RTA v CREMONA

Mrs Cremona was also awarded costs on a party/party basis to 25 July 1995 and indemnity costs from 26 July 1995. 5 The RTA has appealed from his Honour's decision and Mrs Cremona has cross-appealed.

Judgment of 20 June 2000 6 The motor vehicle accident occurred when Dr Cremona's car was travelling in a north-bound lane on the expressway. The car struck the rear of a large truck driven by Mr Capelo. At the time the RTA was carrying out road works on the south-bound carriage of the expressway. These works involved stripping the road surface and loading the spoilage into trucks, including Mr Capelo's truck, for the spoilage to be taken away. 7 Dr Cremona was born in Malta on 9 September 1954 and Mrs Cremona in Finland on 20 April 1964. They were married on 10 September 1988. At the date of judgment, the first child of the marriage, Sarah, was attending the local Montessori School and was doing extremely well. The second child of the marriage, Alex, also attended the school and was progressing above his age level. He was a highly motivated and articulate child. 8 From the time he left the University of New South Wales with an honours degree in medicine at the end of 1978 Dr Cremona had practised as a general medical practitioner. On 1 October 1985 he began practice on his own at Dapto. He held various academic and professional positions and was regarded as one of the hardest working general practitioners in New South Wales. His Maltese background enabled him to expand his clientele in the Maltese community which is significantly represented in the Wollongong/Illawarra area. He carried on an extremely high level of community and medical activity. Dowd J described in some detail the various programmes that Dr Cremona was involved with. 9 His Honour accepted that Dr Cremona's medical knowledge and ethical standards were very highly spoken of. He had a very high level of patient skills and community respect. He was popular, enjoyed the confidence of his patients and commanded a range of surgical and other medical skills. Dowd J said: "15 The overriding nature of the practice however was that of a doctor who carried out vast numbers of consultations where such consultations were clearly much shorter than the average consultation but there is no evidence that he was any less skilful than a doctor that took longer in consultation. Dr Cremona worked from very early in the morning to very late in the afternoon. The evidence showed that his waiting room was almost always fairly full with patients waiting. 16 The evidence before me showed that his patient numbers increased to more than double in the period 1986-1993 notwithstanding that he already had a very high patient load and that during almost the same period his consultation rebate from Medicare also doubled. From 1985 to 1993 the number of distinct patients approximately doubled in number as did the number of services rendered. In his practice Dr Cremona was assisted from time to time by a number of locums and assistants from 1985 until May 1993. 17 Dr Cremona's surgery in Bann Bann Street, Dapto comprised a very large waiting room off which were two consulting rooms, one used by Dr Cremona, the other used by any other doctor who worked in the practice and was otherwise used for persons having procedures such as an ECG or where someone was ill and needed to rest and lie down. 18 There was adequate provision on the premises for a partner or employed doctor to work with Dr Cremona. The subject building had other medical professionals that could provide related medical services for Dr Cremona's practice. Dr Cremona had a bulk billing practice as did the sixteen other doctors that carried on general medical practice in Dapto." 10 Since 1987, before his marriage, Dr Cremona had engaged in substance abuse. Initially this derived from a need to ease the pain of migraine headaches. The abuse progressed from the use of heavy pain killers such as Panadeine Forte to the use of pethidine and morphine, Schedule 8 drugs in the Poisons List (s8 of the Poisons & Therapeutic Goods Act 1966), which are issued to all approved prescribing doctors for the "Doctors Bag". It was said that he did this on a recreational basis. Ultimately the receptionist found Dr Cremona in his surgery after he had injected himself with pethidine. In December 1990 he was admitted to Wandene Private Hospital at Kogarah for assessment and treatment. This was successful. He thereupon voluntarily relinquished his approved status to prescribe Schedule 8 drugs and came under the supervision of the impaired doctors scheme. Dowd J observed that the relinquishment may have in fact amounted to no more than accepting that inevitably approval to prescribe Schedule 8 drugs would have been revoked. Pharmacists generally are notified of a doctor's inability to prescribe addictive drugs in Schedule 8. Dowd J said this made it very difficult for the doctor to obtain such drugs. Dr Cremona neither regained nor apparently sought to regain approval to prescribe such drugs, even though he was entitled to apply after two years. Later in his reasons Dowd J dealt with the likelihood of relapse. 11 Dr Cremona made arrangements to reduce the incidence of income tax and in particular had a superannuation arrangement with a fund known as Scottish Amicable. He set up a proprietary company "L J Cremona Pty Ltd" of which he and his mother were directors. Mrs Cremona became a director in the last year before Dr Cremona's death as a result of a deterioration in the health of Dr Cremona's mother. Dr Cremona set up another company "Caldety Pty Ltd" as trustee for the Cremona Family Trust, a trust designed to employ staff of the practice and to minimise the incidence of tax. 12 Dr and Mrs Cremona had previously jointly owned residential premises at Kieraville outside Wollongong and had bought three quarters of an acre at Cordeaux Heights which was closer to Dapto in what was described as the "treed" area in the foothills of Mount Kembla. After Christmas 1992 construction of a dwelling on this land began. By the end of May 1993 the first floor brickwork was complete. To do this work Dr and Mrs Cremona borrowed an amount in excess of $100,000 as bridging finance. On Dr Cremona's death, Mrs Cremona acquired full ownership of the premises. 13 Not surprisingly Dowd J used actuarial calculations in assessing damages. The assessment began with a consideration of the credibility of Dr Cremona and of Mrs Cremona. One issue was the likelihood that their marriage would have survived. About Dr Cremona particular matters in issue were his future intentions had he lived, his likely career path and the effect of his propensity for drug abuse. The RTA submitted that at the time of Dr Cremona's death he was suffering from stress and over-work, and that Mrs Cremona had significantly inflated the amount of additional work that he would have undertaken and income that he would have earned at a time when Dr Cremona was endeavouring to preserve his marriage and change his ways by cutting down on hours. About Mrs Cremona a particular matter in issue was her prospects of re-marrying. Much cross-examination was directed to her credit. Mrs Cremona was said to present as someone who was very conscious of the relevance of the prospects of remarriage to the amount of damages recoverable and her evidence reflected this. Dowd J said that Mrs Cremona appeared to be going to some trouble to emphasise the matters that assisted her claim such as Dr Cremona's diligence and competence and how difficult she was and therefore how unlikely to remarry. His Honour said: "Notwithstanding such emphasis I do however accept that the plaintiff had, in her evidence, a present intention not to marry." 14 In some respects Dowd J found that Mrs Cremona was seeking to create a more rosy picture than the reality and endeavouring to cover up the fact that she had considered Dr Cremona was "very resourceful" in obtaining drug supplies. Dowd J said: "I consider that the weight of the plaintiff's evidence was at all time coloured by the consciousness of the significance of her evidence on matters such as likelihood of resumption of work and likelihood of remarriage." 