Gray v Motor Accident Commission

High Court of Australia|1998-11-17|Before: Gleeson CJ, Callinan JJ, Hayne JJ, Windeyer J

A 16-year-old was deliberately run down by a driver who was later jailed for seven years for intentionally causing him grievous bodily harm. The victim sued the driver's compulsory insurer for compensation. The trial judge gave him roughly $72,000 for his injuries and lost earnings but refused to add exemplary damages because the driver had already been punished in the criminal courts. The High Court agreed that exemplary damages were unavailable once substantial criminal punishment had been imposed, because the goals of punishment and deterrence were already satisfied and further punishment would be duplicative. However, the Court found the amounts allowed for past and future lost earnings were too low, as the judge had placed too much weight on old school reports suggesting lack of motivation and had understated the lasting effects of the head and leg injuries on the victim's ability to work. The appeal was allowed and a fresh trial ordered limited to working out the proper compensatory damages.

For the reasons given by Kirby J, the damages awarded to the appellant were manifestly inadequate.

The appeal should therefore be allowed with costs, the order of the Full Court dismissing the appeal to that Court be set aside, in lieu there should be orders that the appeal be allowed with costs, and there be a new trial on the issue of damages (other than aggravated and exemplary damages). The costs of the new trial should be in the discretion of the judge at that trial.

This appeal from the Full Court of the Supreme Court of South Australia [69] raises two questions. The first concerns a suggested error on the part of the Full Court in failing to correct the decision of the primary judge (Judge Pirone) who refused to award exemplary (or punitive) damages in the circumstances of the case. The second concerns a complaint that the Full Court should have held that the amount allowed for pre-trial economic loss and future loss of earning capacity was manifestly inadequate, so as to authorise and require the recalculation of the damages.

Gray v State Government Insurance Commission (unreported; Supreme Court of SA; 10 September 1996).

Special leave was granted primarily to permit examination, yet again [70] , of the vexed question of exemplary damages. The quantification of damages in this case, a matter which would not normally attract the attention of the Court, was doubtless left open in case it might require reconsideration in the light of the outcome of the claim for exemplary damages. Whilst I am of the opinion that the claim for exemplary damages was rightly dismissed, the examination of the other components of the damages, occasioned by the appeal, demonstrates error which required correction by the Full Court. The only acceptable solution is a retrial of the question of damages. However, such damages must exclude the exemplary damages claimed.

See Uren v John Fairfax & Sons Pty Ltd (1966) 117 CLR 118; Fontin v Katapodis (1962) 108 CLR 177; XL Petroleum (NSW) Pty Ltd v Caltex Oil (Australia) Pty Ltd (1985) 155 CLR 448; Lamb v Cotogno (1987) 164 CLR 1.

Mr Donald Gray (the appellant) is an Aboriginal Australian. On 9 September 1988 at Salisbury, a suburb of Adelaide, he was injured when struck by a motor vehicle driven by Mr Darren Bransden. The motor vehicle was insured under the compulsory third party provisions of the Motor Vehicles Act 1959 SA (the MV Act) [71] . The insurer was the State Government Insurance Commission now renamed the Motor Accident Commission (the Commission).

The primary judge found that the appellant was injured when Mr Bransden drove directly at a group of Aboriginal youths, including the appellant, doing so with the intention of running the appellant down and seriously hurting him. At trial, liability for negligence was not disputed. Nor was it contested that Mr Bransden's conduct was deliberate, evidencing a want of regard for the safety and person of the appellant. Contributory negligence was not shown. The case was therefore one for the assessment of damages.

Mr Bransden was charged with the criminal offence of intentionally causing grievous bodily harm to the appellant [72] . He was convicted of this offence by a jury [73] and sentenced to seven years imprisonment [74] . The sentencing judge described his conduct as inexcusable, with no mitigating factor at all. It was, he said, a "blatant breach of the law" that was "brutal and cowardly". The primary judge in these proceedings took a similar view of Mr Bransden's conduct.

Criminal Law Consolidation Act 1935 SA, s 21. 2. R v Bransden (unreported; Supreme Court of SA (Bollen J); 26 February 1991). 3. R v Bransden (unreported; Supreme Court of SA (Bollen J); 14 March 1991).

The background of the appellant was explained in the evidence. He was abandoned by his parents soon after birth. He was brought up by an aunt and uncle. He attended public schools but, because he was one of only two Aboriginal students at the secondary school, he was continuously picked on. He played various sports at school and was chosen for successful Australian Rules football teams in his local area. He enjoyed long distance running. He was visited occasionally by his natural father and when, in 1987 his aunt and uncle died, he went to live with a cousin in Salisbury. He commenced a course at a college there which specialises in Aboriginal education. However, he left the college to take a six month job at a local school earning $250 a week net. The work involved building school facilities. Necessarily, it required the appellant to engage in squatting, lifting materials and bending. The primary judge accepted that the appellant liked the work, that he did it well and that his performance was satisfactory. This was his situation at the time he was deliberately run down and injured.

As a result of the impact, the appellant suffered organic and psychological injuries. The former included fractures of the tibia and fibula of both legs and multiple contusions to his face and head. As found by the primary judge, the injury to the appellant's head resulted in initial confusion, disorientation, incomprehensible verbalisation and retrograde amnesia. He was left with a cognitive impairment.

Between the injury and the trial the appellant was admitted to hospital on three occasions for various procedures. He came under the care of Dr Anthony Ingman. He did not return to work or to college. He began drinking alcohol to excess. He claimed that after his injuries he turned to drinking "full on". He also became involved in a variety of criminal offences [75] , most of them relatively minor. He was sentenced to various terms of imprisonment between 1990 and 1993, usually for several days but on one occasion for five months. At the trial of his action in June 1995, he told the primary judge that he had given up drinking alcohol altogether after his last term of imprisonment. However, his natural father, to whom he had gone after his release from custody, contradicted this statement. He said that the appellant had been drinking alcohol, although not every day, whilst staying at his home and had been drunk "[o]n a couple of occasions".

Before the subject injuries were inflicted upon him, the appellant had once been convicted of larceny. However, he was fined $50 and placed on a six month good behaviour bond. No conviction was recorded.

The appellant brought proceedings in the District Court of South Australia, initially against Mr Bransden, claiming damages against him for negligence. The claim was not framed in terms of trespass to the person. Amongst the damages claimed was a specific claim for exemplary damages. In 1995 the proceedings were amended to substitute State Government Insurance Commission as the defendant [76] . The substitution of the Commission for Mr Bransden was effected pursuant to s 125A of the MV Act. That section provides that the Court may, on the application of the insurer, join it as a defendant to the action. Where it is so joined the insurer is taken to have "directly assumed the liability (if any) of the insured person upon the claim in respect of bodily injury and, where such a liability is found to exist, judgment upon that claim will be given not against the insured person but against the insurer" [77] . Although provision is made for the insured person to remain a party for purposes of defending, in effect, a property claim or prosecuting a counter-claim, neither of these was relevant. In accordance with the MV Act, Mr Bransden "cease[d] to be a party to the action" [78] . Provision is made in certain circumstances for the insurer to recover from the insured in respect of its liability where the insured has contravened or failed to comply with a term of the policy of insurance [79] . The appellant submitted that this possibility, although not yet carried into effect, continued to expose Mr Bransden to the possibility of recovery at the suit of the Commission, for example for any exemplary damages which the Commission was ordered to pay by reason of Mr Bransden's deliberate driving.

By order of a Master of the District Court on 23 January 1995 on the application of the Commission. 2. MV Act, s 125A(3)(a). 3. MV Act, s 125A(3)(b). 4. MV Act, s 124A(1). ["Where an insured person incurs a liability against which he or she is insured under this Part and the insured person has contravened or failed to comply with a term of the policy of insurance by driving a motor vehicle with the intention of causing bodily injury to a person the insurer may recover from the insured person any money paid or costs incurred by the insurer in respect of that liability."]

The primary judge assessed the appellant's damages at $72,206. Judgment was entered in his favour in that sum together with an amount for interest. The components of the judgment were $15,000 for past economic loss; $30,000 for future economic loss; and $18,190 for non-economic loss (calculated in accordance with the Wrongs Act 1936 SA, s 35A(b) [80] ). The out-of-pocket expenses were agreed at $9,016. The appellant complained that this judgment was "manifestly inadequate". Specifically, he argued that the judge had erred on failing to include a sum for exemplary damages. More generally, he complained that the amounts provided for economic loss, past and future, were erroneous, being arrived at by faulty reasoning which should be corrected on appeal. He submitted that such correction was available, notwithstanding several references by the judge to credibility findings which were adverse to him.

That section provides that in such cases non-economic loss is to be assigned a numerical value on a scale rising from 0 to 60. The primary judge assigned the number 17. At the relevant time, this produced the component of the judgment of $18,190. See the definition of prescribed amount in s 35A(6)(b).

On the claim for exemplary damages, Judge Pirone accepted that exemplary damages were legally available in a case such as this, notwithstanding the fact that the appellant had not expressly framed his case in terms of trespass to the person and that the defendant before the Court was not the tortfeasor himself but his compulsory third party insurer. The judge found that, if the appellant was entitled to an award of exemplary damages, it should be in the sum of $10,000. However, after reference to a decision of the Supreme Court of Tasmania in Watts v Leitch [81] , Judge Pirone accepted that he had a discretion to award, or refrain from awarding, exemplary damages. Although he was not bound by the Tasmanian decision, it accorded with his own opinion. Taking into account the fact that Mr Bransden had already been punished by being sentenced to a substantial period of imprisonment in respect of the same conduct, the judge concluded that no award of exemplary damages "should" be made.

As to the claim for economic loss, the appellant presented himself at trial as totally and permanently unemployable. Essentially, this perspective of the facts was based upon the contention that he had been progressing reasonably, despite adversity, until the deliberate wrong done to him by Mr Bransden. He had regular work, was a keen sportsman, had attended college for a time and hoped to begin a career working on an oyster or abalone farm by the age of twenty. After the injury his life was dislocated.

The primary judge accepted that the appellant's earning capacity had been diminished as a result of the subject injuries, both in relation to the past and with respect to the future. In measuring the extent of his loss, he recorded his preference for the evidence of Dr Ingman. That witness had testified that:

[I]n work that involved heavy lifting and carrying [the appellant] would be restricted, and also in work requiring squatting or bending He could do this work intermittently and more slowly than the average person. Dr Ingman concluded: The reality is that, unless he happened to be in a situation where someone wanted a person who worked more slowly, he would be better employed in something else.

Although accepting that the injury to the head was "significant and severe" and although generally accepting the evidence of Mr Mark Reid, a neuropsychologist, that the appellant had suffered cognitive impairment which Mr Reid, as to approximately 75 per cent, attributed to the accident, the primary judge concluded that the appellant had a pre-existing short-term memory impairment. He therefore found that the short-term memory problems were not related to the subject incident.

