Fitch v Hyde-Cates

High Court of Australia|1982-04-06|Before: Brennan JJ, Appeal Reynolds J, Glass J, Reynolds J, Stephen J, Mason J, Glass JJ, Mahoney J, Sheppard J

High Court of Australia Gibbs C.J. Stephen, Mason, Aickin and Brennan JJ. Fitch v Hyde-Cates [1982] HCA 11

ORDER Appeal dismissed with costs. Cross appeal allowed with costs. Vary the judgment of the Court of Appeal by substituting for the sum of $73,475.30 the sum of $91,475.30.

I have had the advantage of reading the reasons for judgment prepared by my brother Mason and I agree with them. I would accordingly dismiss the appeal.

The judgment of this Court in Todorovic v. Waller [1] , which had not been given at the time when the Court of Appeal made its assessment, shows that the present value of the future loss ought to have been quantified by adopting a discount rate of three per cent. The present value of eighty dollars per week for thirty-five years, calculated at a rate of three per cent, is $91,032. If a reduction for contingencies is made in a proportion similar to that taken by Reynolds J.A., the resulting figure is $78,000. When this is added to the amount of $13,475.30 assessed by the Court of Appeal and not in dispute, the total reached is $91,475.30. I would allow the cross appeal and would give judgment for the respondent in that amount.

I have had the advantage of reading the judgment of Mason J. with which I am in agreement. As to the appeal I would uphold the conclusions arrived at by the majority in the Court of Appeal, which their judgments so clearly express. The cross appeal must succeed in view of the decision of this Court in Todorovic v. Waller [2] . I agree with the Chief Justice that the judgment of the Court of Appeal should be increased by substituting the sum of $91,475.30 for the sum of $73,475.30.

Are damages for loss of earning capacity in "the lost years" recoverable in a survival of actions claim in New South Wales by the estate of a deceased person whose life has been curtailed by the wrongful act or omission of the defendant, or are such damages excluded by s. 2(2)(c) or (d) of the Law Reform (Miscellaneous Provisions) Act 1944 N.S.W. ("the Act")? This is the issue which arises in this appeal, the N.S.W. Court of Appeal by majority (Reynolds and Glass JJ.A., Mahoney J.A. dissenting) having held that damages for loss of earning capacity are recoverable.

The respondent is the administratrix of the estate of Gary John Hyde-Cates ("the deceased") and sued the appellant for damages pursuant to the provisions of s. 2 of the Act. The deceased died on 13 December 1975 as the result of injuries suffered by him in a motor accident. Liability was admitted on the part of the appellant and it is only the quantum of the respondent's damages which is in issue.

At first instance Sheppard J. awarded the respondent damages in the sum of $26,209.50. This included an amount of $20,000 damages for future loss of earnings. The Court of Appeal increased the award to $73,475.30, the component for loss of future earnings being increased to $60,000 with the addition of a further $10,000 for loss of earnings between the date of death and the date of the Court of Appeal's decision. The Court of Appeal disallowed a claim for $1,800 which Sheppard J. had awarded for loss suffered in relation to a life insurance policy. The appellant now contends that no damages for loss of earning capacity should be allowed and the respondent cross-appeals on the ground that the Court of Appeal erred in applying a discount rate of 5 per cent in assessing damages.

Section 2 cannot be construed in isolation. It needs to be read against a background of related developments. They begin with the old common law rules: (1) that in a civil court "the death of a human being could not be complained of as an injury" (Baker v. Bolton [3] , a rule which was described by Lord Wright in Rose v. Ford [4] as "a dogma of somewhat obscure import and uncertain application"); and (2) that a cause of action in tort died with the person in whom it vested and did not survive for the benefit of the estate - actio personalis moritur cum persona.

(1808) 1 Camp. 493, at p. 493 [170 E.R. 1033, at p. 1033]. 2. [1937] A.C. 826, at p. 846.