15 The RTA submitted that Dr Cremona had been abusing drug substances covertly during the whole period of his marriage and deceiving Mrs Cremona. Even when he was finally exposed he lied to her. However, Dowd J did not accept that, once Dr Cremona had surrendered his approved status to prescribe Schedule 8 drugs, in a relatively closed area such as Dapto he would have been able, without appropriate prescribing powers, to obtain pethidine or morphine or other such medication used for abuse without being detected by the pharmacists who had been notified of the withdrawal of those prescribing powers. 16 Under the heading "Heads of Damages" Dowd J dealt first with contingencies. His Honour said: "41 The plaintiff's submission is that if you examine the various factors going to make up the usual 15% contingencies and take out strikes, unemployment and the like, the chance of Dr Cremona having unemployment was virtually nil except for a slight chance of relapse into drug dependency but contends that excluding mortality and including the possibility of drug relapse the provision should be no more than 5% and it is submitted that this is supported by Dr Cremona's excellent health. 42 The evidence in my view is to the contrary. There is evidence that notwithstanding a habit of having little sleep ….. Dr Cremona was working very long hours, a circumstance likely to create stresses that affect health. It is clear that Dr Cremona had difficulty coping with dying patients as deposed by his solicitor Michael Campbell that primarily being as a result of being emotionally close to patients. 43 The marriage was generative of stress and was likely to continue to do so notwithstanding the adjustments that had been made but the overriding concern that I have is that someone who generates a serious level of migraine and is a poly-substance abuser over a period of four years whilst building up his substantial medical practice has a risk factor which must be taken into account when assessing vicissitudes. 44 Dr Cremona was pushing himself in his work and was likely to be suffering psychologically and had shown a propensity for drug-dependency over a significant part of his life prior to discovery. He is statistically likely to relapse because of the stresses although I will deal specifically with that likelihood of relapse under another heading. I do consider that the vicissitudes contingency factor, which I would agree ought to be low for a self employed general medical practitioner in private practice is in the particular circumstances of Dr Cremona's history [sic], it is proper to calculate a 15% contingency factor for vicissitudes." 17 Next his Honour turned to consider Mrs Cremona and the submission that the only likely vicissitude was remarriage. Notwithstanding a serious medical problem she had recently dealt with, she was otherwise in good health. Dowd J said: "46 I accept that it is proper for a reduction from the normal vicissitudes of 15% when taking into account the normal factors of an employee which is not her circumstance and since she has a fairly wide range of skills and I consider that the proper allowance for vicissitudes is 7.5% being half of the normal contingency factor. It is submitted by the plaintiff that the children's contingency allowance should be minimal as mortality is the only real factor and that constitutes a very small percentage. It is put by the plaintiff that leaving home and severing connection with family would be a tiny contingency. 47 The excellent performance of both children academically to this stage coming from a family with a high achievement tradition makes it unlikely that the children would not follow through and remain dependent on the parents. [H]owever to adopt a one in fifty probability that something such as a child leaving home or dropping out of school that will happen is a fairly low order of probability and it seems to me that each child should have a contingency factor of 2%" 18 Dowd J next considered the strength of the marriage. The RTA submitted that there were poor prospects that it would have survived and suggested, as a fact, that one marriage in three ended in divorce. There were various apparent problems in the marriage. Mrs Cremona said that the movement to Wollongong was away from her social circle and she had to make sacrifices. Dr Cremona tended to place her second after his compulsive working activities. Another factor was the deceit over his drug abuse. Mr Sam Borenstein, a consultant clinical psychologist, whom the parties had consulted, had taken the view that they had a lot of issues to resolve because Dr Cremona was not likely to change his habits. The RTA relied on Mrs Cremona's own self description as acrimonious and a "black and white person" and that she was not particularly happy. Dowd J accepted that she was very independent and did not cohabit very well. The marriage was not necessarily always congenial. Dowd J said: "52 It is necessary, on the other hand, to look at the fact that the parties were successfully negotiating the acquisition of a very nice new home, that they would soon have it paid off and [would] not therefore be subject to the financial pressures that very much impinge upon matrimonial accord in our society. Dr Cremona had started to have increased social and recreational activity with the plaintiff and they were spending and organising holidays together and went bushwalking. 53 The significant evidence however is that the parties had been through a most cathartic episode in the discovery of the drug taking and the acknowledgment of the final admission of the extent of the problem. Also the way in which Dr Cremona, notwithstanding spending more time with his family, continued to operate on all the evidence very efficiently in his practice. Marriage[s] are more fragile at an earlier than at a later stage and the evidence in this case leads me to the view that Dr Cremona's attitude towards the sanctity of marriage and the obsessive success orientation of both parties means that notwithstanding the difficulties that I have outlined, I find that on the evidence the marriage was likely to survive [sic]. 54 Notwithstanding the plaintiff's colouring of her evidence I nonetheless accept that, after the difficulties which they had, the parties were better able to cohabit. As submitted by Counsel for the plaintiff, I found Dr Cathy Allen, an impressive witness, I accept her view that the marriage difficulties had been resolved. I also accept the submission that Dr [sic] Borenstein's opinion could be relied upon when he expressed the view that the plaintiff and Dr Cremona were determined to make the marriage work." 19 About the chances of Mrs Cremona's remarriage after her husband's death, Dowd J said: "55 The plaintiff is a difficult forthright determined and strong willed woman who would not make an easy marriage partner. I accept that she considers that she will not re-marry and that she is unwilling to enter into another matrimonial venture. It is submitted on behalf of the plaintiff that there is a low percentage chance of remarriage particularly in the light of the highly successful high performing doctor to whom she had been married. It is unlikely that she would find someone who is able to provide as he did." 20 His Honour referred to long established authority that the revived capacity of a widow to marry again has been regarded as having some value in the assessment of damage in fatal accident cases but went on to comment that almost all of the authorities related to the "home maker-breadwinner" relationship and bore little similarity to the present proceedings. After referring to Dominish v Astill (1979) 2 NSWLR 368 Dowd J said: "60 Notwithstanding the views expressed by the plaintiff and the fact that there were two young children of the marriage and the clear difficulties the plaintiff has in working in a marriage relationship, I find that there still exist a real prospect of remarriage which the court is obliged to take into account. 61 The difficulty in this particular case is that the relationship which the plaintiff and Dr Cremona had was of an exceptionally high income earning family where both parties have a capacity to earn substantial income. Most of the normal fiscal needs were being provided for the future, particularly superannuation." 