The reasons advanced to support this conclusion, vital to the calculation of past and future economic loss, were two. The first involved consideration of a number of comments on the appellant's scholastic performance at secondary school when he was in his early teens. The second related to the judge's assessment of the appellant as a witness and his observations of him whilst he was in the witness box. The judge also seems to have been affected by the fact that the appellant's natural father deposed, contrary to the appellant's own testimony, that he was still drinking alcohol. Taking these considerations into account, as well as the disadvantages inevitably flowing from the appellant's criminal record, Judge Pirone concluded that the appellant had "evinced no intention or genuine desire to make use of his residual earning capacity" in the past and that "the same may be true of him at other times in the future". He therefore reached the monetary allocations already mentioned after "wielding the broad axe". Essentially, his Honour concluded that the "obvious lack of motivation" which the appellant displayed after injury, and demonstrated during his evidence, had its roots not in the trauma and dislocation of the wrong done to him by Mr Bransden but in personality traits already obvious when he was at high school. He did not accept the appellant's evidence that he could not play pre-injury sports; although he was prepared to concede that long distance running might now be beyond him.

In the Full Court, the reasons for rejecting the appellant's appeal were given by Millhouse J [2] . On the complaint concerning the refusal to include exemplary damages, it was recorded that the Commission had conceded that such damages "could have been awarded. It was a matter of discretion" [3] . Reference was made to Watts v Leitch and to the primary judge's consideration of the fact that the driver had already been punished by imprisonment. Millhouse J accepted that the primary judge had a discretion which he had chosen not to exercise in favour of the appellant. He considered that there was no reason why the Full Court should interfere.

Bollen and Williams JJ concurring. 2. Gray v State Government Insurance Commission (unreported; Supreme Court of SA; 10 September 1996) at 4.

On the more general complaint concerning the suggested inadequacy of the damages, Millhouse J referred to the "adverse view of the appellant's credibility" [4] formed by the primary judge, the "appalling" school reports, the resort to drinking alcohol and the appellant's criminal record. He concluded [5] :

The sad fact is that the appellant's chances of achieving much by way of employment in life have always been small. Although [counsel] argued that the learned judge should not have, nor should we, set store by those school reports I cannot see why not. They don't shew much promise The learned judge had found the reports pointed to the appellant's lack of motivation: he found that this lack of motivation had gone on. There is no reason for us to review these findings. 1. Gray v State Government Insurance Commission (unreported; Supreme Court of SA; 10 September 1996) at 3. 2. Gray v State Government Insurance Commission (unreported; Supreme Court of SA; 10 September 1996) at 4.

Whilst accepting that the assessment for non-economic loss in this case was "quite low", the Full Court declined to intervene. As to the economic loss, on the footing that the appellant's future "given his lack of skills and motivation" was never a good one and that he had been left with "little permanent disability" [6] , those sums were also left undisturbed. The result was that the Full Court dismissed the appeal.

Gray v State Government Insurance Commission (unreported; Supreme Court of SA; 10 September 1996) at 4.

Upon some questions raised by the appeal there was common ground between the parties:

The Commission accepted that it was liable to the appellant for any exemplary damages that might be awarded in the proceedings arising out of the conduct of Mr Bransden. No point was taken that liability for such damage would fall outside the policy. I shall assume that this is so whatever might be the subsequent rights of the Commission, as insurer, to recover the whole or any part of the damages from Mr Bransden [7] . Had it been otherwise, or had the matter been in doubt, it would have been necessary to join Mr Bransden once again as a party so that he could be given the opportunity to be heard before any such damages were ordered affecting him. Neither party suggested that Mr Bransden should be afforded notice of the hearing to protect his contingent interests in its outcome. In light of the conclusion to which I have come, it is unnecessary to explore this problem.

The references to the criminal proceedings, made by the primary judge, arose out of the tender of part of the transcript of those proceedings, including the remarks on the sentencing of Mr Bransden [8] . This tender was received by consent of the parties. It served simply to confirm the conclusions independently reached by the primary judge so that no question arises as to such use. The case was conducted on the basis that there was no, or no sufficient, provocation on the part of the appellant to justify or explain Mr Bransden's conduct [9] . A defence of contributory negligence, although pleaded, was not pressed.

Whilst contesting the adequacy of the primary judge's quantification of pain and suffering, the appellant concentrated his attack on the judgment in terms of the omission of exemplary damages and the alleged errors in the calculation of the allowances for economic loss. The appeal was conducted on the footing that the quantification of the potential exemplary damages by the primary judge was accepted. The appellant therefore asked that $10,000 be added to his judgment if he were to succeed on that ground of appeal alone. If he succeeded on the complaint about economic loss, the appellant asked that there be a general retrial as to damages. This represented a departure from the relief initially sought in the grounds of appeal where the appellant had asked that the proceedings be returned to the Full Court for assessment of damages or that this Court should substitute its own assessment.

Pursuant to MV Act, s 124A. 2. The certificate of conviction was admitted pursuant to the Evidence Act 1929 SA, s 34A. 3. In this respect the case was different from Lamb v Cotogno (1987) 164 CLR 1.

Although not specifically pleaded, the appellant sought, under the claim for compensatory damages, to argue that allowance ought to have been made for aggravated damages. At the very close of the hearing, the Commission, for its part, asked the Court to reconsider the authority of its decision in Lamb v Cotogno [10] . This is where the common ground ran out. The Commission objected to any allowance for aggravated damages. It relied, to support its objections, upon the formulation of the grounds of appeal and argument, and the way in which the proceedings had been conducted in the courts below. The appellant did not expressly object to this Court's reopening Lamb v Cotogno, but stated his strong support for that decision.

Should the authority of this Court in Lamb v Cotogno be reopened to permit the Commission, as a compulsory insurer, to contest the applicability to it of the law entitling a plaintiff to recover exemplary (or punitive) damages on the grounds of the conduct of the tortfeasor whom it is obliged to indemnify? (The reopening issue.)

If not, is the holding in Lamb v Cotogno inapplicable to the facts of this case on the footing either (a) that the claim in Lamb v Cotogno was framed in terms of trespass to the person, whereas in this case the sole cause of action pleaded by the appellant was negligence? or (b) on the basis that in Lamb v Cotogno the defendant was the tortfeasor, whereas in this case the sole defendant was, by statute, the Commission, punishment of which was said to be neither rational nor fair. (The scope of exemplary damages issue.)

If the Commission is prima facie liable to the appellant under the holding in Lamb v Cotogno, is that liability affected in any way by the provisions of the Wrongs Act, s 35A limiting recovery of damages in the case of motor vehicle accidents? (The Wrongs Act issue.)

If exemplary damages may be recovered, is the award of such damages discretionary and, if so, did the discretion miscarry by reference to the way in which the prior criminal conviction and punishment of Mr Bransden was treated? (The criminal punishment issue.)

Having regard to the pleadings and the conduct of the proceedings, is the appellant entitled to aggravated damages in addition, or in the alternative, to the exemplary damages claimed? (The aggravated damages issue.)

In respect of the remainder of the appeal, the question is whether the award of damages for economic loss, past and future, is manifestly inadequate and whether, having regard to the reasons given by the primary judge (including his references to his assessment of the credibility of witnesses) the Full Court was authorised and required to intervene to correct the misassessment. (The economic loss issue.)

This Court in Lamb v Cotogno decided that there was nothing in the language or scheme of the Motor Vehicles (Third Party Insurance) Act 1942 NSW which prohibited the award of exemplary damages to a plaintiff injured as a result of the driving of a vehicle insured under that Act. In the New South Wales Court of Appeal, I concluded, by reference to the legislation and my understanding of its purposes, that exemplary damages were inappropriate and unavailable in such circumstances [11] . Such an award would, as a matter of practicality, neither punish nor deter the driver responsible nor motorists generally. I considered that it would produce absurd results [12] . I suggested that realism required that the role of the insurer should be taken into account, at least where its obligations arose from a statutory scheme providing for compulsory insurance [13] . Upon one view, the decision of this Court, in Kars v Kars [14] (decided since Lamb v Cotogno) suggests a greater willingness, on the part of this Court to consider the scope and applicability of common law entitlements where they arise for elucidation in the context of a compulsory statutory scheme for universal insurance. However, nothing said in Kars casts doubt on the authority of Lamb v Cotogno [15] . In some Australian jurisdictions, legislation has been introduced to overcome the effect of Lamb v Cotogno [16] . No such provision has been enacted in South Australia.

Cotogno v Lamb [No 3] (1986) 5 NSWLR 559 at 570. 2. Cotogno [No 3] (1986) 5 NSWLR 559 at 568 referring to Luntz, Assessment of Damages for Personal Injury and Death, 2nd ed (1983), p 68. 3. Cotogno [No 3] (1986) 5 NSWLR 559 at 571. 4. (1996) 187 CLR 354. 5. See esp Kars (1996) 187 CLR 354 at 381-382. 6. See, eg, Motor Accidents Act 1988 NSW, s 81A and Motor Accident Insurance Act 1994 Q, s 55(1). Under s 55(2) of the Queensland Act it is provided that a court may enter a separate judgment against an insured person for exemplary or punitive damages. An insured person is not entitled under a statutory policy to indemnity against such an award: s 55(3). There is no reference to exemplary damages for motor vehicle accidents under any other Australian statute. See MV Act, Transport Accident Act 1986 Vic; Motor Vehicle (Third Party Insurance) Act 1943 WA; Motor Accidents (Liabilities and Compensation) Act 1973 Tas; Motor Accidents (Compensation) Act 1979 NT; Motor Traffic Act 1936 ACT.

Until the holding in Lamb v Cotogno is displaced by legislation or overruled by this Court, it must be applied to the same or analogous circumstances. The suggestion that the rule in Lamb v Cotogno, if applicable, should not be followed was unavailable to the Commission in the courts below. Unless the decision could be distinguished, it was the duty of all Australian courts to conform to the principle which that decision established [17] . In its written submissions, the Commission, rather tentatively, suggested that the Court might wish to depart from its holding in Lamb v Cotogno or to alter or modify the principle which that decision established [18] . It submitted that there was no policy or other justification for an award of exemplary damages against it, as the compulsory statutory insurer substituted in accordance with the legislation, for the tortfeasor who was no longer a party to the action.

Garcia v National Australia Bank Ltd (1998) 194 CLR 395 at 403-404. 2. Respondent's written submissions, par 7.