The harshness of the operation of these rules was alleviated by statute. First, the introduction in England in 1846 of the Fatal Accidents Act (whose current counterpart in New South Wales is the Compensation to Relatives Act 1897) conferred a right of action on the dependants (within the meaning of s. 4) of a deceased person whose death resulted from the wrongful act or omission of the defendant to recover compensation for the financial loss which they sustained by reason of the deceased's death. Secondly, almost a century later the actio personalis rule was abrogated in the United Kingdom by s. 1 of the Law Reform (Miscellaneous Provisions) Act 1934, the ancestor of s. 2 of the Act. Shortly afterwards the Court of Appeal decided that an injured plaintiff could recover damages for loss of expectation of life in an action for negligence (Flint v. Lovell [5] ). Two years later the House of Lords decided that a cause of action which vested in a deceased person before her death entitling her to sue for damages for expectation of life survived under the Act of 1934 and was enforceable by her administrator (Rose v. Ford).

The two decisions demonstrated that the Fatal Accidents Acts and the survival of actions legislation might become a potential source of double liability - the wrong-doer being liable (a) to the victim's estate for his loss of earning capacity, including that referable to the lost years; and (b) to the victim's dependants for their financial loss. This was expressly recognized by Lord Atkin and Lord Wright in Rose v. Ford (at pp. 835 and 853 respectively), though each thought, for different reasons, that no real difficulty would arise in this respect. I leave for later discussion what they had to say upon the point.

English courts consistently awarded damages for loss of future earning capacity occasioned by a wrongful act the effect of which was to curtail a plaintiff's expectation of life. But inOliver v. Ashman [6] , the Court of Appeal confined damages for loss of future earning capacity to the plaintiff's shortened period of life. Subsequently, in Skelton v. Collins [7] , this Court refused to follow the Court of Appeal, holding that in the assessment of loss of future earnings account should be taken of the plaintiff's loss of earnings in the lost years. More recently, in Pickett v. British Rail Engineering Ltd. [8] , the House of Lords overruled Oliver v. Ashman and adopted the approach earlier taken by this Court in Skelton.

[1962] 2 Q.B. 210. 2. (1966) 115 C.L.R. 94. 3. [1980] A.C. 136.

In Skelton this Court had assessed the plaintiff's damages on the footing that there should be subtracted from his future earnings the estimated expenditure that would have been necessary to maintain him during the lost years had he lived. In Pickett, with the exception of Lord Russell of Killowen who dissented, the members of the House of Lords adopted the same approach. However, in Skelton, Taylor J. said [9] :

where an action is brought, not by the injured person himself but, upon his death, by his legal personal representative for the benefit of his estate, the damages would be assessed having regard to the gain, if any, which would have accrued to the deceased from his future probable earnings after taking into account the expenditure which he would have incurred, if he had survived, in maintaining himself and his dependants, if any. This enabled his Honour to conclude that, as an action for the benefit of the deceased's dependants would be assessed having regard to the amount of their loss as dependants, the possibility of duplication of damages would be remote. 1. (1966) 115 C.L.R., at p. 114.

It seems that his Honour thought that the measure of damages for loss of earning capacity occasioned by curtailment of life differed according to whether the plaintiff is the victim himself or his estate. When the victim is the plaintiff expenditure on his maintenance in the lost years is brought to account; when his estate is the plaintiff expenditure on his maintenance and that of his dependants in the lost years is brought to account. Some judges, thinking that his Honour did not seek to draw a distinction between the two situations and that he favoured the deduction of expenditure on the dependants' maintenance in both cases, have been unable to find a foundation in logic or principle for reducing the victim's damages by amounts which he would expend on his dependants in the lost years - Gannon v. Gray [10] ; Jackson v. Stothard [11] , per Sheppard J. whose comments were quoted with approval by Gibbs and Stephen JJ. in Sharman v. Evans [12] . As I have said, I read Taylor J.'s judgment as drawing a distinction between the two situations. Acknowledging that his Honour's judgment was susceptible to this interpretation, Gibbs and Stephen JJ. left undecided the question whether a different rule should apply when the estate of the victim is the plaintiff [13] .