21 After references to Horton v Byrne (1956) 30 ALJ 583 at 585 and Jones v Schiffmann (1971) 124 CLR 303 the trial Judge continued: "64 The plaintiff is now thirty six and if I may delicately say is neither young nor old. It seems to me that the prospect of remarriage would be to someone of professional standing and higher income as being more likely. Nonetheless the independence of the plaintiff in fiscal and personality terms means any contribution to her future support is likely to be relatively small. I consider that a proper provision is to provide a value on her prospect of remarriage at 2% but 2% only of the loss of future economic loss only, not of the total amount of damages, and excluding superannuation." 22 The submissions on future economic loss were directed to the growth of Dr Cremona's practice and its future development. While high growth was demonstrated in the financial years of 1988 to 1993 the RTA submitted that there was little capacity to increase the amount of hours spent by Dr Cremona and in light of the stresses which he manifested in his need for more holiday time and recreation time to spend with his family it was hard to see how much more income could be earned. Specifically Dowd J rejected a report of Dr Gadiel of 9 September 1996. His Honour described as nonsense the suggestion that Dr Cremona might on advice from the Housing Insurance Corporation Professional Services Division be obliged to reconstruct his modus operandi to conform with mainstream general practice behaviour. The Housing Insurance Corporation, on the evidence, had inspected the practice and was perfectly satisfied with the way in which it was being conducted. Dowd J concluded: "69 Notwithstanding the intensive level of the plaintiff's work, it is however difficult to see that the plaintiff would not continue some level of growth. Senior Counsel for the plaintiff reminds the Court that Dr Cremona saw 117 patients on his last day of practice. I consider that the period of five years nominated by the plaintiff that there continue to be growth initially at a higher percentage tapering off to the end of the period but that a proper assessment of the increase for that period would be to average growth at 2% until 30 June 1998. I consider that the practice would have thereafter plateaued until Dr Cremona was aged 65 and, in accordance with the evidence before me of the Reark Research Report 1994, as to the normal practice of general practitioners I consider that he would have worked part time for the years 65 to 70 and that a proper estimate of the income earned by him in that five years would be one third of his pre-existing practice income." 23 Taking account of Medicare increases and the RTA's agreement with the calculation of $345,283 as the annualised profit for the year ended 30 June 1993 less $25,000 for superannuation contribution, Dowd J said that that figure less tax should be used as the basis for calculating past and future loss of income. This would have to be discounted in accordance with the 3% tables. 24 Mrs Cremona submitted that Dr Cremona was considering changing from a bulk billing practice to a full charging practice. Dowd J said: "73 In a fairly discreet [discrete] area such as Dapto with the other sixteen doctors continuing to bulk bill in a lower socio-economic area I think it is likely [my emphasis] notwithstanding that I accept the relative price insensitivity of a change from bulk billing to a full charging practice that Dr Cremona would have continued to bulk bill. The convenience of so doing as compared with the problems of collecting fees from patients has certain offsetting advantages to the increased gross profit that would come from the charging of AMA recommended rates." [In the original form of the reasons for judgment the word 'likely' where emphasised above in this quotation was 'unlikely'. Dowd J corrected this when it was brought to his attention]. 25 Another question was whether Dr Cremona would take on a partner in the practice. His Honour said: "74 ……The advertisement which was admitted in evidence for someone to work in the practice and the evidence of the various witnesses including the plaintiff lead me to the view that it is likely that Dr Cremona would eventually succeed in taking a partner into his practice. 75 The partner would enable him to ease his own workload but would give the advantages of sharing of costs of the practice would bring financial benefit demonstrated by the evidence [sic]. I do not however consider that a partner would come in on a small share such as thirty percent which would mean that Dr Cremona would be earning two and one third [more] than the other partner. It is likely ultimately that another partner would build up a share of the practice and would build up the number of patients to an extent, not approaching the level of Dr Cremona but nonetheless a substantial proportion. 76 I consider that it is likely that a substantial partner would acquire a forty percent share in the practice. It may be that this would initially be at a smaller percentage and later in life a somewhat higher percentage but I consider that a forty percentage sale is a proper basis for projecting the future of the practice." 26 On 19 July 2000 Dowd J gave further reasons for judgment which included the following: " Deceased's income after sale of 40% of practice 5 The plaintiff's written submissions calculate a continuation of increase Dr Cremona's earning rate and eventual plateauing of income as I have indicated in my judgment of 20 June 2000 both before and after the period of the sale of 40% of the practice. 6 It is submitted by the defendant that the judgment requires clarification as it is suggested by the defendant that in paragraph 75 I intended to show that the 'easing of his workload' to which I referred would have resulted in a reduction of income for Dr Cremona. 7 In order to clarify this issue and to give further reasons for the findings I made, I wish to say in support of the finding of continued growth and potential of Dr Cremona's income level that I had intended that he would 'ease' his pressure with the convenience of a partner who could see patients on any day or time that he wasn't present and who would ultimately, in some cases, permit a sharing of the patients. I intended to make it clear that as the practice premises were designed for two practitioners and that Dr Cremona would have continued but with some little easing to his workload, in a similar work fashion to what he did previously, that the benefit of the partner would have been the sharing of existing expenses and the slight increase in those expenses which is projected by the plaintiff in her submissions as set out in Exhibit W, which increase in expenses I accept. 8 My intention was and it is my finding that the taking of a partner would have given Dr Cremona the convenience of a partnership with the sharing of expenses and the possibility of slightly reducing his workload. I did not envisage nor do I find that there would have merely been a sharing of the gross expenses. Clearly two medical practitioners operating in most cases at the same time where a patient has an option in some cases to take either partner permits the reduction of some of the pressure at the end of the work day and allows for greater flexibility. 9 Partners can share house and hospital calls in some cases and can ease the workload of the other. Coordination of activity and management of the practice would permit each to have more time off without significant reduction in income. 10 My finding as expressed in paragraphs 69 and 75 was to show the benefit of the sharing of expenses which would increase his net income and that he would therefore be able to slightly reduce his gross income by such amount as to maintain the existing income. It would mean that the overall gross income of the practice would substantially increase for the benefit of both partners. It is my view that Dr Cremona would have continued a heavy schedule, but easing slightly as I have indicated to spend more time with family and to relax more. 11 The evidence that I relied on is that of Mr Forde in his report of 25 September 1996 and particular page 12, table 4 and also the evidence of Mr Johnson of Deloitte Touche Tohmatsu in his report of 18 March 1999."

