Johnson v Perez [1988] HCA 64;

Johnson v Perez [1988] HCA 64; - HCA 1988 case summary — Zoe

[42]

" I return to the question of whether for the

purposes of this case the court should try to

project itself back in time to a period when the

plaintiff might have been expected to have

brought the action on for hearing and if it had

come on for a hearing within the time expected

for uncomplicated cases in which a writ had been

issued in the middle of 1970. Again this

submission seems to me to be open to two

objections. The first is the notion that the

court can project itself back in time to imagine

as it were that it was deciding a case at a prior

point in time. Although I suppose it is

notorious that the level of damages has increased

markedly over the years, it is quite impossible

in my view for a tribunal of fact to say what it

would have awarded at such prior point of time as

contrasted with what it will award in respect of

the same facts in a verdict arrived at at the

present time. Would for instance one apply the

principles for assessing the present value of

future economic loss as applied since Todorovic

v. Waller [1981] HCA 72; (1981) 56 ALJR 59; 37 ALR 481?

Secondly, the hypothesis verges on the unreal. I

do not see how it is of any assistance to imagine

that the present case would have been reached for

hearing at the end of the period which normal and

uncomplicated cases took to be reached for

hearing at a time in the past. The defendants'

conduct took the case out of the normal category,

but they might have issued the writ late although

within time. They might have applied for an

extension within the fourth year. In any event

even if the statutory period of limitation had

not been pleaded, it is quite possible that the

case might have dragged on and on before it was

reached for hearing. It may be that the longer

the plaintiff waited for a hearing the higher an

award of damages was likely to be. It is quite

impossible to select a point of time in the past

when it could be said that the plaintiff's action

commenced by the writ issued on 26th August,

1970, should or would have been reached for

hearing."

[44]

14. When an action has been dismissed for want of prosecution due to the negligent conduct of a solicitor, the client has lost the opportunity to bring that claim to trial and recover damages in respect thereof. As already indicated, in some cases it may be appropriate to describe the loss as the loss of a chance for there may be various contingencies bearing on the likelihood that the plaintiff would have recovered judgment against the defendant and further that any such judgment would have been met. When those contingencies have been foreclosed by agreement or by the decision of the primary judge in the trial of the claim against the solicitor, the way is open for the judge to proceed to the assessment of damages for the loss flowing to the plaintiff by reason of the negligence of the solicitor. The first component in that assessment is the amount of damages likely to have been awarded by the court before whom the action against the employer (as in this case) would have come. That loss crystallizes when the action is dismissed for want of prosecution and is then capable of assessment. The process of assessment may well require a broad brush approach in determining when, in the absence of negligence, the action would have come to trial and the evidence bearing on the quantum of damages that would or should have been available for tender to the court. Undue emphasis should not be placed on the difficulties surrounding the selection of a notional trial date of the original action. In the majority of cases some variation in this regard will be immaterial; it will only be in those cases where a new and material fact emerges for the first time after the earliest notional trial date or where the relevant principles of law governing the assessment of damages are undergoing a process of change that it may be necessary to identify with some precision when the earlier action would probably have been determined. We return to this aspect of the matter later in these reasons.

[73]

7. A lump sum assessment of damages for personal injury embraces three components: pre-trial economic loss (if any), post-trial economic loss (if any) and a component for pain, suffering and loss of amenities. Pre-trial economic loss is assessed at the nominal amounts lost or expended. Post-trial economic loss may be assessed by reference to interest tables which furnish an appropriate factor by which contemporary nominal amounts being lost or expended are multiplied. For the reasons stated in Todorovic v. Waller, the 3% interest table is used and a factor is selected which is intended to ensure that, with the increments which can be earned from the sum awarded, the plaintiff can have in hand a sum corresponding with the actual economic losses he will suffer in the future at the times when he will suffer them. Economic loss which occurs between the time of an earlier assessment and the time of a present assessment is provided for in the earlier assessment at a discounted figure but it is provided for in the present assessment at an undiscounted figure. The difference between the two figures is the increment upon the discounted sum which could have been earned if the plaintiff had recovered a judgment at the earlier time. If, by his solicitor's negligence, the plaintiff did not recover a judgment at the earlier time, he lost the discounted figure plus the increment which the discounted figure could have earned, the sum of those figures being the undiscounted figure of the present assessment. Or, putting it another way, if he is awarded the economic loss he has actually suffered up to the time of the present assessment rather than the discounted figure of the earlier assessment, the difference is no more than the increment which the discounted figure could have earned. Post-trial economic loss is a smaller component in the present assessment than in the earlier assessment, the difference being due to the allocation of the economic loss suffered in the time between the two assessments to pre-trial economic loss. Reciprocally, the pre-trial economic loss component in the present assessment is larger than in the earlier assessment.