Outside Australia, a body of judicial and other legal writing exists which lends support to the view that shifting the burden of exemplary damages to an insurer, at least in the case of statutory schemes of compulsory insurance, insufficiently serves the purposes of punishment, deterrence and disapprobation for which the common law provided the remedy of exemplary damages. Cases where the tortfeasor is privately insured and where the insurer is held liable to indemnify the insured which is vicariously liable for highhanded conduct on the part of an employee can be readily distinguished [19] . But where the damages are defrayed not by the wrong-doer but by an insurer pursuant to a statutory obligation, judges [20] and other commentators [21] have questioned the applicability of exemplary damages as fulfilling the objects for which such damages are ordinarily provided. Some have even questioned whether, in the case of private insurance, an obligation to indemnify an insured for the consequences of criminal conduct might not be unenforceable, as contrary to public policy [22] . One United States judge questioned the point of publicly punishing an insurer since "it has done no wrong" [23] . In the case of a compulsory statutory insurer, and particularly where (as in the present case) the Commission was then the sole insurer licensed to issue policies under the MV Act, by punishing it "society would then be punishing itself for the wrong committed by the insured" [24] . Arguably, doing this would defeat or undermine the achievement of the objects of the legislation.

Ohio Casualty Insurance Co v Welfare Finance Co (1934) 75 F 2d 58 at 59 (8th Cir); Cherniak and Morse, Aggravated, Punitive and Exemplary Damages in Canada in Torts in the 80s (1983), p 200. 2. eg, Judge Wisdom (with whom Judge Jones concurred) in Northwestern National Casualty Co v McNulty (1962) 307 F 2d 432 at 440-441 (5th Cir); Affiliated FM Insurance Co v Beatrice Foods Co (1985) 645 F Supp 298 at 303-305 (ND Ill). 3. eg, McGregor on Damages, 16th ed (1997), par 466, n 1; Cooper-Stephenson and Saunders, Personal Injury Damages in Canada (1981), p 702. 4. Cooper-Stephenson and Saunders, Personal Injury Damages in Canada (1981), p 709. 5. Northwestern National Casualty Co v McNulty (1962) 307 F 2d 432 at 440 (5th Cir). 6. Northwestern National Casualty Co v McNulty (1962) 307 F 2d 432 at 440-441 (5th Cir).

Whatever weight these arguments might be thought to have, they cannot, as a matter of authority, affect the outcome of these proceedings whilst Lamb v Cotogno stands. Some day it may be necessary to reconsider the correctness of that decision [25] . However, it is a relatively recent and unanimous holding of the Court. It was arrived at with acknowledgment that the contrary arguments had "strength" [26] . In the present appeal, the Commission's application to reargue the point was not clearly signalled either at the special leave hearing or in the written submissions. It was not even raised in the oral arguments for the Commission until the very close of its submissions and then only as a result of direct questioning by the Court. This Court may have been differently constituted had a clear indication been earlier given that the Commission sought to challenge the correctness of its earlier authority. In these circumstances, it is not appropriate to permit the Commission to reargue the holding in Lamb v Cotogno [27] . This appeal must be approached in conformity with the law as there stated.

In Daniels v Thompson [1998] 3 NZLR 22, the New Zealand Court of Appeal (by majority) departed from the approach taken in Lamb v Cotogno. The Court of Appeal held that all claims for exemplary damages in relation to conduct that has been, or was likely to be, the subject of a criminal prosecution were inadmissible. See also Smillie, Exemplary damages and the criminal law, Torts Law Journal, vol 6 (1998) 113. 2. Lamb (1987) 164 CLR 1 at 9. 3. The appellants did not refer to the then recent decision of the New Zealand Court of Appeal in Daniels v Thompson [1998] 3 NZLR 22. Indeed, neither party referred to that decision in argument.

The Commission accepted that the restrictive approach to the recovery of exemplary damages in England [28] had not been followed in Australia. In this country, awards of exemplary damages were available to a wider catalogue of causes of action than English law now provides. Thus, such damages have been recovered in actions framed in terms of trespass to chattels [29] , trespass to land [30] , trespass to the person [31] , deceit [32] , reckless negligence [33] and defamation [34] , unless expressly excluded by statute [35] . Although there was no holding of this Court on the point, the Commission urged that the purposes for which exemplary damages were awarded were inapplicable to a cause of action framed in negligence. Its argument went thus: where the only wrong pleaded and proved was breach of a duty of care, it was inappropriate to award exemplary damages in order to make an example of the defendant or to mark the court's strong disapproval or to punish the defendant or to provide a remedy which would discourage revenge and self-help. Because the appellant had not conducted his case on the footing that it involved a trespass to the person, he was confined to the damages available for the wrong of negligence. This meant compensatory damages (including aggravated damages). It did not extend to exemplary or punitive damages. In so far as the evidence suggested deliberate wrongdoing against the appellant by Mr Bransden, that was merely the factual background upon which the cause of action was to be considered. The remedies provided by law were defined by the cause of action, not the evidence.

Rookes v Barnard [1964] AC 1129 at 1226-1227. 2. Healing (Sales) Pty Ltd v Inglis Electrix Pty Ltd (1968) 121 CLR 584. 3. XL Petroleum (NSW) Pty Ltd v Caltex Oil (Australia) Pty Ltd (1985) 155 CLR 448. 4. Lamb v Cotogno (1987) 164 CLR 1. 5. Musca v Astle Corporation Pty Ltd (1988) 80 ALR 251. 6. Midalco Pty Ltd v Rabenalt [1989] VR 461 (the trial in that case appears to have been conducted on the assumption that exemplary damages were available, and the Appeal Division did not disturb the finding). 7. Uren v John Fairfax & Sons Pty Ltd (1966) 117 CLR 118. 8. Luntz, Assessment of Damages for Personal Injury and Death, 3rd ed (1990), par 1.7.4, nn 4 and 5.

Because this point is not decided by authority, it is necessary to decide it as a matter of principle. Originally, the language used in most cases where exemplary damages were awarded suggested that the feature of the cause attracting such damages was the existence of an intent on the part of the tortfeasor to harm the victim [36] or some form of conscious wrongdoing in contumelious disregard of the victim's rights [37] . It was for that reason that exemplary damages were provided in cases of intentional torts. Sometimes such damages were refused where intentional injury could not be established [38] . However, even in some of the older cases, exemplary damages were occasionally awarded where wilful negligence was shown followed by high-handed conduct towards the victim [39] . Although punitive damages would not be awarded for acts properly described as accidents, framed in terms of the tort of negligence [40] , proof that the wrong went beyond mere negligence and could be characterised as wanton, reckless or outrageous would attract exemplary damages [41] .

Cherniak and Morse, Aggravated, Punitive and Exemplary Damages in Canada in Torts in the 80s (1983), pp 173-174. 2. cf Whitfeld v De Lauret & Co Ltd (1920) 29 CLR 71 at 77. 3. See, eg, Kaytor v Lion's Driving Range Ltd (1962) 35 DLR (2d) 426 at 431-432. 4. See, eg, Emblen v Myers (1860) 6 H & N 54 [158 ER 23]. 5. Hawley, Punitive and Aggravated Damages in Canada, Alberta Law Review, vol 18 (1980) 485, at p 496 . 6. Blacquiere's Estate v Canadian Motor Sales Corporation Ltd (1975) 10 Nfld & PEIR 178 at 207.

In Canada, the proposition that such damages were not available to a cause of action framed in negligence has been rejected [42] . It is recognised that, depending on the circumstances, a claim framed in negligence can attract such damages [43] . Professor Fleming acknowledged that awards of exemplary damages in actions for negligence were comparatively rare [44] . However, he noted that such damages had been recovered in product liability cases [45] and cases involving unsafe working conditions [46] . What mattered, he said, was "the conduct of the wrong doer, not the nature of the tort" [47] . I agree. Punishment for deliberate wrongdoing is certainly a consideration in deciding the applicability of exemplary damages. But it is not the sole reason for the award of such damages. The more recent cases on the subject, including in this Court, have accepted that such damages may be recovered whatever the subjective intention of the tortfeasor if, objectively, the conduct involved was high-handed, calling for curial disapprobation addressed not only to the tortfeasor but to the world. The first objection therefore fails.

Robitaille v Vancouver Hockey Club Ltd (1979) 19 BCLR 158 at 179. 2. Denison v Fawcett [1958] OR 312 at 319; McBride, Punitive Damages in Birks (ed), Wrongs and Remedies in the Twenty-First Century (1996) 175, at p 179, n 8 ; cf Kaytor v Lion's Driving Range Ltd (1962) 35 DLR (2d) 426 at 432. 3. Fleming, The Law of Torts, 9th ed (1998), p 273. 4. Vlchek v Koshel (1988) 52 DLR (4th) 371. 5. Trend Management Ltd v Borg (1996) 40 NSWLR 500; Coloca v BP Australia Ltd [1992] 2 VLR 441. 6. Fleming, The Law of Torts, 9th ed (1998), p 273, citing Coloca v BP Australia Ltd [1992] 2 VLR 441 at 445.

What of the complaint that, of their nature, exemplary damages do not apply where the defendant is the Commission and where the actual tortfeasor is no longer a party to the action? Certainly, these features distinguish the present case from Lamb v Cotogno where the wrongdoer (and not the insurer) was the defendant on the record. However, the distinction is an insubstantial one. It is not sufficient to distinguish Lamb v Cotogno from this case. By the MV Act, where the insurer has been joined as defendant it is "taken to have directly assumed the liability (if any) of the insured person" (s 125A(3)(a)). If the liability of the insured extends to exemplary damages, judgment for such damages must be given "not against the insured person but against the insurer" (s 125A(3)(a)). Because, by Lamb v Cotogno, the insured is liable for exemplary damages, the Commission, by the Act, steps into his shoes. It assumes his liability. Considerations of its entitlement to recover from the insured are irrelevant to the obligations which the Act imposes on the insurer. To the objection that it is the Commission, an insurer, and not the tortfeasor personally which has to foot the bill, the answer must be that this is precisely what Lamb v Cotogno countenanced. The second objection likewise fails.

The Commission next suggested that the award of exemplary damages was subject to significant restrictions because of the terms of the Wrongs Act and particularly the provisions of s 35A limiting recovery of damages for "non-economic loss". The legislative scheme contained in s 35A of the Wrongs Act is unique to South Australia. The section, as applicable at the relevant time, provided that "where damages are to be assessed for or in respect of an injury arising from a motor accident" its provisions apply. There was no dispute that the appellant's claim fell well within the section. The contest was whether the terms of the section included exemplary damages within the damages that may be "awarded for non-economic loss" [48] . If they were so included, the common law was excluded and the damages had to be assessed by reference to a scale "running from 0 to 60" (s 35A(1)(b)(i)) and by reference to a "prescribed amount" (s 35A(1)(b)(ii)).

The issue raised by this objection is the subject of authority in South Australia. In Andary v Burford [49] , the Supreme Court, with reference to earlier decisions of the Local and of the District Court of South Australia, concluded that s 35A was not intended to exclude the recovery of exemplary damages; nor did such damages fall within its terms. I agree. In order to abolish a civil right to exemplary damages by statutory implication (no express abolition appearing) a clearer indication of the parliamentary purpose would be required. "Noneconomic loss" is defined in s 35A(6) to mean: "(a) pain and suffering; (b) loss of amenities of life; (c) loss of expectation of life; (d) disfigurement."

[1994] Aust Torts Reports ¶81-302 (Millhouse J).