27 In his judgment of 20 June 2000 Dowd J said that he considered it likely that Dr Cremona would have acquired a partner within three years of the end of the 1993 financial year and that a partner would have purchased a share by 30 June 1996. In a judgment of 25 July 2000 Dowd J said that he was of the view that Dr Cremona would take a partner from 1 July 1996 but that his income would continue to increase until 1998, being a continued growth of 2 per cent and the agreed increase in Medicare fees and the plateau would then commence from 30 June 1998. 28 In his judgment of 20 June 2000 Dowd J said that so far as past loss was concerned this should be calculated on the basis of Dr Cremona's not abandoning bulk billing. Thereafter it should be on the basis that Dr Cremona and his partner would continue to bulk bill and that Dr Cremona's share of 60 percent would be of a practice which was likely to increase in gross income and that there would be a significant reduction in the shared overheads. His Honour said that interest on past losses should be calculated as provided by the Supreme Court Rules to the date of final judgment. 29 Dowd J next addressed the likelihood of relapse to drug abuse. Evidence adduced by the RTA and statistical evidence provided showed that there was a high risk that Dr Cremona would revert to drug abuse. His Honour rejected the evidence adduced by the RTA to the effect that there were opportunities for Dr Cremona to continue his drug abuse. He said: "80…..The suggestion that it is easy for a doctor to conceal drug abuse requires him to collaborate with someone else or abuse his Schedule 8 prescribing powers. Dr Cremona worked, as I have said in a discreet [discrete] area with pharmacists who all would have been notified of the limitation of his prescribing powers. The possibility of continuing to abuse drug consumption is inconsistent with the high level of work he continued to carry on and the expansion of his practice. It is inconsistent with someone who not only obtained marriage counselling from Dr Borenstein but continued to seek advice from him as to stress management. Effective continued abuse would require Schedule 8 prescribing powers. He neither had those powers or sought them." 30 Dowd J said that Mrs Cremona's contention that there was no resumption of drug abuse was supported by each of the witnesses she called on this issue. His Honour said he had no basis for rejecting that evidence. He considered Mrs Cremona had made a clear case that despite the pressures and the statistical probabilities of resumption of drug abuse Dr Cremona did not resume the drug abuse and that his rehabilitation was complete. His Honour said that Dr Cremona's failure to attend at all of the narcotic anonymous and alcoholic anonymous meetings did not detract from the fact that he did attend some of those meetings. Mrs Cremona's expertise in drug matters would also have allowed her a considerable measure of effective supervision. In his Honour's opinion she would not tolerate Dr Cremona's resumption. He did not accept Dr Mattick's evidence as applying to Dr Cremona although he did accept his general statistical evidence as to the likelihood of recidivism with drug abuse. 31 His Honour saw it as difficult for someone with a high profile in the Wollongong area in general practice being able to carry out any covert drug abuse without detection. He accepted the opinion of Dr Gertler, a specialist psychiatrist, that Dr Cremona was not taking drugs. That view was corroborated "by the very impressive and highly qualified witness Dr Stella Dalton". Dowd J said: "86 I accept the submission of the plaintiff in making this finding that the Court should rely on Malec v Hutton (1990) 169 CLR 638 at 642: 'When liability has been established and a common law court has to assess damages, its approach to events that allegedly would have occurred, but cannot now occur, or that allegedly might occur is different from its approach to events which allegedly have occurred. A common law court determines on the balance of probabilities whether an event has occurred. If the probability of the event having occurred is greater than it not having occurred, the occurrence of the event is treated as certain; if the probability of it having occurred is less than it not having occurred, it is treated as not having occurred. Hence, in respect of events which have or have not occurred, damages are assessed on an all or nothing approach.' 87 Thus, I find that Dr Cremona would not have reverted to drug abuse." 32 Next, Dowd J came to the superannuation claim. Section 3 of the Act, so far as presently relevant, provides as follows: "(1) Whensoever the death of a person is caused by a wrongful act, neglect, or default, and the act, neglect, or default is such as would (if death had not ensued) have entitled the party injured to maintain an action and recover damages in respect thereof, then and in every such case the person who would have been liable if death had not ensued shall be liable to an action for damages, notwithstanding the death of the person injured, and although the death has been caused under such circumstances as amount in law to felony. ….. (3) In assessing damages in any such action there shall not be taken into account - (a) any sum paid or payable on the death of the deceased under any contract of insurance; or (b) any sum paid or payable out of any superannuation, provident, or like fund, or by way of benefit from a friendly society, benefit society, or trade union; or (c) any sum paid or payable by way of pension under: (i) the Widows' Pension Act 1925-1942; (ii) the Coal and Oil Shale Mine Workers (Pensions) Act 1941-1942; (iii) the Australian Soldiers' Repatriation Act 1920-1943 of the Parliament of the Commonwealth; (iv) the Widows' Pension Act 1942-1945 of the Parliament of the Commonwealth; (v) the Invalid and Old-age Pensions Act 1908-1945 of the Parliament of the Commonwealth; or under any Act (Commonwealth or State) amending or replacing any such Act." Section 4(1) provides that the action shall be for the benefit, relevantly, of the wife and children of the deceased and shall be brought in the name of his executor. 33 The RTA submitted that losses due to diminished superannuation rights should not be taken into account and relied on s3(3)(b) of the Act. His Honour said that it was clear that Mrs Cremona was entitled to include in her damages the total loss of benefit from superannuation and referred to Luntz "Assessment of Damages for Personal Injury and Death" 3rd ed, para 9.5.11. Mrs Cremona submitted calculations based on an annual superannuation contribution of $25,000 by Dr Cremona and earned interest rate of 11 per cent. She submitted that no account should be taken of the payment which she had already received of $163,780 which was the superannuation fund balance at the date of Dr Cremona's death paid to her by way of a death benefit. Dowd J held that s3(3)(b) of the Act did not preclude an assessment of damages on the full superannuation entitlement. However, he also held that after that calculation had been made, $163,780 should be deducted from the damages "in order that the plaintiff not receive the same amount of $163,780 twice". Dowd J said: "92 Superannuation is not a normal investment which attracts a return in the nature of interest. In addition to its tax benefits, superannuation comprises a capital growth fund in addition to any return on the funds already invested. I accept that notwithstanding the fact that Dr Cremona had not used his full superannuation entitlement in the last financial year of his life that non-contribution was based on two factors: one, that monies were largely being used, as deposed by the plaintiff, to contribute to the house building and; two, that the non-performing Scottish Amicable Fund did not make the investment worthwhile and that Dr Cremona was proposing to change from the existing superannuation fund and was trying to reduce the penalty arising from that change. 93 I consider that the RTA contention that the interest should be earned factor of 7% which, as the plaintiff's Counsel pointed out is less than the RTA's own evidence of three years average, is too low. The 11% calculation takes into account capital growth and investment income. 94 I consider that the methodology proposed by Geoffrey McRae for calculating superannuation is correct, that is taking the gross future superannuation entitlement and that figure be reduced to present tax and thresholds and applying present tax and thresholds. The calculations should therefore be done ignoring the payment of $163,780 as at 30 June 1993 and should be calculated on an 11% investment return on the fund annual contributions of $25,000 per annum for Dr Cremona and $8,000 per annum for the plaintiff for the financial year ending 30 June 1994 and that both the plaintiff and Dr Cremona would retire on 9 September 2019 when Dr Cremona reached the age of sixty five years. I consider that after that calculation that the credit be given for the $163,780 payment already made." 34 Dowd J rejected the RTA's contention that "the superannuation benefits should be based on present calculations"; compare Jongen v CSR Limited (1992) ATR 81-192. He also rejected RTA's submission in reliance on Todorovic v Waller (1981) 150 CLR 402 that no future allowance should be made for inflation. His Honour said Todorovic v Waller was a decision affecting the reduction of future losses using discount tables so as to calculate a figure for present day payment. 