[1973] Qd. R. 411, at pp. 428-492. 2. [1973] 1 N.S.W.L.R. 292, at pp. 298-299. 3. (1977) 138 C.L.R. 563, at p. 581. 4. (1977) 138 C.L.R., at p. 582.

Very recently in Gammell v. Wilson [14] the House of Lords, in awarding damages to the estate of a victim in a survival action, took account of the victim's living expenses but not those of his dependants. The distinction suggested by Taylor J. seems to have escaped attention for it is not mentioned in the speeches of their Lordships. Before I examine the validity of this distinction it is convenient to dispose of one other suggestion which has been made and to look to the language of the Act.

In Oliver v. Ashman, Holroyd Pearce L.J. [15] considered that, apart from authority, there was much to be said for allowing recovery for the lost years to the victim in his action whilst denying recovery for those years in a survival action by his estate. But his Lordship rejected the distinction on the ground that the speeches in Rose v. Ford left no room for treating differently the claim brought by a living plaintiff and the claim brought by his estate in respect of the lost years. Later, in Kandalla v. European British Airways Corporation [16] , Griffiths J. rejected the distinction, holding that the measure of damages must be the same in each case. He considered that the speeches in Pickett assumed that the claim for the lost years survived for the benefit of the estate. This conclusion is now endorsed by the decision in Gammell v. Wilson. This brings me to the terms of s. 2(1) of the Act. It provides inter alia:

on the death of any person after the commencement of this Act all causes of action subsisting against or vested in him shall survive against, or, as the case may be, for the benefit of, his estate . Section 2(2) then provides: Where a cause of action survives as aforesaid for the benefit of the estate of a deceased person, the damages recoverable for the benefit of the estate of that person -

(b) in the case of a breach of promise to marry shall be limited to such damage, if any, to the estate of that person as flows from the breach of promise to marry;

(c) where the death of that person has been caused by the act or omission which gives rise to the cause of action, shall be calculated without reference to any loss or gain to his estate consequent on his death, except that a sum in respect of funeral expenses may be included;

(d) where the death of that person has been caused by the act or omission which gives rise to the cause of action, shall not include any damages for the pain or suffering of that person or for any bodily or mental harm suffered by him or for the curtailment of his expectation of life.

[1962] 2 Q.B., at pp. 227-228. 2. [1981] Q.B. 158.

Sub-section (5) expressly states that the rights conferred by Pt II of the Act "shall be in addition to and not in derogation of any rights conferred on the dependants of deceased persons by the Compensation to Relatives Act of 1897 ".

Sub-sections (1), (2) and (5) reflect the language of the English legislation except for s. 2(2)(d) which has no counterpart in England. Section 2(2)(d) follows the form of an amendment made in 1937 to s. 3 of the Law Reform Act 1936 N.Z. which repeated the provisions of s. 1 of the English Act of 1934. The amending provision, to be found in s. 17(1) of the Statutes Amendment Act 1937 N.Z., was introduced to limit the defendant's liability for loss of expectation of life in an action by the deceased's estate, it being thought in New Zealand that Rose v. Ford had opened the door to the deceased's beneficiaries "making a profit" out of his death - see vol. 14 (1938) 33, at p. 35; see also New Zealand Law Journal vol. 14 (1938), p. 200; and the comments of Myers C.J. in McLeavey v. Marris and Campbell Ltd. reported in New Zealand Law Journal, vol. 14 (1938) 42, at pp. 42-43. The amendment was not aimed specifically at loss of earning capacity. The preceding cases and the debate which they generated had been concerned with damage for loss of expectation of life in the strict sense, that is, non-pecuniary loss. Of course, it by no means follows that the amendment is confined to non-pecuniary loss - this depends on its interpretation.

