years. But, using the interest rate which was applied in the actuarial calculations, an amount of $133,340 would be sufficient to return an annual income of, approximately, $8,000 and the respondent would be left with the capital intact at the time of his death whether, in the ordinary course of events, he should die before attaining sixty or survive for a considerably longer period. But, as I have already said, the amount of $60 per week for loss of his earning capacity and the amount of $120 per week for future nursing and medical attention represented the optimum amount that could have been taken into consideration in respect of these items. The first amount assumes that the respondent would, if he had not been injured, have earned $60 every week for a period of thirty years. I do not think that any such assumption can fairly be made. As far as future nursing and medical attention is concerned, the somewhat general evidence placed an outside limit on the future expenditure necessary for this purpose. It is, however, suggested that it is likely that the cost of such attention will rise in future years. But what is, it seems to me, more important is that the suggested method of calculating the respondent's loss under this heading assumes that, for the rest of his life, it will be both possible and beneficial for him to be cared for in his own home. The possibility of it becoming necessary or desirable for him to enter some appropriate form of institution with a resultant diminution of his weekly outgoings seems to have escaped attention. To me it seems that this possibility should have been taken into account and if the two weekly figures are discounted by as little as ten per cent the estimate of his future loss would be reduced from $180 per week to $162 per week or to a little over $8,000 per annum. The amount which I have already mentioned, $133,340, invested at six per cent would return an annual income of approximately $8,000 per annum and would leave the respondent with the capital sum intact on his death. One may, of course, merely speculate as to how the members of the jury arrived at their assessment. But it does seem to me that the actuarial evidence must have assumed undue significance in their minds and that, in making their assessment, they must have lost sight of the practical result which their assessment would produce. In all the circumstances I am of the opinion that the verdict was manifestly excessive and that there should be a new trial.

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Before

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Judgment (52 paragraphs)

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