35 The next question for consideration was dependency. The RTA submitted that dependency should be 55 per cent. Mrs Cremona submitted that the appropriate dependency was 82 per cent comprising 71 per cent for her, 6 per cent for Sarah and 5 per cent for Alex. She proposed that the dependency should decrease by 3 per cent from 20 July 2012 being Sarah's 23rd birthday and by a further 2.5 per cent on 21 April 2015, Alex's 23rd birthday. She proposed that her dependency should reduce on 9 September 2019 being Dr Cremona's 65th birthday. 36 Mrs Cremona said she had no current intention of returning to work. She had however retained her capacity to practise as a pharmacist and was skilled in regulatory affairs within the pharmaceutical industry. Dowd J accepted that she would intend to do further study but would find that the further study would inevitably lead to her re-entering the workforce on a part time basis during the high school education years of the children and that she would return to work on a part time basis comprising most of the working week once both children had entered tertiary education. His Honour said: "98 The plaintiff has worked very hard in the practice of Dr Cremona and indeed worked until an advanced stage of her pregnancy. The plaintiff is an intelligent educated woman who is likely to work for intellectual satisfaction as much as the financial rewards. I consider that she would have re-entered the workforce on the basis that I had proposed if Dr Cremona had been alive and I do not consider that Dr Cremona's death would have made any change to that working proposal. He was likely to be fairly busy in his practice and the substantial drive of the plaintiff would have taken her into the workforce. 99 I consider that the discount factor in superannuation is appropriately 10% for vicissitudes relating to the deceased. Notwithstanding the potential vagaries of taxation and superannuation legislation I consider that the basis for normal vicissitudes of 15% is not an appropriate figure for superannuation. I therefore find that 10% is an appropriate figure. As I have already indicated that for the plaintiff alone a figure of 7.5% is appropriate, and this should apply to her superannuation. 100 Dependency is very difficult to estimate in a high income family, it is likely that the house that Dr Cremona and the plaintiff had built would have been paid for in a short period after its completion and the normal financial pressures of a domestic household would have been reduced. To some extent both the plaintiff and Dr Cremona would have had a large disposable income and Dr Cremona was likely, as an astute investor to make further money after maximising his superannuation entitlements. I consider that it is likely that the plaintiff would have continued her superannuation entitlement at about the figure of $8,000 which was being paid from her director's fees. 101 The plaintiff was very much involved in Dr Cremona's practice and would inevitably seek fulfilment in using her brain and skills. The figures in Professor Luntz's book for dependency are largely predicated on the home maker/bread winner family and do not fit comfortably in the circumstances of the present calculation. Although it is noted above that a larger component of Dr Cremona's income would be applied to savings or investments the plaintiff and her children are entitled to claim what the deceased would have saved and ultimately left to them: Davies v Powell Duffryn Associated Collieries Ltd [1942] AC 601. 102 I accept that no deduction should be made from earnings derived by the plaintiff after the deceased's death as held in Carroll v Purcell [1961] 107 CLR 73 but as I have indicated I consider that the plaintiff would have gone back to work and that the death of Dr Cremona would have made no difference and therefore her dependency on her [sic] would have been reduced. I consider taking into account all of the above factors that a proper dependency for the plaintiff herself is 63% which is at the lowest range in the table on p369 of Professor Luntz' book on damages that I have referred to. 103 In relation to the children I find that in a professional family it is likely that the children will complete a tertiary education and being children of a medical practitioner a period until their 23rd birthday of each of them is appropriate. They are progressing well at school and are obviously intelligent and apply themselves even at the young age at the time of the hearing. I consider that the dependency for Sarah should be 6% as submitted by the plaintiff and 5% for Alex. I consider however that the total family dependency which comprises 74% should decrease by 4% from 20 July 2012 being Sarah's 23rd birthday and a further 3% on 21 April 2015 being Alex's 23rd birthday. I consider that the dependency for Sarah and Alex should both then be 2.5% as it is likely that the children would have obtained benefits and assistance from Dr Cremona even after that time." 37 In summary Dowd J anticipated that the parties would carry out calculations consequent upon his findings and would address on any issues that had arisen as a result of them.

Judgment of 25 July 2000 38 In reasons for judgment given on 25 July 2000 Dowd J referred to exhibit W in calculating economic loss. His Honour said: "Economic Loss Calculations 11 In accordance with the calculations set out in Exhibit W [I] find the future economic loss of $3,545,797, less vicissitudes personal to deceased at $3,013,927, therefore the value of the future dependency from date of judgment is $2,176,327. 12 It is appropriate that the sum of $2,176,327 be apportioned between the three dependents in the proportions which each dependency percentage I found bears to the total sum of the three dependants. This means that the plaintiff at 63%, Sarah at 3% and Alex at 5% produces an apportionment of 85% to the plaintiff, 8% to Sarah and 7% to Alex. The plaintiff $1,898,774 Sarah $ 144,087 Alex $ 133,465 Total $2,176,326 13 This after deducting vicissitudes for the plaintiff at 9.5% and at 2% for each of Sarah and Alex produces the following amounts: The plaintiff $1,718,391 Sarah $ 141,205 Alex $ 130,796 Total $1,990,392 14 I find that the amount to be awarded for past loss, excluding funeral costs and trustee management fees, should include growth at 2% plus the Medicare increase and interest. I therefore find for the apportionment of past dependency as follows: The plaintiff $1,271,795 Sarah $ 121,123 Alex $ 100,936 Total $1,493,854 15 In accordance with the calculations set out in Exhibit W, I find that the sum to be allowed for the plaintiff in her own right taking into account the vicissitudes set out in Exhibit W is the sum of $1,732,492. Other Heads of Claim 16 The remaining heads of claim by the plaintiff are as follows: the amount of $4,896 for funeral costs, $3,667 for interest on funeral costs to 25 July 2000, $9,240 for trustee management fees and $20,840 for future trustee management fees making a total of $38,643. 17 Accordingly the total sum total payable by the defendant is set out below: Future Economic Loss $1,990,392 Past Loss $1,493,854 Loss of Superannuation $1,732,492 Other Heads of Claim $ 38,643 Total $5,255,381 18 The plaintiff has received interim payments totalling $1,000,000 on which interest at Court rates from date of receipt of the two payments have been calculated at $155,364. The plaintiff has already received a superannuation payment in the sum of $163,780. Apportionment of Damages 19 Damages are calculated for past economic loss at 85% for the plaintiff, 8% for Sarah and 7% for Alex. I apportion damages for past and future economic loss, past trustee management fees, future management trustee fees less the interim payment of one million and relation interest: The plaintiff $1,834,822 Sarah $ 278,695 Alex $ 245,445 Other heads of damage payable to the plaintiff Superannuation less payment $1,568,712 Funeral costs & interest $ 8,563"