In Rose v. Ford [17] Lord Atkin, speaking with reference to the English s. 1(2)(c), said: "Plainly this does not mean that his estate is not to gain by the award of any damages at all, for this would be absurd." The appellant's argument seeks to outflank this obstacle by extending the exclusion for which the paragraph provides to loss of earning capacity in the lost years, apart from other losses or gains to the estate consequential upon death to be mentioned shortly. At once it must be said that the language of the paragraph is hardly apposite to exclude the deceased's loss of earning capacity in the years of life of which he has been deprived. The context in which the paragraph speaks is that of a cause of action vested in the deceased which survives to his estate. In this context it is inappropriate to speak of the deceased's loss, either of future earning capacity or of future wages as a "loss to his estate consequent on his death". At no time does the estate of a deceased person have an entitlement either to his earning capacity or to the future wages he might have earned but for his death. The loss of them is a loss of the deceased, not of his estate.

The words are apt to refer to incidental losses or gains to the estate consequential upon death, viz. pensions, superannuation benefits, insurance moneys.

MacKinnon J., who in Slater v. Spreag [18] expressed a contrary view, did not have the benefit of argument on the point, the relevant claim having been abandoned in that case. Lord Wright in Rose v. Ford [19] instanced insurance moneys falling due on death and annuities ceasing on death as falling within s. 1(2)(c) of the English Act. However, in Gammell v. Wilson, Lord Scarman [20] correctly observed that annuities ceasing on death is not a good example " for that loss, like the loss of the earnings of the lost years, is to be attributed to the years lost by reason of the injury sustained and is, therefore, part of the cause of action which vested in the deceased before his death ". Lord Scarman went on to say: "Nevertheless, there are losses to an estate consequent upon death which could never arise as losses to the deceased during his lifetime". In the Court of Appeal [21] , Brandon L.J., who listed some of them, also made the telling point that, were it not for the express exception in par. (c) itself, funeral expenses would be such a loss. Brandon L.J. and Sir David Cairns suggested that the paragraph was introduced for more abundant caution.

[1936] 1 K.B. 83, at pp. 87-88. 2. [1937] A.C., at p. 843. 3. [1982] A.C., at p. 77. 4. [1982] A.C., at p. 47.

In the present case counsel for the appellant submitted somewhat faintly that we should adopt the interpretation given to the paragraph by Megaw L.J. in his dissenting judgment in the Court of Appeal in Gammell v. Wilson. He thought that as damages for lost earnings in the lost years are a loss consequent upon death, they are irrecoverable by the estate [22] . He considered that the paragraph should be interpreted as excluding from recovery by the estate damages which would have been recoverable by the deceased if he had not died. This view was specifically rejected by all the members of the House of Lords. As we have seen, it is extremely difficult to treat the words "loss to his estate consequent on his death" as comprehending loss in respect of which there was a right to recover damages vested in the deceased immediately before his death. Megaw L.J.'s interpretation is supported neither by principle nor authority.

In the result I consider that s. 2(2)(c) is to be given the same interpretation as that given by the House of Lords in Gammell v. Wilson s. 1(2)(c) of the English Act - see especially the remarks of Lord Russell of Killowen [23] , where the point is made that "gain" refers to gains to the estate consequent upon death which cannot be set against the liability of the wrong-doer under general law and that "loss" is a reference to the liabilities of the estate which arise only because it is the estate of a deceased person under the general law.

