Redding v Lee; Evans v Muller

Redding v Lee; Evans v Muller - [1983] HCA 16 - HCA 1983 case summary — Zoe

[16]

In the present state of the authorities the matter must be decided by the application of the principles which I have endeavoured to state. It seems to me, with all respect, that the Court inTuncel v. Renown Plate Co. Pty. Ltd. [50] fell into error in drawing an analogy between the case of unemployment benefits and one in which hospital or pharmaceutical benefits have been received. As I have already endeavoured to show, if an injured person receives hospital treatment, but pays nothing because the costs are met by a scheme of hospital benefits, he suffers no loss. He cannot claim as part of his damages a cost of hospital treatment which he did not incur. The plaintiff in Evans v. Muller did, however, suffer a loss: he lost his wages. The question in that case is whether, as against that loss, the defendant must be given credit for the benefit which the plaintiff received and which, when received, in fact had the effect of reducing the loss. However, and again with all respect, I cannot share the view of Blackburn C.J. in Canny v. John Pfeiffer Pty. Ltd. [51] that the judgment in Tuncel v. Renown Plate Co. Pty. Ltd. cannot be reconciled "with the proposition that loss of wages is a means of valuing the loss of the capital asset which is earning capacity". It is beyond question that the Court in Graham v. Baker was correct in saying that "an injured plaintiff recovers not merely because his earning capacity has been diminished but because the diminution of his earning capacity is or may be productive of financial loss" [52] . In assessing damages it is therefore not inappropriate to look at the economic loss in fact suffered or likely to be suffered by the plaintiff and to deduct from the amount of that loss any benefit that is proper to be considered in accordance with the principles laid down in National Insurance Co. of New Zealand Ltd. v. Espagne [53] . However, I do agree with the view which Blackburn C.J. suggested in Morley v. Murray [54] , that considerable practical difficulties would arise in taking into account the possibility that the plaintiff might in future receive unemployment benefit.

[18]

If in the present case we were to inquire what result would best accord with public policy, there would, on the one hand, be much to be said for the view that in reality the plaintiff's loss was reduced by the receipt of the unemployment benefits, and that since both the benefits and the insurance moneys which are used to meet the defendant's liability for damages are provided as a result of contributions made by the public in one form or another, the plaintiff should not be allowed to recover his loss of wages twice over. On the other hand, exactly the same might be said of a benefaction provided by a benevolent association financed by public contributions, and in such a case logic yields to charity. Further, it is also very much in the public interest that the assessment of damages for personal injuries should not become so complex that settlements are discouraged, trials are prolonged and appeals are multiplied. There is no doubt that to take unemployment benefits into account will add to the complications of an assessment. I have already referred to the difficulty of taking into account, in assessing future loss of earning capacity, the possibility that the plaintiff will or may receive unemployment benefits in the future. The benefit must be reduced if the income of the plaintiff exceeds quite a small weekly amount (s. 114 of the Social Security Act) and the effect of the award of damages itself on the plaintiff's income will be very difficult to predict. Yet there is no reason in principle to distinguish between present and future receipts of unemployment benefit in making an assessment. There are other complications in relation even to unemployment benefit received before trial. The plaintiff is not entitled to the benefit unless he has taken reasonable steps to obtain work (s. 107(1)(c)) and it therefore seems right to deduct from the benefit the costs of unsuccessfully endeavouring to obtain work. If the plaintiff does not apply for the benefit, it would seem to follow, as a matter of logic, that if the benefit is deductible from the damages, a failure to apply for the benefit will amount to a failure to mitigate damages. That view was not taken by Demack J. in Vassilef v. B.G.C. Marine Services (N.S.W.) Pty. Ltd. [55] , but if it were correct it would create additional problems in making the assessment.

[19]

However, in my opinion, rather than embark afresh on a consideration of what, on balance, might best suit the public interest, when such an inquiry is unlikely to lead to any definite conclusion, we should endeavour to maintain consistency in the application of the principle that has been established in the National Insurance Co. of New Zealand Ltd. v. Espagne [56] . In applying that principle it is clear that the unemployment benefit is conferred on a person who is entitled to it independently of the existence in that person of a right of redress against others. The entitlement to a benefit does not depend on the fact that the person concerned has been done any wrong; his unemployment may be due to the termination of his employment because of the depressed state of the public economy. Further, a person may be entitled to a benefit although he has suffered no injury; indeed, to be eligible for the benefit, the person concerned must satisfy the Director-General that he "was capable of undertaking paid work that, in the opinion of the Director-General, was suitable to be undertaken by the person" (s. 107(1)(c)(i)) and he must not be in receipt of an invalid pension. Moreover, the benefit may in some circumstances be paid throughout a particular period notwithstanding that the recipient has undertaken paid work during the whole or part of that period: s. 107(3). The benefit does not depend either on the fact that the person entitled to it has suffered a diminution of his earning capacity, or has lost wages that he was previously able to earn, since a person who has never shown any capacity to earn and who has never in fact earned anything may get the benefit. The benefit is intended to provide some relief against destitution for a needy person who is unemployed, whether or not his unemployment is due to an injury, and whether or not he has any cause of action for damages. In my opinion it should be concluded that the Parliament intended that unemployment benefit should enure entirely for the benefit of the person who receives it and should not relieve from liability any other person who may be liable to pay damages to him. The case seems to me to fall entirely within the principles enunciated in National Insurance Co. of New Zealand Ltd. v. Espagne and I am unable to see any valid point of distinction between the unemployment benefit now in question and the invalid pension considered in that case.