Although exemplary damages are "non-economic" in the generality of that expression, they do not fall within any of the stated paragraphs of the definition. They are not, therefore, controlled by the assessment prescribed by s 35A. They remain to be assessed, where applicable, according to common law principles. The statement that the purpose and application of the section is to impose a cap on general damages [50] is irrelevant in this instance.

In New Zealand, where a similar problem arose under the Accident Compensation Act 1972 NZ, the Court of Appeal reached a like conclusion [51] . It held that the general language of the Act excluding defined entitlements to damages at common law did not prohibit recovery of exemplary damages having regard to their special features and purposes. If the recovery of such damages were to be abolished, the abolition would have to be effected by clear legislation, specifically addressed to that objective [52] . I would reach the same conclusion here. Accordingly, the Wrongs Act issue also fails.

Donselaar v Donselaar [1982] 1 NZLR 97. 2. Donselaar [1982] 1 NZLR 97 at 105, per Cooke J. See now Daniels v Thompson [1998] 3 NZLR 22. See also Smillie, Exemplary damages and the criminal law, Torts Law Journal, vol 6 (1998) 113, at pp 118-120 .

The appellant then objected that the courts below had treated the award of exemplary damages as discretionary and had erred in their approach to providing them. Specifically, he argued that Watts v Leitch was incorrectly decided and that it was erroneous to approach the question by reference solely to the fact that the tortfeasor had suffered criminal punishment. The Commission supported the decisions below and contested the suggestion that the discretion had miscarried.

Two preliminary questions are presented by this issue. The first is whether the liability of the tortfeasor to punishment is relevant. The second is whether, if it is, taking it into account is properly described as discretionary. Both of these questions were answered in the affirmative by the courts below.

Turning to the first question, it is impossible to contest, in the face of authority, the relevance of the fact of criminal punishment of the tortfeasor. The essential argument against doing so is that criminal proceedings are outside the control of the person injured and are designed to achieve the purposes of the State. If the injured party has suffered in an additional way, such as would ordinarily attract an entitlement to exemplary damages, why should such entitlement be lost simply because of the operation of the criminal law? This approach has found favour in some jurisdictions in the United States of America [53] . Authority exists in that country supporting the refusal of a request to instruct the jury to consider a criminal fine imposed on the defendant in reduction of his civil liability to the plaintiff [54] . Where there are multiple plaintiffs, a particular problem arises for treating criminal punishment as relevant. How, then, is the criminal punishment of the defendant to be apportioned in assessing the several civil claims? This consideration, and the fact that what is at stake are the damages to which the plaintiff is entitled, has caused some courts to conclude that the fact that a tortfeasor has been punished criminally, or is liable to be so punished, is not material to the question of the plaintiff's entitlement to the exemplary damages which belong to the plaintiff [55] .

Gustafson, Damages - Punitive Damages and Double Jeopardy, Notre Dame Lawyer, vol 21 (1946) 206, at p 208 . 2. Redden v Gates (1879) 2 NW 1079. See Gustafson, Damages - Punitive Damages and Double Jeopardy, Notre Dame Lawyer, vol 21 (1946) 206, at p 208 . 3. Jefferson v Adams (1845) 4 Del 321; Redden v Gates (1879) 2 NW 1079; Irby v Wilde (1908) 46 So 454; Dubois v Roby (1911) 80 A 150 at 154.

The foregoing opinions are outside the mainstream of applicable legal authority. They are, moreover, inconsistent with basic principle. The rule that a person shall not be liable to be tried or punished again for an offence for which he or she has already been finally convicted or acquitted in accordance with law is a fundamental principle of human rights [56] . There is no reason for excluding its operation in this area of discourse except for the inter-position of compulsory insurance, which authority holds is not reason enough. That is why liability to criminal punishment, and more especially the imposition of such punishment (and particularly that of imprisonment) have been repeatedly held in Australia [57] , England [58] , Canada [59] , New Zealand [60] and in many jurisdictions of the United States [61] , as relevant to the provision of exemplary damages (and even aggravated compensatory damages). Courts commonly take into account the fact and severity of any criminal punishment imposed or to which the tortfeasor is liable. Particular exceptions have been suggested where the criminal punishment imposed on the defendant, or to which the defendant may be liable, is regarded as insubstantial. An example is where the tortfeasor was conditionally discharged in the criminal proceedings [62] . Adopting this approach may appear to breach the rule against double punishment by permitting a civil court to add, in effect, to the punishment imposed on the wrongdoer by the criminal court acting within its powers [63] . Because, generally, a criminal trial is heard and determined before a civil action, the practical problems of reconciling the two systems are ordinarily avoided. But they can arise when the criminal punishment is unknown or delayed [64] . However, complaints of this kind are really addressed to the fundamental problem of retaining exemplary damages in civil cases where the tortfeasor is also liable to criminal punishment [65] . The way that the law has endeavoured to grapple with this problem is by recognising a discretion to award, or to withhold, exemplary damages and, in awarding them, to moderate their amount by reference to considerations of criminal punishment. Exemplary (or punitive) damages are said to be uncommon outside the common law. They certainly present conceptual problems. But they are too deeply embedded in our law to be abolished by a court. They have been accepted by this Court as part of Australian law [66] . We must live with, and adapt to, the difficulties. Discretion is the way this is done.

International Covenant on Civil and Political Rights, Art 14.7. See also Pearce v The Queen (1998) 194 CLR 610. 2. eg, Watts v Leitch [1973] Tas SR 16; O'Reilly v Hausler (1987) 6 MVR 344. 3. Rookes v Barnard [1964] AC 1129; Archer v Brown [1985] QB 401 at 423; AB v South West Water Services Ltd [1993] QB 507 at 516. See also the United Kingdom Law Commission, Aggravated, Exemplary and Restitutionary Damages, Law Com No 247 (1997), p 135. 4. Natonson v Lexier [1939] 3 WWR 289 at 291; Loedel v Eckert (1977) 3 CCLT 145 at 150-151; Kenmuir v Heutzelmann (1977) 3 CCLT 153 at 158; Norberg v Wynrib [1992] 4 WWR 577; Cherniak and Morse, Aggravated, Punitive and Exemplary Damages in Canada in Torts in the 80s (1983), p 197; Hawley, Punitive and Aggravated Damages in Canada, Alberta Law Review, vol 18 (1980) 485, at pp 503-504 ; Cooper-Stephenson and Saunders, Personal Injury Damages in Canada (1981), p 699. See also the report of the Ontario Law Reform Commission, Report on Exemplary Damages (1991), pp 43-46. 5. Taylor v Beere [1982] 1 NZLR 81; Donselaar v Donselaar [1982] 1 NZLR 97. In Daniels v Thompson [1998] 3 NZLR 22, the imposition of, or likely liability to criminal punishment was held to be a complete bar to the recovery of exemplary damages. 6. See, eg, Borkenstein v Schrack (1903) 31 Ind App 220; 67 NE 547; Gustafson, Damages - Punitive Damages and Double Jeopardy, Notre Dame Lawyer, vol 21 (1946) 206, at p 207 . 7. Connors v Doak (1978) 24 NBR (2d) 85; Cherniak and Morse, Aggravated, Punitive and Exemplary Damages in Canada in Torts in the 80s (1983), pp 197-198. 8. Waddams, The Law of Damages, 2nd ed (1991), ¶11.470. 9. Waddams, The Law of Damages, 2nd ed (1991), ¶11.480. 10. As Lord Devlin commented in Rookes v Barnard [1964] AC 1129 at 1230. See also Lord Reid in Broome v Cassell & Co [1972] AC 1027 at 1087. 11. Uren v John Fairfax & Sons Pty Ltd (1966) 117 CLR 118; Lamb v Cotogno (1987) 164 CLR 1.

The notion that a plaintiff's entitlement to a component of damages at common law is a matter of discretion is exceptional. Damages are ordinarily the plaintiff's right, being the remedy devised by the common law to effect its purposes. However, the description of exemplary damages as "discretionary" is embedded in the case law. In Rookes v Barnard [67] , Lord Devlin explained the instruction to be given to the jury where exemplary damages were available. They might award such damages "if, but only if" [68] the compensatory damages were inadequate to mark the court's disapproval of the tortfeasor's conduct and to deter him and others from repeating such conduct. Thus the component of exemplary damages was not a right but an element of the damages which the jury could elect to provide or to withhold. In Broome v Cassell & Co, Lord Hailsham described an award of punitive damages as "discretionary" [69] . There are similar descriptions in Canadian [70] and Australian authority [71] . Indeed, the existence of a discretion has been described as a "safety valve" permitting the tribunal of fact to decline the award of exemplary damages if some factor makes it proper to refuse them [72] .

[1964] AC 1129. 2. Rookes [1964] AC 1129 at 1228. 3. Broome [1972] AC 1027 at 1060. See also Law Commission, Aggravated, Exemplary and Restitutionary Damages, Law Com No 247 (1997), pars 4.29, 4.40. 4. Blacquiere's Estate v Canadian Motor Sales Corporation Ltd (1975) 10 Nfld & PEIR 178 at 205. 5. Watts v Leitch [1973] Tas SR 16 at 20. 6. Law Commission, Aggravated, Exemplary and Restitutionary Damages, Law Com No 247 (1997), par 1.20.

I accept that describing the process involved as "discretionary" may encourage a certain looseness of thinking. However, to some extent that is inherent in the interaction of criminal punishment and civil damages which are described as being in part punitive. It is a discretion to be exercised in accordance with principle. If one of the reasons for awarding exemplary damages is the punishment of the wrongdoer in an emphatic and public way, it is obviously relevant to take into account the fact that this may already have been done or is likely to follow. Once exemplary damages are seen as supplementary to compensatory damages (an addition that may or may not be appropriate in the particular case) the fact that a plaintiff may lose them (or have them reduced by reference to the actions of others in the criminal courts) does no offence to reason. The primary judge's description of exemplary damages as discretionary was therefore correct.

As to the appellant's objection that, a discretion being established, the primary judge erred in exercising it solely by reference to the imprisonment of Mr Bransden, I cannot agree. The language used, as in Watts v Leitch [73] was consistent with a recognition that exemplary damages might be awarded but should not because of the substantial term of imprisonment to which the wrongdoer had been sentenced. No error was therefore shown on this issue in the approach of the primary judge or of the Full Court. It was open to Judge Pirone to conclude that the imprisonment to which Mr Bransden was sentenced would adequately fulfil all of the purposes for which an award of exemplary damages in this case would otherwise have been appropriate.

Belatedly, the appellant sought to include in his claim for compensatory damages an additional element for aggravated damages, although this had not been pleaded or advanced at trial.