Again, the language of this paragraph is scarcely apposite to cover damages for lost earning capacity in the years of life of which the deceased has been deprived. The paragraph specifically excludes particular heads of damage associated with personal injury, but significantly it makes no reference to economic or pecuniary loss. With reference to the argument that the words "bodily harm" are large enough to comprehend economic loss, the majority in the Court of Appeal rightly made the point that bodily injury has traditionally been treated as a head of damage separate from economic loss, citing the well known passage in the judgment of Cockburn C.J. in Phillips v. South Western Railway Co. [24] . An endeavour was made to rely on dictionary meanings to establish that "harm" has a larger content than "injury". This no doubt is true and in some contexts it will lead to the conclusion that the expression "bodily harm" is large enough to include all the heads of damage which a plaintiff may recover in respect of physical injury. Here the expression is "bodily or mental harm". It naturally refers to physical or mental injury or disability; it does not naturally refer to economic loss and in the context in which it appears the expression seems to bear the narrower meaning. If it has the larger meaning contended for by the appellant so that it includes economic loss it is difficult to perceive any reason for mentioning pain and suffering and curtailment of expectation of life which, like economic loss, are also heads of damage consequential upon bodily injury.

The principal merit of the appellant's argument is that it provides a means of avoiding double liability. To support his construction counsel for the appellant relies heavily on the absence in the paragraph of any reference to loss of amenity of life as a separate head of damage. He says that it is inconceivable that the legislature overlooked this head of damage and that it is necessarily comprehended by the paragraph. If it is so comprehended, then it must be covered by the words "bodily or mental harm" and if it be comprehended by them, why not economic loss as well?

No doubt it is right to say that there is a difference between pain and suffering stricto sensu and loss of amenity of life and that in some instances, as in Skelton v. Collins, it becomes important to distinguish between them and that in some cases damages may be obtained for one, but not for the other. However, at times pain and suffering is used in a loose sense so as to denote loss of amenity of life as well as pain and suffering in the strict sense. This, perhaps, is the error into which the draftsman fell here. The other possibilities are that the draftsman thought that loss of amenity of life, unlike economic loss, came within the general conception "bodily or mental harm" and that loss of amenity was included within "curtailment of his expectation of life" - see Skelton [25] - though it is not easy to perceive how loss of amenity in its entirety is subsumed under "curtailment of his expectation of life".

The comment of Lord Atkin in Rose v. Ford [26] , to which I referred earlier, which was directed to par. (c), has even greater force in relation to the appellant's suggested interpretation of par. (d). The appellant's counsel concedes that the meaning that he seeks to give to "bodily or mental harm" has the result that the paragraph excludes recovery of all damages in personal injury cases, except perhaps for funeral expenses. To say the least this outcome can scarcely have been intended. It would have been a simple matter to exclude actions for personal injuries from the general vesting of causes of action in the estate of the deceased. Instead, as the appellant would have it, the legislature has chosen to say that although the cause of action vests in the estate, no damages at all will be recoverable - an oblique means of arriving at the suggested result. Moreover, the effect of the argument is to exclude recovery by the estate of loss of earnings between the date of injury and the deceased's death - yet there is no good reason for thinking that this loss should be excluded.

It is not suggested that the exclusion of damages "for the curtailment of his expectation of life" excludes economic loss flowing from the shortening of the victim's life. To the layman this may seem surprising. With justification he may ask: "Why is economic loss flowing from curtailment of expectation of life not part of the damages recoverable for curtailment of that expectation?" The lawyer's answer is that courts and lawyers have always drawn a distinction between economic loss and non-economic loss despite the fact that each flows from the shortening of the victim's life. The summing-up of Field J. to the jury in Phillips v. London and South Western Railway Co. [27] contained a specific reference to the plaintiff's "prospect of a speedy death", though it seems that the judge was inviting the jury to treat loss of expectation of life as an element in pain and suffering or loss of amenity of life - see Kahn-Freund, Expectation of Happiness, Modern Law Review, vol. 5 (1941) 81, at p. 83 . Later shortening of life was accepted as a head of damage in Scotland - see Reid v. Lanarkshire Traction Co. [28] . And Lord Atkin and Lord Wright in Rose v. Ford thought that damages for loss of expectation of life had always been a usual element in the assessment of damages [29] . In these, as in later cases, the notion was that damages for loss of expectation of life was a head of damage separate from economic loss.