Grounds of Appeal and Cross-Appeal 39 The RTA filed an amended notice of appeal. The grounds of appeal were as follows: "1. His Honour erred in failing adequately to take into account, in relation to (i) the likelihood of the deceased's earnings continuing at the same high or higher levels, (ii) the likelihood of his marriage to the plaintiff continuing, (iii) his capacity and willingness to avoid relapsing into drug abuse and (iv) his capacity to remain in medical practice: (a) the fact that excessive stresses at work and within his marriage had driven him originally into drug addiction, and such stresses were likely to continue; (b) the fact that the deceased enjoyed the effects of morphine abuse; (c) as his Honour found, the deceased's 'propensity for drug dependency' over a significant part of his life prior to detection; (d) as his Honour found 'The statistical likelihood of relapses'; (e) as his Honour found 'The evidence adduced by the RTA and the statistical evidence show that there was a high risk of Dr Cremona reverting to drug abuse'; (f) as his Honour found 'The statistical probabilities of resumption of drug abuse'. 2. His Honour made an inadequate allowance for the risk of the deceased relapsing into morphine or other drug addiction. 2A. His Honour erred in law by basing a finding that the deceased would not have reverted to drug abuse upon a passage which his Honour quoted from the High Court decision in Malec v JC Hutton Pty Limited (1990) 169 CLR 638, 642 that when a Court which is assessing damages is approaching events which allegedly have occurred in the past, damages are assessed on an all or nothing approach in respect of events which have or have not occurred and if the probability of an event having occurred is less than it not having occurred, it is treated as not having occurred, in that: (a) His Honour incorrectly treated this passage as being applicable not to the proposition of whether Dr Cremona had reverted to drug abuse prior to his death, but rather whether he would have reverted to drug abuse in the future; (b) His Honour eliminated the chance that deceased, but for the accident, would have reverted to drug abuse, from the identification and quantification of the adverse vicissitudes which potentially affected, in the future, the deceased's career prospects and earnings as a doctor, the survival of the deceased's marriage to the plaintiff, and the level of support which could be derived by the plaintiff and the family from the deceased's earnings. 3. His Honour erred in basing his conclusion that the deceased has not covertly continued to abuse morphine upon wholly inadequate reasons, in particular what his Honour found was the deceased's inability 'in a relatively closed area such as Dapto that he would have been able without the appropriate prescribing powers to obtain the pethidine or morphine or other such medication used for abuse without being detected by the pharmacists', in that pharmacists beyond the Dapto area, who would not recognise the deceased, were readily accessible by the deceased. 4. In determining whether the deceased had returned prior to his death to drug addiction, and in assessing the likelihood of future relapse into drug addiction, his Honour erred in failing to take into account the deceased's capacity, well established on the evidence, to deceive and lie in order to maintain and conceal his drug addiction. 5. His Honour erred in basing his conclusion that the deceased has not covertly continued to abuse morphine on the failure of the plaintiff to detect such conduct in that the deceased had previously over a period of about four years successfully concealed such conduct from the plaintiff. 6. His Honour made an inadequate reduction of the award of damages for all adverse vicissitudes, in reducing by 15% for adverse contingencies facing the deceased, 7.5% for adverse contingencies facing the plaintiff and 2% for adverse contingencies facing each child. 7. In considering the prospects, but for the deceased's death, of the marriage between the plaintiff and the deceased breaking down in any event: (a) his Honour failed to make adequate or any allowance for the general rate of breakdown of marriages within the community; (b) his Honour failed adequately to take into account and give effect to the evidence which supported a higher risk than usual of the breakdown of the marriage between the deceased and the plaintiff; (c) his Honour failed to give effect to his own conclusion that 'There was a high statistical likelihood on the evidence that the marriage was at risk': (d) his Honour erred in concluding that 'On the evidence the marriage was likely to survive' when that conclusion was based on stated reasons given by his Honour which were inadequate to support such conclusion, and led to his Honour, in any event, failing to determine, and to give effect to, the full extent of the risks that the marriage would not survive. 8. In reducing the award of damages for the plaintiff's prospects of remarriage: (a) his Honour erred in finding there still exists 'a real prospect of remarriage which the Court is obliged to take into account', yet deducting only 2%, which was a wholly inadequate reduction in the circumstances; (b) his Honour erred in finding that the prospect of remarriage would 'lead to someone of professional standing and high income as more likely', but then finding 'the independence of the plaintiff in fiscal and personality terms means any contribution to her future support is likely to be relatively small'; (c) his Honour erred in applying the percentage prospect of remarriage to future economic loss, yet excluding superannuation from his calculation. 9. His Honour erred in assuming a practice growth of 2% per annum in light of: (a) the excessive stresses upon the deceased which a lesser workload had imposed upon him, with consequences to his health , his marriage and drug addiction; (b) the deceased's professional intentions, as expressed to the plaintiff, his treating doctors, the Medical Board doctors, and his accountant, to cut down his workload in future in order to enjoy more family and recreational time. 10. His Honour erred in calculating losses based upon the deceased's involvement in superannuation saving and investment, in that: (a) his Honour erred in law in failing to apply to this aspect of the alleged losses to the deceased's relatives (ie the plaintiff and the children) the 3% per annum discount rate required by the High Court decision in Todorovic v Waller (1991) 150 CLR 402 ; (b) his Honour applied over the entire period of future loss an excessive rate of return from superannuation investments; (bb) his Honour made no allowance for the prospect that the deceased would not invest in superannuation at the maximum level, but instead rely on non-superannuation investment opportunities. (c) his Honour erred in law in failing to disallow the entire claim for superannuation losses, by reason of the prohibition in the Compensation to Relatives Act, s3(3)(b); (d) his Honour failed to take into account the plaintiff's capacity, from the investment of her verdict, to obtain the same return through superannuation investments or other fund management, as would have been obtained by the deceased if he had survived; (e) his Honour made an inadequate discount for vicissitudes of 10% in relation to the deceased's superannuation; (f) his Honour erred in making allowance in the plaintiff's favour for superannuation which was applicable not to the deceased but to the plaintiff's own earnings from working in the deceased's medical practice; (g) his Honour erred in relation to the superannuation applicable to the plaintiff, in failing to take into account her capacity to use superannuation investments or other fund management from both her investment of superannuation payments in respect of her own earnings in the workforce. (h) his Honour erred in admitting the evidence of future predictions as to inflation and anticipated investment returns. 11. His Honour erred in failing to take into account in the defendant's favour: (a) the plaintiff's revived capacity, following the deceased's death, to re-enter the workforce, particularly in the pharmaceutical industry from which she had come; (b) the economic value of the capacity for work which the plaintiff performed in the deceased's practice, when that capacity for work, after the deceased's death, continued to have economic value which the plaintiff remained able to exploit. 12. His Honour erred in allowing an excessive percentage dependency of the plaintiff and the children upon the deceased in that: (a) his Honour failed to take into account the plaintiff's past and likely future contribution of her own working activities and her earnings (as an assistant to the deceased's practice, and in the future, even if the deceased had survived, on her return to the general workforce) to the pool of money from which the benefits were derived by all members of the family; (b) his Honour failed to adopt a reduced percentage of dependency for the past and particularly the future, as was required by the NSW Court of Appeal decision in Halvorsen Boats Pty Limited v Robinson (1993) [31 NSWLR 1], in order to reflect the past fact and future possibility (and probability) of both the plaintiff and the deceased contributing to the family pool of income, from which the entire family derived benefits; (c) his Honour failed to take into account the statistical fact that the percentage of dependency drops substantially when the major earner in a marriage is in a high earning bracket, and where the major asset, the family home, is fully paid off. 13. His Honour erred in making excessive allowance in the plaintiff's favour for benefits to her from accumulated savings, including superannuation, by failing to take into account the contingency that such benefits may not be enjoyed by the plaintiff if, but for the deceased's death in the subject accident, she had died before the deceased, this being a possibility of which his Honour failed to take account in the defendant's favour. 