The difficulty of distinguishing between aggravated damages and exemplary damages has been acknowledged by this Court [74] . To some extent compensatory, aggravated and exemplary damages overlap [75] . Thus, compensatory damages themselves may, to some degree, fulfil the purposes for which exemplary damages exist. These are ambiguous concepts [76] and, at least in part, anomalous [77] . However, it is clear that, by Australian law, compensatory damages may be enlarged to include a component for the aggravated circumstances in which a wrong to the plaintiff has occurred [78] . It is perhaps because of the lack of complete clarity of the differentiating features of aggravated damages [79] , and doubts as to what they involve, that legal practitioners often fail to claim them and persons wronged often fail to recover them. This is doubtless why it has been proposed that the "misleading phrase", aggravated damages, should be replaced by a specific component of damages for mental distress [80] . The danger of double counting in the provision of aggravated damages is an ever present one [81] . The differentiation between "aggravated damages" and "exemplary damages" became more marked following Rookes v Barnard [90] . It assumes critical importance in those jurisdictions where exemplary damages, as such, have been abolished by statute.

Uren v John Fairfax & Sons Pty Ltd (1962) 117 CLR 118 at 149, per Windeyer J. 2. Watts v Leitch [1973] Tas SR 16 at 23; Cotogno v Lamb [No 3] (1986) 5 NSWLR 559 at 576; cf Cherniak and Morse, Aggravated, Punitive and Exemplary Damages in Canada in Torts in the 80s (1983), p 196. 3. Fleming, The Law of Torts, 9th ed (1998), p 274. 4. See Stone, Double Count and Double Talk: The End of Exemplary Damages?, Australian Law Journal, vol 46 (1972) 311. Professor Stone points out (p 314) that there was an analogy in Roman law designed to buy off plaintiffs and to prevent them taking vengeance into their own hands: the award of quadruple losses (furtum manifestum). There appear to be contemporary analogies, for example, in the legal systems of some countries whereby a financial settlement, acceptable to the family of a victim, may avoid or mitigate the criminal punishment of the perpetrator. 5. Uren v John Fairfax & Sons Pty Ltd (1966) 117 CLR 118 at 129-130, 149; Justin v Associated Newspapers Ltd (1966) 86 WN (Pt 1) (NSW) 17 at 42, 44; Rigby v Associated Newspapers Ltd (1966) 68 SR (NSW) 414 at 430-432, 438-439. 6. Thompson v Commissioner of Police of the Metropolis [1998] QB 498 at 513. 7. Law Commission, Aggravated, Exemplary and Restitutionary Damages (Law Com No 247) (1997), par 1.9. 8. Thompson v Commissioner of Police of the Metropolis [1998] QB 498 at 513; cf Broome v Cassell & Co [1972] AC 1027 at 1072, per Lord Hailsham of St Marylebone LC. 9. [1964] AC 1129.

Aggravated damages are given for conduct which shocks the plaintiff and hurts his or her feelings. Exemplary damages are awarded for conduct which shocks the tribunal of fact, representing the community [91] . Obviously the two affronts will often coincide and overlap. But in awarding an additional element in the plaintiff's compensatory damages as aggravated damages for such affront, the attention of the decision-maker must be concentrated upon the impact which the wrong had on the plaintiff and the particular injury done to his or her feelings.

Fleming, Law of Torts, 9th ed (1998), p 274; Salmond and Heuston, Law of Torts, 21st ed (1996), p 503.

In England [92] and Canada [93] , authority exists that claims for exemplary damages do not need to be pleaded and, by analogy, the same might be said of aggravated damages, being within a claim for compensatory damages, generally expressed. In Australia, a stricter approach has been taken to the pleading of aggravated damages [94] . It was not argued that any special rule or practice of pleading in South Australia governed the question in this case. Whilst each case depends upon its own circumstances, basic principle requires that, if a particular claim has not been in issue, and a case fought on that basis, a party should not be obliged to meet such a claim for the first time on appeal where the conduct of its case might have been different if notice of the claim had been given before the trial [95] .

Broome v Cassell & Co [1972] AC 1027 at 1083. Lord Hailsham proposed that the issue be referred to the Rule Committee and pointed out that there was much to be said for the view that in such a case the defendant should not be taken by surprise. See now Law Commission, Aggravated, Exemplary and Restitutionary Damages (Law Com No 247) (1997), par 1.22. 2. Starkman v Delhi Court Ltd (1961) 28 DLR (2d) 269 at 274; Paragon Properties Ltd v Magna Envestments Ltd (1972) 24 DLR (3d) 156 at 163-164; Cooper-Stephenson and Saunders, Personal Injury Damages in Canada (1981), p 690. 3. Cotogno v Lamb (noted in (1985) 2 MVR 480). On this point see the unreported reasons for judgment: Court of Appeal of NSW; 9 August 1985, at 7-8, per Mahoney JA (McHugh JA concurring). 4. Coulton v Holcombe (1986) 162 CLR 1 at 7-8.

The last consideration applies here. Had aggravated damages been sought by the appellant, the Commission's case could well have been different. It would have been entitled to explore, test and challenge suggestions of particular hurt to, and affront on the part of, the appellant. As it is, the appellant himself gave little evidence specifically, relevant to such questions. The differential entitlement to aggravated damages just seems to have been overlooked as it was at trial in Cotogno v Lamb and in many other cases before and since. To permit the matter to be ventilated for the first time in this Court would involve not only inefficiency and condonation of professional oversight. It would risk procedural unfairness to the Commission. Assuming that such damages were otherwise available to him, the appellant's belated application for an award of aggravated damages in the appeal should therefore be refused.

The foregoing analysis means that it was open to the primary judge and the Full Court to conclude that the appellant was not entitled to exemplary damages. Their reasoning on this issue was correct. To that extent, the appeal must be dismissed. However, there remains the appellant's complaint about the manifest inadequacy of the award of general damages for economic loss, past and future. Here, I consider that the appellant is on much stronger ground.

On the face of things, it might seem (as the Full Court observed) an unpromising case to reopen the primary judge's estimation of the economic impact of the injuries on the appellant. Judge Pirone said that the appellant had made "an unfavourable impression" [96] upon him and, in several places in his reasons, that he did not believe him [97] . Because the assessment of the economic consequences of an injury, especially in a person who has served various periods of imprisonment, involves evaluation which is difficult and disputable at the best of times, the primary judge's estimate of someone in the position of the appellant is usually of first importance. In such matters, appellate courts exercise restraint out of their respect for the advantages which the trial judge enjoys over the appellate courts in the estimate of the credibility of witnesses [98] . Nevertheless, the exercise of such restraint does not necessarily mean that the appeal is "hopeless" or "doomed to failure" as the Full Court suggested [99] . Three features of Judge Pirone's reasons provide the key to unlock the door of appellate intervention which would otherwise be closed by the stated assessments of the credibility of the appellant and his witnesses:

Judge Pirone made it plain that he preferred the evidence of the appellant's medical witnesses, Dr Ingman and Mr Reid. He only rejected the latter's opinion that the appellant's short-term memory problem was causally related to the subject incident "[f]or reasons which I give later" [100] . When those reasons are examined they are, with respect, unconvincing. Most especially, they depended, in large part, upon the judge's examination of the appellant's school records. The judge quoted from three school reports [101] . He extracted teacher comments to the effect that the appellant was finding it difficult to cope, sometimes lacked concentration, required frequent supervision and encouragement and "constant reminders to return notes from home". From these brief comments by teachers about the appellant, the judge felt able to conclude, despite the unanimous medical opinion, that the appellant's short-term memory problem was not related to the subject accident. He said that, in his opinion, it was "pre-existing and therefore not compensable". A fuller review of the school reports gives no objective foundation for this conclusion. In the case of a young Aboriginal student, who had been abandoned by his natural parents at birth and who was in a school with only one other Aboriginal where he was picked on, the school reports appear unremarkable. Woven through them are various positive comments about the appellant's friendliness, co-operative nature, improvement and effort to work to the level of his ability. To call the school records "appalling" as the Full Court did is unreasonable. To infer from them that the appellant was already stamped with a short-term memory problem appears completely unsafe. To allow them to reinforce an impression which, after injury, the appellant gave in the witness box involves suspect reasoning. It makes inadequate allowance for the fact that, objectively, the appellant had done reasonably well for himself, given his many disadvantages. He had completed school. He had started college. He had secured employment and was performing it satisfactorily until injured by Mr Bransden's driving.

Although the foregoing might not, of themselves, be sufficient to permit an appellate court to substitute a different view on the appellant's credibility and prospects from that expressed by the primary judge, a passage in the reasoning of Judge Pirone shows that the rejection of the appellant's credibility was not an opinion derived from the testimony of the appellant himself. Judge Pirone indicates expressly that up to a point towards the end of the appellant's cross-examination "I had formed a favourable impression of him" [102] . What caused him to change was the evidence of the appellant's father, described as "totally inconsistent" with that of the appellant himself. Whilst it was open to the primary judge to be impressed by the appellant's father, the latter's testimony was quite limited, doubtless because of the absence of a long term relationship between them. It seems to have turned, in the mind of the trial judge, upon the appellant's assertion that he had given up drinking alcohol completely and his father's denial of that fact. Such a contradiction seems scarcely sufficient to warrant changing a "favourable" impression of the witness to one of complete disbelief of his testimony and rejection of his evidence.

When, in these circumstances, regard is also paid to the testimony of the medical witnesses whose evidence the primary judge said he generally accepted, the impact of the appellant's injuries on his employment capacity take on a different quality. Dr Ingman, for example, said that the appellant was restricted in work requiring squatting or bending, heavy lifting and carrying. He also said that he would work more slowly. These are disabilities of crucial importance to the employability of a young Aboriginal man with no more than school education, effectively with little more to sell in the employment market than his labour. The judge preferred his own estimate of the appellant's prospects in life for that of the two psychologists whose testimony he otherwise said he generally accepted. Very properly, he put his concerns about the school reports to one of the psychologists, Mr Walsh. Although the latter's answers are quoted in the judge's reasons, I do not derive from them any support for the proposition that they demonstrated the kind of defects of intellect and character which the judge thought effectively doomed the appellant to a life much the same as that which had unfolded after injury: long periods of unemployment, interrupted only by periods in prison. On the contrary, Mr Walsh stated that, having reviewed the school reports, his opinion would have been the same. There was no evidence from the latter of any pre-injury brain damage. Instead, there was evidence that the appellant was trying hard at school. His sporting prowess and early quest for employment bear out this conclusion. Whilst further, more detailed, examination of the school history, beyond the brief reports used by the primary judge, might have been useful, Mr Walsh said that he "would still be of the opinion that the problem that I have seen is one which is caused by brain dysfunction" [103] , ie caused in large part in the subject accident. The provision of an allowance for future economic loss of an unskilled worker aged twenty-three at trial of only twice the sum provided for economic loss to the time to trial and amounting in all to only $30,000 appears on its face incongruous.