[79]

10. The first qualification relates to matters for which full compensation is allowed in the present assessment but which were mere contingencies at the time of the earlier assessment. A development in the plaintiff's condition which had not occurred but which was foreseeable at the time of the earlier assessment is taken into account in that assessment, but as a contingency; a development which has occurred by the time of the present assessment, on the other hand, is taken into account as a reality. And, of course, a development which had not occurred and which was not foreseeable at the time of the earlier assessment is not taken into account at all in the earlier assessment, but if it has occurred by the time of the present assessment it is taken into account as a reality. As the basic component of the loss caused by the solicitor's negligence is the amount which the lost cause of action would have yielded (either on judgment or compromise) at the earlier time, it would be wrong to cast onto the solicitor a liability to compensate the plaintiff for a development which occurred thereafter and for which the plaintiff would not have been compensated if the original action had been tried or compromised in due time. The damages which a court assesses in an action for a solicitor's negligence are not identical with the damages which the court would assess in an action for the tort which caused the plaintiff's personal injuries. In both cases, the court may have regard to relevant losses which have occurred prior to the assessment or which are then foreseeable. But in the former case, the relevant losses are the amount which would have been received as compensation by the plaintiff if his action for damages for personal injuries had earlier been tried or compromised (an amount which includes compensation for sequelae of the initial injury which would then have been known or foreseeable) together with the consequences of delay in receiving that amount; in the latter case, the relevant losses include all the sequelae of the initial injury which are known or which are foreseeable, whether or not those sequelae were known or foreseeable at an earlier time. Evidence of changes in the plaintiff's condition prior to trial is relevant in the latter case, but not necessarily in the former. That is because the amount which the plaintiff would have received at the earlier time must be ascertained by reference to the evidence which was then available. A plaintiff who would not have been fully compensated for the injuries tortiously inflicted if his solicitor had not been negligent is not entitled to full compensation if his solicitor is negligent. The solicitor cannot be called upon to underwrite a deterioration in the plaintiff's condition which was not foreseeable or not wholly foreseeable at the time when the original action should have been tried or compromised. But the present assessment of a plaintiff's personal injuries would allow fully for changes in his condition which have occurred after the time when he would have received compensation for his personal injuries and for which no allowance would have been made if the action had then been tried or compromised. The present assessment is, to that extent, an incorrect reflection of the loss suffered by reason of the solicitor's negligence. If the changes are significant, it would not be right to use a present assessment as the measure of the loss caused by a solicitor's negligence; if the changes are minor, some adjustment to the present assessment has to be made.

[93]

8. What, one is led to ask, are the reasons in logic or in common sense which justify a conclusion that a present-day award of compensatory damages should be calculated by reference to the more valuable currency of the past but be made payable in the debased currency of the present? What, one is also led to ask, are the reasons which justify the approach that a court must ascertain and apply some discount to adjust what the courts currently hold to be appropriate compensation for the non-economic consequences of physical injury to reflect perceptions and standards to which the courts no longer adhere? The answer to these questions cannot be that that conclusion or that approach is necessary to determine the true value of what the respondent lost in each case. It is not possible to identify precisely when his action against the relevant employer would have come on for hearing if it had not been dismissed for want of prosecution. The hearing may have been delayed for any of a variety of reasons such as the length of court lists, sickness or unavailability of witnesses or tardiness (not leading to dismissal of the action) of legal practitioners. The first hearing may have resulted in an erroneous award of damages, followed by appeal (or appeals) and a further hearing. Indeed, there can be no iron-clad guarantee that the action against the particular employer would, if it had not been dismissed for want of prosecution, have actually come on for hearing before the action against the relevant appellant solicitor was heard. Even if one could assume that the action against the particular employer would otherwise have been heard at some particular earlier time, there is no compelling reason in logic or in common sense why a lost right to damages in an amount to be assessed as at the time when it becomes payable under an enforceable order should be valued, for the purposes of quantifying compensation for its loss, otherwise than by reference to the level of awards prevalent at the time when the order for compensation comes to be made. To the contrary, as has been said above, it would be to affront logic to assess appropriate compensation for the loss of that right by reference to the level of awards made in the context of long outdated currency values but to make the compensation payable in the debased currency of the present. And, as has also been said above, it would be unfair to the plaintiff, as well as undesirable and, to some extent, impracticable from the point of view of the administration of justice, to require a court to assess the appropriate compensation for the loss of such a right by reference to perceptions and standards which were applicable years before the time at which an order for compensation is being made. In that regard, one need go no further than a case such as the present with distinct injuries allegedly caused by the separate negligence of different employers over a long period of years to illustrate the practical difficulty which would be involved in requiring a court to assess compensation for each lot of injuries by reference to the different notional times of hypothetical hearings.

At a glance

Court

Decision date

Before

Source

Judgment (121 paragraphs)

Johnson v Perez [1988] HCA 64; (1988) 166 CLR 351 (6 December 1988)

Parties

Legislation Cited (3)

Cases Cited (16)