14. His Honour made an excessive allowance for interest on past losses, as the rate of interest used failed to take into account the undue profit to the plaintiff which would be created by the fact that interest payable under s94 of the Supreme Court Act would, in light of the decision of the Full Bench of the Federal Court of Australia in Whitaker v Commissioner of Taxation (1998) 82 FCR 261, not be taxable in the plaintiff's hands. 15. The assessment of damages by his Honour was as a whole, manifestly excessive in the circumstances." 40 Mrs Cremona filed a notice of cross-appeal. The grounds were: "4. His Honour erred in deducting from the primary damages figure the sum of $163,780 paid as superannuation consequent upon the deceased's death, contrary to the provisions of s3(3)(b) Compensation to Relatives Act 1897. 5. His Honour erred in limiting the damages award to the plaintiff on the basis of a dependency of only 63%. 6. His Honour erred in failing to include in his assessment of damages an allowance for the contingency that the deceased might have changed from a bulk billing practice to a full charging practice." 41 Mrs Cremona sought to have the damages based on a 71 per cent dependency in accordance with Exhibit W. She also sought to have damages recalculated on the basis that Dr Cremona's change from a bulk billing practice to a full charging practice after 28 May 1993 would result in an 8.5 per cent increase in his gross fee income calculated in accordance with Exhibit W. In the alternative, she sought to have the damages recalculated to reflect an appropriate positive contingency from 28 May 1993 to reflect the possibility of his changing from a bulk billing to a full charging practice after that date. 42 The main questions for determination on the appeal and cross-appeal were summarised as follows: Appeal 1. Keep 2% practice growth from 1993 to 1998? 2. Increase Dr Cremona's vicissitudes from 15%? 3. Increase plaintiff's vicissitudes from 9.5%? 4. Allow Supreme Court Act interest on past loss of 4%? 5. Reduce 11% superannuation earning rate?

The RTA also submitted that nothing should have been allowed for loss of superannuation and, if anything were allowed, it should have been calculated in the way prescribed in Todorovic v Waller . Cross-Appeal 1. Add back $163,780 to superannuation? 2. Increase plaintiff's dependency from 63% by a figure up to 71%? 3. Allow as a vicissitude the prospect of Dr Cremona's abandoning bulk billing (as a percentage of $507,000 total benefit which would have arisen from abandoning bulk billing from 1998).

Damages under the Compensation to Relatives Act 43 As an introduction to the determination of the issues the parties have raised on the appeal and cross-appeal it is useful shortly to re-state how damages are to be assessed under the Act. In Watson v Dennis (1968) 88 WN (Pt 1) (NSW) 491 at 495 Walsh JA, with whose judgment Holmes JA agreed, quoted from the decision of the Privy Council in Nance v British Columbia Electric Railway Company Limited [1951] AC 601 and said: "All that means is this; that you seek to reach a value for benefits which the deceased would probably have applied for the maintenance of his wife and family if he had not been killed. But, in the absence of special provision, you also have to set off against that any payments or benefits which, because of the death, are received by the wife or family." See also Davies v Powell Duffryn Associated Collieries Limited at 611 and Halverson Boats Pty Ltd v Robinson at 11. 44 One matter for consideration is the extent to which the damages recoverable by the widow should be affected by her prospects of marrying again. Such prospects have to be taken into account; Carroll v Purcell. At 79 Dixon CJ, Kitto, Taylor and Windeyer JJ distinguished between the proposition that the death of a husband will free the wife from her marital obligations and thus enable her to marry again, which must be allowed for, and the proposition that she is freed from the obligation of managing her late husband's domestic establishment if, in fact, she be freed from this task, which may not be taken into account. Their Honours said: "The death of one spouse inevitably results in a revived capacity in the other to remarry. This, for what it is worth in any particular case, has so long been regarded as having some value in the assessment of damages in fatal accident cases that it is profitless to debate how far the established rule is justified. But the death of one spouse does not result in a revived capacity in the other to undertake gainful employment." 45 The reason is that the widow's ability to work is always there. Many exercise it during marriage, some do not. Choice should not be confused with lack of freedom. In Jones v Schiffmann (1971) 124 CLR 303 at 308-9 Menzies J said: "The extent to which the prospect of a particular widow marrying again will reduce the damages recoverable by her is not, however, a matter which can be governed by rules, even by imprecise rules. It is a matter for the judgment of the assessor in the circumstances of the particular case. …. It cannot be said, however, that, on the mercenary level of economic advantage, a second husband is hardly worth having. Some unquestionably are. It is not difficult to imagine a case where a widow could reasonably recover but small damages when the death of a former 'bread winner' - to use an opprobrious description - has been quickly followed by marriage to a man who, from his wealth, can provide much more than bread. More, I think, cannot be said in general than that, in the assessment of her damages, a widow's prospects of marrying must be taken into account and given such consequence as the circumstances of the particular case seem to warrant." 46 In his submissions, Mr Barry QC, who appeared for the RTA, relied upon a passage in the judgment of Barwick CJ, who dissented, at 306. His Honour said: "The question, I think, is what is the value to this widowed plaintiff of her freedom to marry. Courts are required from time to time to value the destruction of the capacity to marry where man or woman is so damaged as to have lost that capacity physically or emotionally. Such an estimation is difficult. To place a value on the widowed plaintiff's regained freedom to marry is no more difficult, though the task in either is undeniably formidable." 47 A significant argument on the cross-appeal was whether the percentage of dependency chosen to represent the value for benefits which Dr Cremona would have applied for the maintenance of Mrs Cremona and the children was adequate. 48 On the appeal a large part of the RTA's argument was directed to the alleged inadequacy of the discounts for vicissitudes. In Wynn v New South Wales Insurance Ministerial Corporation (1995) 184 CLR 485 at 497-8 Dawson, Toohey, Gaudron and Gummow JJ said: "It is necessary to say something as to contingencies or 'vicissitudes'. Calculation of future economic loss must take account of the various possibilities which might otherwise have affected earning capacity. The principle and the relevant considerations were identified by Barwick CJ in Arthur Robinson (Grafton) Pty Ltd v Carter (1968) 122 CLR 649 at 659 as follows: 'Ill health, unemployment, road or rail accidents, wars, changes in industrial emphasis, so that industries move their location, or are superseded by new and different techniques, the onset and effect of automation and the mere daily vicissitudes of life are not adequately reflected by merely - and blindly - taking some percentage reduction of a sum which ignores them.' It is to be remembered that a discount for contingencies or 'vicissitudes' is to take account of matters which might otherwise adversely affect earning capacity and as Professor Luntz notes, death apart, 'sickness, accident, unemployment and industrial disputes are the four major contingencies which expose employees to the risk of loss of income'. Positive considerations which might have resulted in advancement and increased earnings are also to be taken into account for, as Windeyer J pointed out in Bresatz v Przibilla (1962) 108 CLR 541 at 544, '[a]ll 'contingencies' are not adverse: all 'vicissitudes' are not harmful'. Finally, contingencies are to be considered in terms of their likely impact on the earning capacity of the person who has been injured, not by reference to the workforce generally. Even so, the practice in New South Wales is to proceed on the basis that a 15 per cent discount is generally appropriate, subject to adjustment up or down to take account of the plaintiff's particular circumstances."