(1879) 5 Q.B.D. 78, at p. 80. 2. 1934 S.C. 79. 3. [1937] A.C., at pp. 833-834, 848-849.

Viscount Simon L.C. in his speech in Benham v. Gambling [30] , in which the other members of the House concurred, discussed damages for loss of expectation of life on the footing that it is a head of damage separate and distinct from economic loss. His Lordship equated damages for loss of expectation of life to damages for "the loss of a measure of prospective happiness" [31] , observing [32] : "Of course, no regard must be had to financial losses or gains during the period of which the victim has been deprived. The damages are in respect of loss of life, not of loss of future pecuniary prospects", and concluding [33] : "These considerations lead me to the conclusion that in assessing damages under this head, whether in the case of a child or an adult, very moderate figures should be chosen."

[1941] A.C. 157. 2. [1941] A.C., at p. 166. 3. [1941] A.C., at p. 167. 4. [1941] A.C., at p. 168.

It may be said that the distinction then drawn between damages for loss of expectation of life and damages for economic loss proceeded in the mistaken belief that the victim could not recover damages for loss of earning capacity in the lost years for it was that belief that prevailed in Oliver v. Ashman [34] until overthrown here in Skelton v. Collins [35] and in the United Kingdom in Pickett v. British Rail Engineering Ltd. [36] . However, and this is especially significant, it was by giving emphasis to the Lord Chancellor's exclusive preoccupation in Benham with damages for loss of expectation of life as a conception which does not embrace economic loss that this Court, notably Taylor J., in Skelton repelled the suggestion that Benham denied recovery of damages for economic loss in the lost years. In Skelton there are to be found statements which plainly indicate that damages for loss of earning capacity in the lost years are to be classified under the head of economic loss, not as an element in loss of expectation of life. See generally the discussion at pp. 117-121. And it should be noted that the heresy in Oliver was largely founded on the view, now held in Skelton and Pickett to be erroneous, that loss of future wages in the lost years was an ingredient in loss of expectation of life. The distinction between damages for economic loss (including loss in the lost years) and damages for loss of expectation of life was maintained in Gammell v. Wilson - see especially at p. 265, per Lord Scarman.

[1962] 2 Q.B. 210. 2. (1966) 115 C.L.R. 94. 3. [1980] A.C. 136.

The point can be made that the meaning which has in this way been assigned to damages for curtailment of expectation of life has in very large measure been the product of judicial exposition that has occurred since the Act of 1934 was introduced in the United Kingdom, and since the counterpart of s. 2(2)(d) was introduced in the United Kingdom, and since the counterpart of s. 2(2)(d) was introduced in New Zealand in 1937. It may be said that this subsequent development does not confute the hypothesis that the draftsman in 1937 thought by excluding damages for the "curtailment of his expectation of life" he was excluding damages for economic loss in the lost years. But the message of the Lord Chancellor in Benham was loud and clear - damages for loss of expectation of life is a separate and distinct head of damage containing no element of economic loss. Consequently by 1944 damages for curtailment of expectation of life had a well-established and limited meaning in New South Wales.

For these reasons s. 2(2)(d), like s. 2(2)(c), does not in my view exclude recovery by the estate of a deceased person for loss of earning capacity in the lost years.