[116]

Section 115 (since repealed and re-enacted as Pt VII, div. 3A) required that the rate of the sickness benefit to which a person would otherwise be entitled be reduced by the amount per week of any payment by way of compensation in respect of the same incapacity. The section also provided that in the event of the sickness benefit being paid without such a reduction being made the recipient should be liable to make an equivalent repayment to the Director-General. The respondent argues that the absence of a similar provision in relation to an invalid pension of the kind in question here is a clear indication of the intention of the legislature that the latter is to be enjoyed by way of bounty in addition to damages. The argument is not without its force. However, the liability to reduction or repayment of a benefit is not the only way in which the non-bounty character of the benefit may be revealed. The legislature may choose in one case to require a set-off of the compensation payment against the statutory benefit. In that event, it will be the revenue that will be protected. In another case, it may choose to rely upon the courts in the application of common law principles governing the assessment of damages to ensure that the plaintiff is not over-compensated. In such a case, the revenue will remain the poorer, but the award of damages will be less. As I have indicated, I regard the provisions of the Act relating to unemployment benefits as reflecting a legislative intention of this kind and the same may be true of the provisions with which we are concerned. It is no longer always correct to describe such a result as operating to the benefit of a wrongdoer. In these days when compulsory insurance covers the bulk of personal injury cases the reality is that there is a public policy significance attaching to the size of awards. The burden of payment of such damages is now borne largely by the premium-paying community as a whole: Lincoln v. Hayman [44] ; Atlas Tiles Ltd. v. Briers [45] ; Parry v. Cleaver [46] . I doubt whether it is helpful to seek from the Act an explanation of the differing procedures that attend different benefits; it may be pertinent, as counsel for the appellant suggests, to note the diverse legislative history of the benefits in question: Invalid and Old-Age Pensions Act 1908 Cth; Unemployment and Sickness Benefits Act 1944 Cth; Social Services Consolidation Act 1947 Cth. The discretion of the Director-General to require a refund, in whole or in part, of benefits paid where compensation has also been received in respect of the one incapacity is presently confined to sickness benefits. Whether or not the legislature should extend that discretion to encompass other pensions and benefits is a vexed question. The administrative complexities attending such a scheme could be very substantial. On the other hand, a clear expression of a legislative intent that a particular benefit is not intended to be by way of bounty, coupled with the existing discretions to control the grant and rate of benefit received after the making of an award of damages, would allow the courts when applying the common law principles governing compensation for injuries received to take account of any benefits received prior to the award.

[127]

If a person upon whom a personal injury is tortiously inflicted (whom I shall call hereafter "the plaintiff") suffers a loss of income from employment as the result of the injury, he or she may become qualified to receive a pension or benefit which will make up some or, in particular circumstances, all of the lost income. Thus, if the plaintiff is a man who has attained the age of 65 or is a woman who has attained the age of 60 or is a class A, class B or class C widow as defined in Pt IV of the Act, whose income from employment debars him or her from receipt of an aged pension or a widow's pension, or from receipt of a full aged or widow's pension, as the case may be, and if that person loses that income because of a personal injury, he or she may be able to reduce the net loss of income by applying for and receiving an aged or a widow's pension or a larger aged or widow's pension (see the income tests in ss. 28 and 63). Or, if the plaintiff is above the age of 16, is not receiving an age pension (s. 24(1)) or a widow's pension (s. 81(1)), and if personal injury renders him or her permanently blind or permanently incapacitated for work to a degree not less than 85 per cent, he or she is qualified to receive an invalid pension (ss. 23, 24) subject to an income test (s. 28). Or, if the plaintiff has attained the age of 16 but being a man has not attained the age of 65 or being a woman has not attained the age of 60, if he or she is not receiving a pension or a sheltered employment allowance and if he or she satisfies the Director-General of Social Security that the personal injury has incapacitated him or her for work during a particular period whereby some income has been lost and that the incapacity is of a temporary nature, he or she is qualified to receive a sickness benefit (s. 108) subject to an income test (s. 114). A sickness benefit may not exceed the beneficiary's lost salary, wages or other income (s. 113). Or, if the plaintiff's personal injury results in his losing his employment and if he, though willing and capable of undertaking suitable paid work, is unable to obtain such work after taking reasonable steps to do so, he is qualified to receive an unemployment benefit (s. 107) subject to an income test (s. 114). An invalid pensioner or a claimant for an invalid pension, who is likely to derive substantial benefit from treatment and training under Pt VIII, may be selected as a person eligible to receive such treatment and training as the Commonwealth provides (ss. 135(1)(a)(i), 135A(1)). Similarly, a person receiving or claiming an unemployment or sickness benefit who would be likely to become unemployable without that treatment and training may be selected as an eligible person (ss. 135(1)(a)(ii), 135A(1)). If a plaintiff is so disabled by his personal injury that he is qualified to receive an invalid pension or if the Director-General is of opinion that, without sheltered employment, he would become permanently incapacitated for work to a degree of not less than 85 per cent, he is qualified to receive a sheltered employment allowance (ss. 133C, 133E). "Sheltered employment" is paid employment for disabled persons provided by approved organizations (ss. 133C(1), 133D). Each of these pensions, benefits or allowances gives a measure of income security. Each is a benefit or subvention made available by the state to a person eligible to receive the particular pension or benefit, whether or not a wrongdoer has brought about the condition or circumstance which makes that person eligible.