Gray v State Government Insurance Commission (unreported; District Court of SA; 28 June 1995) at 34. 2. Gray v State Government Insurance Commission (unreported; District Court of SA; 28 June 1995) at 18, 23, 24, 33, 34. 3. See, eg, Abalos v Australian Postal Commission (1990) 171 CLR 167 at 178; Devries v Australian National Railways Commission (1993) 177 CLR 472 at 479; Zuvela Pty Ltd v Cosmarnan Concrete Pty Ltd (1996) 71 ALJR 29 at 31; 140 ALR 227 at 229-230. 4. Gray v State Government Insurance Commission (unreported; Supreme Court of SA; 10 September 1996) at 1. 5. Gray v State Government Insurance Commission (unreported; District Court of SA; 28 June 1995) at 3. 6. Gray v State Government Insurance Commission (unreported; District Court of SA; 28 June 1995) at 4-5, 32-33. 7. Gray v State Government Insurance Commission (unreported; District Court of SA; 28 June 1995) at 20. 8. Cited by Judge Pirone: Gray v State Government Insurance Commission (unreported; District Court of SA; 28 June 1995) at 7.

The duty of the Full Court was to re-examine the complaints about the suggested serious inadequacy of the damages for economic loss, much as I have done [104] . The mention of estimates of credibility in the reasons of the primary judge does not insulate those reasons from proper analysis. When analysed, although correct on the issue of exemplary damages, they display serious errors in the treatment of past and future economic loss. It is not possible for this Court, which has not seen the appellant, to recalculate his damages. That must be done by a court which has those advantages but which does not engage in reasoning which, with respect, was seriously flawed.

I agree in the orders proposed by Gleeson CJ, McHugh, Gummow and Hayne JJ.

This is an appeal from the Full Court of the Supreme Court of South Australia dismissing an appeal from a judgment of Judge Pirone of the District Court of that State.

On 9 September 1988 the appellant, a young aboriginal man of sixteen years, was walking across a street in Salisbury, South Australia when he was struck by a motor car deliberately driven at him by another man for whose actions the respondent statutory insurer is liable. The appellant suffered personal injuries in respect of which he claimed, and was awarded in the District Court of South Australia, damages of $72,206.

The driver of the motor car was convicted of the offence of causing grievous bodily harm with intent to do such harm as a result of the running down of the appellant. He was sentenced to a term of imprisonment of seven years to be served on the expiration of other sentences which he was serving at the time of trial. The trial judge found, indeed it was not contested, that the driver acted maliciously.

After reviewing a number of cases and rejecting a submission by the respondent that exemplary damages were not available against a statutory insurer such as the respondent, the primary judge resolved to apply a decision of Nettlefold J in Watts v Leitch [105] in which the latter said:

The court has a discretion to award or refrain from awarding exemplary damages. This discretion must be exercised judicially and after a consideration of all the relevant evidence.

The fact that the defendant was fined in the Criminal Court must be taken into account when considering the question of exemplary damages.

In view of the punishment already imposed upon the driver, Judge Pirone dismissed the claim for exemplary damages, saying, in doing so, that, had he been minded to make an award of them, $10,000 would have been the appropriate measure.

The appellant appealed to the Full Court of the Supreme Court of South Australia on a number of grounds all of which failed. On the question whether exemplary damages should have been awarded Millhouse J (with whom Bollen and Williams JJ agreed) said this:

The only other matter is exemplary damages. Mr Stratford conceded that on the authority of Lamb v Cotogno [106] exemplary damages could have been awarded. It was a matter of discretion. He referred to the third edition of Luntz, Assessment of Damages in which the learned author, on the authority of Watts v Leitch [107] says that where a defendant has pleaded guilty to a criminal charge arising out of an incident in which a plaintiff was injured and been sentenced, there should be no exemplary damages, "since the defendant had already been punished." Just the situation here. The learned judge was aware of his discretion to award exemplary damages and chose not to exercise it in favour of the appellant. There is no reason why we should interfere. 1. (1987) 164 CLR 1 at 9. 2. [1973] Tas SR 16.

The grounds of appeal to this Court are as follows:

The Full Court was in error in failing to find that the appellant was entitled to exemplary damages in circumstances when he had suffered injuries intentionally inflicted by the use of a motor vehicle and in particular misapplied the principles relating to exemplary damages enunciated by the High Court in Lamb v Cotogno and in particular was in error in purporting to apply a decision of a single judge of the Tasmanian Supreme Court in Watts v Leitch in the context of punishment already suffered by the tortfeasor when assessing exemplary damages.

The Full Court was in error in failing to increase the damages for future economic loss to which the appellant was entitled when the amount awarded at first instance of $30,000 was to compensate a twenty-three year old man for the rest of his working life when his disabilities of both legs and the effect of a close head injury sustained when he was sixteen years of age were significant and severe.

The Full Court was in error in its decision by accepting the trial judge's finding that the head injury was significant and severe and the injuries to his legs gave rise to a permanent disability of 10 per cent loss of use of the right leg and 5 per cent loss of use of the left leg and then proceeding, without warrant to find there was little permanent disability.

The Full Court failed to rectify the error made by the learned trial judge in placing great weight on the content of the appellant's school reports of his two years' secondary school when assessing his loss of earning capacity.

Ground 1 does not directly raise the question of the role (if any) that exemplary damages should play in this country in the law of damages for which a statutory insurer is responsible but may call for some consideration of the application of Lamb v Cotogno [108] in the context of the South Australian motor vehicles insurance legislation.

The notion that compensation is to be assessed by an independent tribunal appointed and maintained by the state, according, and confined to the damage and loss actually sustained by a victim, evolved with the advance of civilisation over time. Private vengeance, of which the Sicilian vendetta is one example, was widespread until comparatively recent times [109] .

In early Roman law there existed the possibility of avoiding retaliation by agreement, to pay compensation. Provision for compensation was made by the Twelve Tables, which were wooden (and bronze) tablets erected in the market place in Rome in 451-450BC. One of their provisions allowed retaliation to be avoided by agreement. The relevant provision has been translated: "If one person maim another, let there be retaliation unless they come to an agreement" (see Thomas, Textbook of Roman Law (1976), p 349). In Justinian's Institutes, further reference can be found. "Under the Twelve Tables the penalty for this delict was, for a damaged limb, retaliation; and for a broken bone a sum of money appropriate to the great poverty of the people of those times. Later the praetors began to allow victims to put their own value on the wrong The penalties of the Twelve Tables have fallen into disuse, while the praetors' system - also called the honorarian - is frequently applied in the courts. The valuation of contempts rises and falls according to the victim's social standing and honour." (Book IV Title 4 from the translation by Birks and McLeod, Justinian's Institutes (1987), p 127.) The Roman law delicts retained until the very end a punitive character, requiring the wrongdoer to pay more than compensation (see Nicholas, An Introduction to Roman Law (1962), p 208).

As Kirby P points out in Cotogno v Lamb [No 3] [110] , punitive damages may have originated in England in an attempt by the courts to stamp out duelling.

(1986) 5 NSWLR 559 at 567. See also Lord Diplock in Cassell v Broome [1972] AC 1027 at 1127.

Modern civil law systems do not recognise exemplary damages. In Scotland, the leading case is Black v North British Railway Co [111] . Lord President Dunedin said there was: "no authority for any distinction between damages and "exemplary damages" in the law of Scotland. The very heading under which it is treated in our older books "Reparation" excludes the idea." [112]

[1908] SC 444. 2. Black [1908] SC 444 at 453.

Similarly, neither French [113] nor German [114] law recognises the concept of exemplary damages.

Article 1382 of the French Civil Code contains a general principle of liability to compensate for "damage" occasioned by fault. The availability, however of dommages moraux has been rationalised as being punitive in nature: see, eg, Savatier, Theorie des obligations, 3rd ed (1974). 2. Markesinis, A Comparative Introduction to the German Law of Torts, 3rd ed (1994), p 921.

In all but limited categories of cases, the House of Lords in Rookes v Barnard [115] abolished punitive or exemplary damages.

[1964] AC 1129 at 1226-1227. The three categories in which exemplary damages were held to be available are (i) oppressive, arbitrary or unconstitutional action by servants of the government; (ii) wrongdoing which is calculated to make a profit; (iii) express authorisation by statute.

The decision in Rookes v Barnard was not greeted with universal approval by text writers [116] , courts of other jurisdictions [117] , and all judges in the United Kingdom [118] .

See, eg, Tilbury, Factors Inflating Damages Awards in Finn (ed), Essays on Damages (1992), p 104, where the author refers to the "irrationality" of the Devlin categories. 2. In Canada, see Vorvis v Insurance Corporation of British Colombia (1989) 58 DLR (4th) 193; in Nigeria, see Eliochin (Nig) Ltd v Mbadiwe (1986) NWLR (Pt 14) 47 (on appeal to the Supreme Court); New Zealand, Taylor v Beere [1982] 1 NZLR 81; Ireland, Conway v Irish National Teachers Organisation [1991] ILRM 497. 3. See Cassell v Broome [1972] AC 1027 at 1114, 1119.

In the landmark decision of Uren v John Fairfax & Sons Pty Ltd [119] , signalling an intention of this Court to depart whenever it might be thought appropriate to do so from decisions of the House of Lords, the High Court decided not to follow or apply Rookes v Barnard [120] :

Upon full consideration, I do not think that the decision of the House of Lords [in Rookes v Barnard ] should force this Court to conclude that the law here is other than what it has for so long been taken to be, viz that where an action is based upon a personal wrong and the defendant has acted arrogantly, mindful only of its own interests and, to use the phrase of Knox CJ, "in contumelious disregard" of the rights of the plaintiff, "damages may be given of a vindictive and uncertain kind, not merely to repay the plaintiff for temporal loss but to punish the defendant in an exemplary manner" for his outrageous conduct. [121] 1. (1966) 117 CLR 118. 2. [1964] AC 1129, per Menzies J. 3. See Finlay v Chirney (1888) 20 QBD 494 at 504, per Bowen LJ.

In the United Kingdom itself there was division of opinion with respect to the theory and utility of exemplary damages. In Cassell v Broome , a case in which exemplary damages were claimed on the basis that a defamatory publication was calculated to make a profit for a publisher in excess of any compensatory damages that might be awarded, Lord Reid said [122] :

It [the concept of exemplary damages] is confusing the function of the civil law which is to compensate with the function of the criminal law which is to inflict deterrent and punitive penalties.

It cannot lightly be taken for granted, even as a matter of theory, that the purpose of the law of tort is compensation, still less that it ought to be, an issue of large social import, or that there is something inappropriate or illogical or anomalous in including a punitive element in civil damages, or, conversely, that the criminal law, rather than the civil law, is in these cases the better instrument for conveying social disapproval, or for redressing a wrong to the social fabric 1. Cassell [1972] AC 1027 at 1086. 2. Cassell [1972] AC 1027 at 1114.