It has often been said that double liability is a remote possibility: Rose v. Ford [37] ; Gammell v. Wilson [38] . First, there is support for the principle that in an action under the Compensation to Relatives Act there will be set off against the dependants' claim to damages any amount which they have recovered under the will or intestacy of the victim (Rose v. Ford [39] , per Lord Atkin; Pickett v. British Rail Engineering Ltd. [40] , per Lord Wilberforce; Gammell v. Wilson [41] , per Lord Edmund-Davies). Moreover, as Taylor J. said in Skelton v. Collins [42] : "Damages in any action for the benefit of the deceased's dependants would, of course, be assessed having regard to the magnitude of their loss as dependants " Thus where damages are recovered in an action by the estate and a later action is brought by the dependants the damages recoverable by the dependants are reduced by what was recovered in the earlier claim. The dependants can only recover "Such damages as proportioned to the injury resulting from" the deceased's death to the dependants within s. 4 of the Compensation to Relatives Act. Secondly, it has been held that any pecuniary benefits or reasonable expectation of pecuniary benefit to the dependants from the death of the deceased must be taken into account in reduction of damages, which are given to compensate the recipient on a balance of gains and losses for the injury sustained by the death (Davies v. Powell Duffryn Associated Collieries Ltd. [43] ). Consequently, if the action by the dependants is heard before any action by the estate, "The authority assessing the damages could always take into account the possibility of such proceedings and make allowance accordingly." (See Davies [44] , per Lord Russell of Killowen.) In practice the difficulty of assessing this expectation is often eliminated because the two actions are frequently joined - see Kandalla [45] .

[1937] A.C., at pp. 835, 853. 2. [1982] A.C., at pp. 69-70. 3. [1937] A.C., at p. 835. 4. [1980] A.C., at p. 150. 5. [1982] A.C., at p. 70. 6. (1966) 115 C.L.R., at p. 114. 7. [1942] A.C., 601, at p. 623. 8. [1942] A.C., at p. 608. 9. [1981] Q.B. 158.

The possibility of duplication of liability remains in two areas. First, although those ultimately entitled to the damages recovered in the separate actions by the estate and the dependants may be identical, their individual share of or entitlement to those damages may differ to some extent. Thus the estate may sue first and recover $80,000, to which, under the deceased's will, A is entitled to $70,000 and B to $10,000. In a later action the dependants may notionally be entitled to $100,000, of which, by reason of their relative dependence on the deceased, A's share is $50,000 and B's share is also $50,000. After setting off, A would receive nothing and B would receive $40,000. This area of duplication arises because, although setting off is possible in the assessment of the dependants' damages, it is not possible in the assessment of the estate's damages because the damages in that action are awarded to the deceased's estate in the strict sense and not to those entitled under it: Davies [46] , per Lord Wright; Winfield and Jolowicz on Tort, 11th ed. (1979), p. 547. This does not represent a significant area of duplication. Secondly, an area of possible duplication of liability remains in those cases in which the beneficiaries in the victim's estate are not his dependants so that the amount recovered by the estate cannot be set off against the damages recoverable under the Compensation to Relatives Act. But as Lord Diplock said in Gammell v. Wilson [47] : "This seems to have occurred very seldom, and where it did, the sums involved in bequests to non-dependent beneficiaries were relatively small." And even in those cases the duplication of liability is diminished if the view of Taylor J. in Skelton v. Collins [48] is correct. We have already noticed that his Honour thought that in assessing the estate's damages under the Act of 1944 allowance should be made not only for the deceased's own living expenses in the lost years but for the living expenses of his dependants. The problem is that when the deceased recovers damages in his lifetime, no deduction is made for the living expenses of his dependants. He recovers damages for his loss of earning capacity which is equated with his future earnings less his probable living expenses in the lost years, for without that expenditure he would not have continued to exercise his earning capacity, and it is after deduction of that expenditure that there remains a surplus which he could spend as he wished on his dependants or otherwise.

[1942] A.C., at p. 615-616. 2. [1982] A.C., at p. 64. 3. (1966) 115 C.L.R. 94.

Where then is the justification for taking into account the probable living expenses of dependants in an action under the Act of 1944? In my opinion there is none. The chose in action of the deceased and the estate are one and the same; it is the deceased's chose in action that is vested in the estate. The loss and damage sustained by the deceased become the loss and damage for which the estate is entitled to recover compensation. For this reason it is not permissible to apply a different measure of damages according to whether the plaintiff is the living victim or his estate.