[130]

If the injured plaintiff has availed himself of these, he cannot establish or calculate his damages on the footing that he did not do so. That is because damages for loss or diminution of earning capacity or for the creation of a new need for services are to be assessed according to the financial loss thereby produced (Graham v. Baker [50] ; Griffiths v. Kerkemeyer [51] ). But subventions which exhibit the relevant "distinguishing characteristic" fall outside the rule. They are exceptions to the rule ordinarily applied to subventions that are available to people generally. Windeyer J. in Espagne's Case stated the exception in these terms [52] : In assessing damages for personal injuries, benefits that a plaintiff has received or is to receive from any source other than the defendant are not to be regarded as mitigating his loss, if: (a) they were received or are to be received by him as a result of a contract he had made before the loss occurred and by the express or implied terms of that contract they were to be provided notwithstanding any rights of action he might have; or (b) they were given or promised to him by way of bounty, to the intent that he should enjoy them in addition to and not in diminution of any claim for damages. In both cases the decisive consideration is, not whether the benefit was received in consequence of, or as a result of the injury, but what was its character: and that is determined, in the one case by what under his contract the plaintiff had paid for, and in the other by the intent of the person conferring the benefit. The exception may be stated too widely here for it is doubtful whether the exception includes the case where the third party benefactor has an independent right of direct recourse against the wrongdoer to recover the amount of the benefit conferred (Treloar v. Wickham [53] ; Griffiths v. Kerkemeyer [54] ). However, that is not a matter for present consideration. The present enquiry is whether the intent of the person conferring the benefit - that is, the intent of the legislature - is that a plaintiff should enjoy payments by way of invalid pension or by way of unemployment benefit in addition to and not in diminution of damages. 1. (1960) 105 C.L.R., at p. 573. 2. (1960) 105 C.L.R., at p. 573. 3. (1961) 106 C.L.R. 340, at p. 347. 4. (1977) 139 C.L.R. 161, at p. 165. 5. (1960) 105 C.L.R., at pp. 599-600. 6. (1961) 105 C.L.R. 102, at p. 122. 7. (1977) 139 C.L.R., at p. 178.

[136]

The unemployment benefits payable by the Commonwealth and the compensation payable by the tortfeasor are concerned with the same subject matter, namely payment for periods when the plaintiff was in fact not working. The actual amounts payable were arrived at by the same mode of calculation for both payments. Both are based directly on the precise periods the plaintiff was not working. They would be similarly calculated on a weekly rate. The difficulty with this approach is the absence of a sufficient ground to distinguish unemployment benefits from invalid pensions or sickness benefits. In Tuncel's Case the Full Court was able to distinguish Espagne's Case [58] only by construing what was said in the latter case as referable only to a blind pension that was unaffected by an income test [59] - a distinction which, in my respectful opinion, is not borne out by a reading of the judgments. Invalid pensions and sickness benefits, as well as unemployment benefits, are "concerned with the same subject matter" as compensation. There is no material distinction between the factors referred to in determining the statutory test of incapacity for work and the factors referred to in ascertaining the measure of damages in tort for destruction or impairment of earning capacity. In those provisions of the Act where invalidity or sickness or injury causing incapacity for work is specified as an element of qualification to receive a payment (ss. 23, 24(1) and 24A relating to invalid pension; s. 108(1)(c) relating to sickness benefit), the state of the labour market reasonably accessible to a claimant is an indispensable consideration in ascertaining his qualification. We were referred to a decision by the Administrative Appeals Tribunal (Re Panke and Director-General of Social Services [60] ) where the relevant provisions of the Act have been thus construed, and subsequent decisions of that Tribunal have confirmed the administrative direction then given. The same consideration applies when a court is assessing a plaintiff's damages in tort for destruction or impairment of earning capacity. 1. [1976] V.R. 501. 2. [1976] V.R., at p. 509. 3. (1961) 105 C.L.R. 569. 4. [1976] V.R., at p. 508. 5. (1981) 4 A.L.D. 179.

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