Defamation cases, in which exemplary damages may turn out to be one of the only effective means of checking excesses of increasing and concentrated media power, and perhaps indispensable for that reason, provide the most frequent occasions for an award of them [124] . As the majority of the Court of Appeal of New Zealand in Daniels v Thompson [125] said:

Exemplary damages may fulfil a useful role in helping to control deplorable conduct outside the reach of the criminal law, such as in the area of defamation [126] . 1. In New South Wales, exemplary damages for defamation were abolished by the Defamation Act 1974 NSW, s 46(3)(a). There is a serious question whether juries, well aware of and anxious to show their disapprobation of the abuse of media power, may not simply have proceeded to award exemplary damages under the guise of aggravated compensatory damages. It is difficult otherwise to understand the magnitude of the awards of $600,000 in Carson v John Fairfax and Sons Ltd (1993) 178 CLR 44 and, on the retrial of the case, before a second jury of $1.3m (see Carson v John Fairfax and Sons Ltd (unreported; Supreme Court of NSW; 6 May 1994, Levine J)). As Viscount Radcliffe PC, GBE said: "A man may glitter with new and valuable ideas or burn with wise thoughts or passionate feelings, but if he is to communicate them to any circle wider than that of his own immediate friends he has got to render them acceptable to the real licensors of thought today, the editors, the publishers, the producers, the controllers of radio and television." ("Censors", The Rede Lecture at Cambridge University, 4 May 1961, in Lord Radcliffe, Not in Feather Beds: Some Collected Papers (1968), p 162.) See also Lewis, Make No Law: The Sullivan Case and the First Amendment (1991), p 207: "Television is even more of an oracle. Its pervasive reach has made national eminences of the network anchor men and women and the top reporters. To the public, that looks like power - and power sometimes exercised in an unaccountable, even arrogant way. The networks, big newspapers and magazines ask questions and demand answers but when anyone wants to know about their business, they wrap themselves in the First Amendment and refuse to answer. So it often appears to the public." Exemplary damages have also been abolished in running down cases and master and servant cases by the Motor Accidents Act 1988 NSW, s 81A, Workers Compensation Act 1987 NSW, s 151R, Motor Accident Insurance Act 1994 Q, s 55, Accident Compensation Act 1985 Vic, s 135A(7)(c) and the Transport Accident Act 1986 Vic, s 93(7). 2. [1998] 3 NZLR 22 at 43. 3. Taylor v Beere [1982] 1 NZLR 81 at 90, per Richardson J.

In XL Petroleum (NSW) Pty Ltd v Caltex Oil (Australia) Pty Ltd [127] , Brennan J discussed the modern rationale for exemplary damages:

As an award of exemplary damages is intended to punish the defendant for conduct showing a conscious and contumelious disregard for the plaintiff's rights and to deter him from committing like conduct again, the considerations that enter into the assessment of exemplary damages are quite different from the considerations that govern the assessment of compensatory damages. There is no necessary proportionality between the assessment of the two categories. In Merest v Harvey [128] substantial exemplary damages were awarded for a trespass of a high-handed kind which occasioned minimal damage, Gibbs CJ saying: "I wish to know, in a case where a man disregards every principle which actuates the conduct of gentlemen, what is to restrain him except large damages?"

The social purpose to be served by an award of exemplary damages is, as Lord Diplock said in Broome v Cassell & Co [129] , "to teach a wrongdoer that tort does not pay."

[1972] AC 1027 at 1130.
1. (1985) 155 CLR 448 at 471.
2. (1814) 5 Taunt 442 [128 ER 761].
3. [1972] AC 1027 at 1130.

Discussing this case in Lamb v Cotogno [130] , Mason CJ, Brennan, Deane, Dawson and Gaudron JJ said:

It was argued on behalf of the defendant that, since the object of exemplary damages is to punish and deter, it is inappropriate that they should be awarded where the wrongdoer is insured under a scheme of compulsory insurance against liability to pay them. Clearly there is strength in that submission, but in our view it cannot succeed. The object, or at least the effect, of exemplary damages is not wholly punishment and the deterrence which is intended extends beyond the actual wrongdoer and the exact nature of his wrongdoing [131] . It is an aspect of exemplary damages that they serve to assuage any urge for revenge felt by victims and to discourage any temptation to engage in self-help likely to endanger the peace [132] . This consideration probably had more force when exemplary damages were in their infancy, but it nevertheless remains as an aspect of them. It should, perhaps, be interpolated that exemplary or punitive damages are not without their critics who assert generally that they are both anachronistic and anomalous [133] . They nevertheless remain as part of the law. When exemplary damages are awarded in order that a defendant shall not profit from his wrongdoing or even where they are described as a windfall to the plaintiff - a description which the plaintiff is unlikely to accept - the element of appeasement, if not compensation, is none the less present.

So far as the object of deterrence is concerned, not only does it extend beyond the defendant himself to other like-minded persons, but it also extends generally to conduct of the same reprehensible kind. Whilst an award of exemplary damages against a compulsorily insured motorist may have a limited deterrent effect upon him or upon other motorists also compulsorily insured, the deterrent effect is undiminished for those minded to engage in conduct of a similar nature which does not involve the use of a motor vehicle.

(1987) 164 CLR 1 at 9-10. 2. See Uren v John Fairfax & Sons Pty Ltd (1966) 117 CLR 118 at 138; Luntz, Assessment of Damages for Personal Injury and Death, 2nd ed (1983), pp 66-67; Street, Principles of the Law of Damages (1962), pp 33-34; cf Costi v Minister of Education (1973) 5 SASR 328. 3. cf Merest v Harvey (1814) 5 Taunt 442 [128 ER 761]. 4. See, generally, Street, Principles of the Law of Damages (1962), pp 33-35.

Whilst the element of appeasement may be of considerable importance, with respect, for myself, I would doubt whether an award of exemplary damages payable by a statutory insurer of motor vehicle drivers, would be likely to have any deterrent effect upon those who might be minded to engage in conduct of a similar nature not involving the use of a motor vehicle.

In the New South Wales Court of Appeal in Cotogno v Lamb [No 3] [134] , Kirby P wrote a powerful dissenting judgment in which his Honour said:

Exemplary damages have been awarded in cases of trespass to the person [135] . It is therefore necessary to approach the present case on the basis that, under the common law, as applied in Australia, exemplary damages are generally available to the plaintiff suing, as the appellant did, in trespass unless the preconditions for an award of such damages are not made out, a defence is established disentitling the plaintiff or a statute sufficiently indicates the exclusion of the application of exemplary damages in the circumstances of the case. 1. (1986) 5 NSWLR 559 at 568. 2. Johnstone v Stewart [1968] SASR 142; Pearce v Hallett [1969] SASR 423.

I am of the opinion that exemplary damages are inappropriate and are not available in cases where the action concerns the death of or bodily injury to a person caused by or arising out of the use of an insured motor vehicle within the meaning of the Act. This conclusion is not inconsistent with the authority of the High Court or of this Court, on the subject of exemplary damages. The precise issue raised in this case has not previously been authoritatively determined. Its determination as I have proposed would at once effect the legislative scheme for compulsory third party insurance in motor vehicle cases, leave untouched the general law on exemplary damages, including in cases of trespass to the person, limit in an acceptable way the availability of anomalous exemplary damages, and avoid the absurd result of levying motorists generally by a derisory amount for the "punishment or deterrence" to be inflicted on a motorist such as the respondent. Furthermore, it would recognise that the basic social purposes served by exemplary damages are to impose punishment or deterrence on a person whose conduct in the future is likely to be modified by the award of exemplary damages against him and to deter members of the public tempted to act in a like manner by the effective public denunciation and punishment of unacceptable behaviour. An award such as is here proposed can fulfil none of these purposes. 1. Cotogno [No 3] (1986) 5 NSWLR 559 at 570-571.

There is much force in his Honour's observations. I would, with respect for myself, have been minded to adopt and apply his Honour's reasoning if I were free to do so because in my opinion the punitive purpose of exemplary damages is overwhelmingly the predominant purpose. But Lamb v Cotogno [137] is a recent unanimous decision of five Justices of this Court. Furthermore, I think that the statutory scheme here is a quite different one from that under consideration in Lamb v Cotogno, and, in my view this aspect of the case depends for its resolution upon the terms of the particular South Australian statute pursuant to which the damages are recoverable, the Motor Vehicles Act 1959 SA. It is therefore neither necessary nor appropriate to deal with the belated application by the respondent for leave to argue that Lamb v Cotogno should be reconsidered.

(1987) 164 CLR 1. See also Kars v Kars (1996) 187 CLR 354 at 378-382, per Toohey, McHugh, Gummow and Kirby JJ in which their Honours accepted that there will inevitably be anomalies in the assessment and awarding of damages in cases in which the wrongdoer is insured: especially will this be so where the insured is covered under a scheme of compulsory insurance.

There have been amendments made to the Act since the appellant was injured. It was common ground that the case and the appeals fell to be decided under the provisions in force at the time of the running down of the appellant and this appears to be so [138] .

See s 19 of the Statutes Amendment (Motor Vehicles and Wrongs) Act 1993 SA: "The amendments made by this Act do not affect a cause of action, right or liability that arose before the commencement of this Act."

Section 102 imposed on drivers an obligation to drive only insured motor vehicles on a road or wharf.

Notwithstanding any enactment, an insurer under a policy of insurance (whether under this Part or otherwise) in relation to a motor vehicle is, as from the date of the policy, liable to indemnify the persons or classes of persons specified in the policy in respect of any liability which the policy purports to cover.

(a) a person has obtained judgment in an action against an insured person for death or bodily injury caused by, or arising out of the use of, an insured motor vehicle; and

(b) before the action came on for hearing the insurer knew that the action had been commenced, the judgment creditor may recover by action from the insurer such amount of the money (including costs or a proportionate part of those costs) payable pursuant to the judgment as relates to death or bodily injury and has not been paid.

It seems to me that exemplary damages awarded to a person who has suffered bodily injury as a result of high handed [139] or malicious conduct prima facie may be said to "relate" to bodily injury within the meaning of s 112.

See Kirby P in Cotogno v Lamb [No 3] (1986) 5 NSWLR 559 at 574-575.

Section 124 required that the owner, person in charge, or driver of a motor vehicle involved in an accident give notice of particulars of it.

Section 124A made provision for recovery by the statutory insurer of damages for death or bodily injury caused when an insured has contravened the term of the policy or has driven the vehicle under the influence of a drug or alcohol:

(1) Where an insured person incurs a liability against which he or she is insured under this Part and the insured person has contravened or failed to comply with a term of the policy of insurance -

(a) by driving a motor vehicle while so much under the influence of intoxicating liquor or a drug as to be incapable of exercising effective control of the vehicle; or

(b) by driving a motor vehicle while there is present in his or her blood a concentration of.15 grams or more of alcohol in 100 millilitres of blood,

the insurer may, by action in a court of competent jurisdiction, recover from the insured person any money paid or costs incurred by the insurer in respect of that liability.

(2) Where an insured person incurs a liability against which he or she is insured under this Part and the insured person has, to the prejudice of the insurer -

(a) contravened or failed to comply with a term of the policy of insurance other than one referred to in subsection (1); or

the insurer may, by action in a court of competent jurisdiction, recover from the insured person so much of the money paid or costs incurred by the insurer in respect of that liability as the court thinks just and reasonable in the circumstances.