The suggested rationale underlying Taylor J.'s approach to the question is that the deceased's net loss is what he would have left after making provision not only for his own living expenses, but also for the living expenses of his dependants. It is only that residue which he would have for himself, to spend, distribute or save as he wishes. The consequence of this reasoning, assuming it to be correct, is that the damages should be assessed on this footing in an action by the deceased as well as in an action by his estate.

However, there are solid grounds for thinking that the true measure of the deceased's loss is not the amount which he would have in his hands to spend, distribute or save, after defraying his probable living expenses and those of his dependants, but the amount of his future earnings less his probable living expenses to enable him to earn future wages. As this Court has said on many occasions in the past, the deceased is entitled to compensation for his loss of earning capacity, not loss of wages. This loss of earning capacity is reflected in a loss of earning capacity or perhaps a reduced earning capacity in the years of life that remain and a loss of earning capacity in the years of which the victim has been deprived. Once the relevant loss is identified as a loss of earning capacity there is a difficulty in saying that there should be deducted future expenditure on the living expenses of the deceased's dependants as well as future expenditure on his own living expenses which should be regarded as an essential condition of the exercise of his earning capacity.

In Pickett all the members of the House of Lords, with the exception of Lord Russell of Killowen, thought that a deduction of the victim's probable living expenses in the lost years should be made, but none favoured an additional deduction of the probable living expenses of dependants. In Gammell v. Wilson Lord Scarman said [49] : "The loss to the estate is what the deceased would have been likely to have available to save, spend, or distribute after meeting the cost of his living at a standard which his job and career prospects at time of death would suggest he was reasonably likely to achieve." This is the approach which the members of this Court (other than Taylor J.) adopted in Skelton v. Collins [50] . Of that case Lord Wilberforce said in Pickett [51] :

The judgments, further, bring out an important ingredient, which I would accept, namely that the amount to be recovered in respect of earnings in the "lost" years should be after deduction of an estimated sum to represent the victim's probable living expenses during those years. I think that this is right because the basis, in principle, for recovery lies in the interest which he has in making provision for dependants and others, and this he would do out of his surplus. There is the additional merit of bringing awards under this head into line with what could be recovered under the Fatal Accidents Acts. 1. [1982] A.C., at p. 78. 2. (1966) 115 C.L.R. 94. 3. [1980] A.C., at pp. 150-151.

This conclusion disposes of a separate argument put by the appellant that the Court of Appeal in the present case erred in failing to allow for the probable living expenses of the deceased's hypothetical dependants in the assessment of damages.

It leaves extant the possibility that in some cases, notably cases in which the deceased leaves his estate to persons other than his dependants, there will be a duplication of liability. Although this is a matter which may require legislative attention, it is not an argument of sufficient weight to induce me to depart from the interpretation of s. 2(2)(c) and (d) which I favour for reasons already given.

I would dismiss the appeal. Since writing this judgment I have had the advantage of reading the reasons for judgment of Gibbs C.J. For the reasons which he gives I would allow the cross-appeal and give judgment for the respondent in the sum of $91,475.30.

In this appeal I have had the advantage of reading the reasons for judgment prepared by my brother Mason. I am in agreement with his conclusion and with his reasons. I would add only that the problem of duplication of liability seems to me to be a real one although it would exist only where the deceased leaves his property or a substantial part of it to persons who are not his dependants for the purposes of the Compensation to Relatives Act 1897 N.S.W. and equivalent legislation in other States. In some cases such a situation might provoke litigation under the testator's family maintenance legislation but that would not eliminate the risk of duplication.

I agree that the appeal should be dismissed for the reasons stated by Mason J. I agree, for the reasons stated by the Chief Justice, that the cross appeal should be allowed and that the judgment of the Court of Appeal be varied by substituting the sum of $91,475.30 for the sum of $73,475.30 as the amount of the judgment for the respondent.

At a glance

Court

Decision date

Before

Source

Judgment (60 paragraphs)

Parties

Cited By (3)