In this case the insurer chose to be joined as a defendant in the action pursuant to s 125A:

(1) Where an action for damages or other compensation has been commenced in a court against an insured person in respect of death or bodily injury resulting from the use of a motor vehicle, the court may, on the application of the insurer, join it as a defendant to the action.

(2) The court may not join an insurer as a defendant to an action under subsection (1) unless the court is of the opinion that -

(a) there is an actual or potential conflict of interest between the insurer and the insured in relation to the presentation of the defence; and

(b) the defence proposed by the insurer in relation to which the actual or potential conflict of interest arises is, in the circumstances of the case, not merely speculative.

(3) Where, in pursuance of this section, an insurer has been joined as a defendant to an action -

(a) the insurer will be taken to have directly assumed the liability (if any) of the insured person upon the claim in respect of death or bodily injury and, where such a liability is found to exist, judgment upon that claim shall be given not against the insured person but against the insurer;

(b) the insured person remains a party to the action only for the purposes of -

(i) defending a claim that is not a claim in respect of death or bodily injury; or

and where there is no such claim or counterclaim, the insured person ceases to be a party to the action;

(d) the insured person is, notwithstanding paragraphs (b) and (c), entitled to be heard in the proceedings upon any question related to the claim in respect of death or bodily injury;

(e) for the purpose referred to in paragraph (d), the insured person is entitled to be represented by counsel of his or her own choice, and the insured person's costs must be paid by the insurer unless, in the opinion of the court, there are special reasons for ordering otherwise; and

(f) the insurer may apply to call the insured person to give evidence and, in that event, the person will be called, or summoned to appear, as a witness and be liable to cross-examination by the insurer.

(4) No judgment or finding of a court in proceedings in which an insurer has been joined as a defendant under this section is binding in subsequent proceedings against the insured person under section 124A.

The language of s 125A(3)(a) is very wide. Here there was no doubt that the insured was potentially liable to pay exemplary damages. That liability was, in my opinion, a liability "upon [a] claim in respect of bodily injury" within the meaning of s 125A(3)(a).

Unlike some other States, South Australia has not enacted legislation expressly exempting statutory motor vehicle insurers from liability for exemplary damages [140] .

Section 81A of the Motor Accidents Act 1988 NSW: "A court shall not award exemplary or punitive damages to a person in respect of a motor accident." Section 55 of the Motor Accident Insurance Act 1994 Q: "(1) No award of exemplary or punitive damages may be made against an insurer on a motor vehicle accident claim. (2) However, if the court is of the opinion that the conduct of an insured person is so reprehensible that an award of exemplary or punitive damages is justified, the court may give a separate judgment against the insured person for the payment of exemplary or punitive damages. (3) An insured person is not entitled, under a CTP insurance policy, to an indemnity against an award of exemplary or punitive damages."

See also Workers Compensation Act 1987 NSW, s 151R; Accident Compensation Act 1985 Vic, s 135A(7)(c); Transport Accident Act 1986 Vic, s 93(7).

Accordingly, on the proper construction of the Motor Vehicles Act 1959 SA, in my opinion if the appellant had been able to make out a case for exemplary damages, he would have been entitled to recover them from the respondent statutory insurer and the fact that they are to be paid by a statutory insurer becomes irrelevant as a discretionary consideration. The insurer was, by the Act, placed in no better or worse a position than the driver with respect to any liability for exemplary damages. A court should therefore look at the conduct of the insured and matters peculiar to him or her and the plaintiff, and not the ultimate liability of the statutory insurer in deciding whether exemplary damages should be awarded.

At first instance Judge Pirone thought that the fact that the defendant motorist had been punished in the Criminal Court was the decisive discretionary consideration against an award of exemplary damages.

The fact of the imposition of punishment and its extent and impact on the defendant will always be relevant factors, probably on most occasions the major and decisive factors [141] . They may not however be conclusive ones for all cases. Other matters will require consideration: for example, the likelihood or otherwise of criminal proceedings in a particular case, the existence and effect of any victims compensation legislation [142] , the nature of the conduct of the defendant, the extent to which the plaintiff may be entitled to be appeased, and would benefit from being appeased, the means of the defendant, the deterrent effect upon the defendant, any profit derived by the defendant from the wrongdoing and the deterrent effect upon the potential wrongdoing community generally. A court would also be entitled to take into account that lesser punishments may have been, or might be imposed as a consequence of the acceptance of a lesser plea, the availability (for what might be sound policy reasons in and for the purposes of the criminal law) of a small penalty only, the desirability of the less condemnatory process by way of civil rather than criminal proceedings, the need to encourage compliance with the law [143] , and the fact that the possibility of any criminal sanction is illusory [144] . These matters are in my view relevant whether the cause of action is in trespass or negligence, although in the latter, particularly in accidental running down cases, occasions for an award of exemplary damages are likely to be extremely rare indeed [145] .

cf AB v South West Water Services Ltd [1993] QB 507 at 527, per Stuart Smith LJ: "In the present case there is the further complication to which I have already referred of the conviction and fine of the defendants. These problems persuade me that there would be a serious risk of injustice to the defendants in this case if an award of exemplary damages were to be made against them." 2. eg, Criminal Injuries Compensation Act 1978 SA. 3. See Law Commission Consultation Paper No 132, Aggravated, Exemplary and Restitutionary Damages (1993), pp 114-127; Law Commission Report No 247, Aggravated, Exemplary and Restitutionary Damages (1997), pp 96-97. 4. See Defamation Act 1889 Q, s 34 which operates to require a prior order of the Supreme Court for a defamation prosecution. 5. In Daniels v Thompson [1998] 3 NZLR 22, the Court of Appeal of New Zealand by a majority took the view that there should be an absolute bar on exemplary damages when criminal proceedings have been instituted and whether a conviction or an acquittal has resulted. Thomas J (dissenting), whilst accepting that an award of exemplary damages would be exceptional when criminal proceedings have been taken was opposed to the absolute rules proposed by the majority.

The trial judge here did make a provisional assessment of exemplary damages of $10,000 taking the relevant factors into account. However his Honour exercised the power which was undoubtedly available to him not to award any sum under this head of damages because of the criminal penalties imposed on the defendant. The Full Court did not think that the trial judge fell into error in doing so and nor do I.

The appellant was given general leave to appeal. His counsel launched an attack upon the trial judge's award of damages for future economic loss assessed at $30,000. The three principal bases for the attack were that his Honour misused, or in some way misunderstood the school reports on the appellant tendered in evidence; that his Honour overlooked or gave insufficient weight to the fact that the appellant was in employment at the time of his injury; and, that on its face, the sum of $30,000 is so grossly and manifestly inadequate as to call for increase.

These arguments were apparently pressed and rejected on the appeal to the Full Court.

It is now submitted that the Full Court fell into error in not accepting these submissions and in two other respects (i) by making a significant factual error in holding that there was "little permanent disability"; and (ii) in not discharging its entire appellate jurisdiction to consider whether there was a "wholly erroneous estimate of the damages" [146] .

Precision Plastics Pty Ltd v Demir (1975) 132 CLR 362 at 369.

It was also said that there was an inexplicable disproportion between the award for pre-trial loss of earning capacity ($15,000) for a period of 6.75 years (9 August 1988 to 28 June 1995) and $30,000 for the rest of the appellant's life. The appellant's counsel pointed out that it was proved that the appellant was in fact earning $250 per week (net) when he was injured.

In my view, the primary judge and the Full Court in reviewing his Honour's assessment of damages for future economic loss did fall into error in three respects even though from the school reports the appellant's pre-injury future looked unpromising: in treating the report cards as if they were indicative of an almost complete lack of earning capacity on the part of the appellant, despite the short periods that they covered and the appellant's age when they were made; by awarding an amount which is manifestly inadequate to compensate a relatively seriously injured young man without skills and entirely dependent upon his physical capacity to pursue remunerative employment; and, in failing to give weight to the relevant consideration that the appellant was in paid employment, albeit of limited duration when he was struck by the defendant's motor vehicle. Any impression of inadequacy is heightened by the obvious disparity between the amounts assessed for past and future economic loss.

The appellant tried to mount an argument that he was entitled to recover but had not been awarded aggravated damages. A claim for these was neither pleaded nor pursued in the courts below. Such a claim requires specific pleading, particulars and evidence directed to it. For these reasons the Court should not entertain this argument.

I would allow the appeal with costs and substitute for the orders of the Full Court an order that the matter be remitted to the District Court for a retrial confined to the issue of general damages for future economic loss. The respondent should also pay the appellant's costs of the appeal to the Full Court and I would order accordingly.

High Court of Australia Gleeson CJ McHugh, Gummow, Kirby, Hayne and Callinan JJ Gray v Motor Accident Commission [1998] HCA 70

[1964] AC 1129. 2. Rookes v Barnard [1964] AC 1129 at 1226-1227, per Lord Devlin. 3. Rookes v Barnard [1964] AC 1129 at 1227-1228, per Lord Devlin.

First, exemplary damages should be an exceptional remedy, rarely-awarded and reserved for the most reprehensible examples of civil wrongdoing which would otherwise go unpunished by the law. Secondly, their availability (and assessment) must be placed on a clear, principled basis. Thirdly, although flexibility is necessary, unnecessary uncertainty as to the availability and assessment of the remedy must be avoided. Fourthly, defendants must not be unfairly prejudiced. Fifthly, the impact on the administration and funding of civil justice should not be adverse. The last four of those aims are not controversial (although the way in which they are to be implemented may be). The first may excite more debate but it will serve as a useful framework for considering some of the issues that arise in this case. 1. In Australia, reference need be made only to Uren. In Canada, see, eg, Vorvis v Insurance Corporation of British Columbia [1989] 1 SCR 1085. In New Zealand, see, eg, Fogg v McKnight [1968] NZLR 330; Taylor v Beere [1982] 1 NZLR 81; and Donselaar v Donselaar [1982] 1 NZLR 97. 2. United Kingdom, Law Commission No 247 (1997). 3. United Kingdom, Law Commission No 247, Aggravated, Exemplary and Restitutionary Damages (1997), par 1.2. 4. United Kingdom, Law Commission No 247, Aggravated, Exemplary and Restitutionary Damages (1997), par 1.17.

See, eg, Kruber v Grzesiak [1963] VR 621; Letang v Cooper [1965] 1 QB 232.

See, eg, Midalco Pty Ltd v Rabenalt [1989] VR 461; Coloca v BP Australia Ltd [1992] 2 VR 441; Trend Management Ltd v Borg (1996) 40 NSWLR 500.

Outcomeappellant

Disposition:

Appeal allowed with costs. Order of the Full Court set aside. In lieu thereof, order that the appeal to the Full Court be allowed with costs and there be a new trial limited to the issue of damages other than aggravated and exemplary damages. Costs of the new trial in the discretion of the trial judge.

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