See also Norris v Blake [No 2] (1997) 41 NSWLR 49 at 73 where this Court in considering what it was most likely a plaintiff would earn during the rest of his working life said that the adjustment of that assessment for contingencies should include the possibility that the plaintiff might have done far better. 49 I observe immediately that Dr Cremona was a successful self-employed medical practitioner whose earning capacity was unlikely, subject to the possibility of a relapse to drug abuse, to be adversely affected by unemployment or industrial disputes. In Chapman v Hearse (1961) 106 CLR 112 at 114 the High Court, allowing an appeal by the executor of a deceased doctor claiming damages for the benefit of the widow and four children of the deceased, held (see p114) that the initial capital sum assessed as damages should be discounted by no more than 12½ per cent in respect of contingencies such as a falling off in income and the possibility of remarriage. "The fact that Dr Cherry was a member of a partnership of four medical practitioners in the opinion of their Honours would operate to insulate him to a considerable extent from the financial effects of sickness or accident unless permanent capacity should result." See also Luntz paras 6.4.8 and 6.4.15. Dowd J was correct to take account of the particular circumstances of Dr Cremona and of his wife and children. 50 In his reasons for judgment at para 86, which I have set out, Dowd J quoted the well-known passage from Malec v Hutton dealing with the Court's approach to events which have occurred but did not set out or refer to the passage following in the joint judgment of Deane, Gaudron and McHugh JJ at 643 where their Honours said: "But in the case of an event which it is alleged would or would not have occurred, or might or might not yet occur, the approach of the court is different. The future may be predicted and the hypothetical may be conjectured. The questions as to the future or hypothetical effect of physical injury or degeneration are not commonly susceptible of scientific demonstration or proof. If the law is to take account of future or hypothetical events in assessing damages, it can only do so in terms of the degree of probability of those events occurring. The probability may be very high - 99.9 per cent - or very low - 0.1 per cent. But unless the chance is so low as to be regarded as speculative - say less than 1 per cent - or so high as to be practically certain - say over 99 per cent - the Court will take that chance into account in assessing the damages." 51 Ground 2A of the appellant's appeal is directed to the question of whether Dowd J failed to apply this principle particularly when considering whether Dr Cremona would have reverted to drug abuse, his career prospects had he survived and whether the marriage would have survived. It is convenient to deal with the appeal and cross-appeal under subject headings.

Drug Abuse 52 Dowd J rejected the RTA's contention that Dr Cremona had reverted to drug abuse before his death. On the appeal the RTA submitted that this finding was erroneous (grounds 3, 4 and 5). A particularly important feature of drug abuse, according to the RTA, was that a consequence of relapse would or might have led to Dr Cremona's being deregistered and unable to practice. The RTA emphasised Mrs Cremona's warning to those admitting Dr Cremona to Wandene Private Hospital on 6 December 1990 that he was "'very resourceful' re acquiring medication". He had concealed his abuse, which had begun before the marriage, from Mrs Cremona. There was no reason why he could not have continued this concealment of continued drug abuse up to the date of death. There was evidence that his attendances at Narcotics Anonymous were irregular. The pressure of work continued and must have increased if the practice continued to grow. Dr Mattick in his report for the RTA of 8 May 1996 remained unconvinced that Dr Cremona was drug-free, given the lack of objective information about drug use from random regular drug urine screens. Dr Mattick said that it was unlikely that he would have maintained his very intense workload, even ignoring his drug-dependence problems. Dr Mattick gave oral evidence and was cross-examined. 53 Dowd J did not accept this evidence of Dr Mattick; the RTA submitted upon inadequate reasons. His Honour preferred the evidence of Dr Gertler that Dr Cremona was not taking drugs which was corroborated by "the very impressive and highly qualified witness, Dr Stella Dalton". Nothing persuasive was put to us to support a conclusion that Dowd J's finding on there being no relapse before death was not open to him. 54 Dr Dalton, in a letter of 2 September 1996, addressed herself to the following questions: "(a) the nature of the Impaired Doctor's Programme (1990-1993); (b) the significance of the fact that Dr Cremona's Medical Board assessments, in 1992 and 1993 did not require urinalysis or hair analysis; (c) what is your general experience with doctor patients withdrawn from drug use in relation to relapse? In most cases, when is relapse most likely to occur? How frequently does relapse occur several years after a patient has withdrawn from drug use? (d) does any significance attach to the fact that Dr Cremona remained restricted from Schedule 8 prescribing rights 2½ years after receiving treatment for his substance use? (e) in your opinion, what was Dr Cremona's prognosis with respect to relapse?" Addressing these questions, Dr Dalton said:

"1 Nature of the Impaired Doctors Programme (1990-1993) The aim of the programme is to enable doctors through early intervention to continue to practise medicine while receiving treatment. It is a therapeutic programme aimed at treatment and rehabilitation. Prior to the introduction of this programme the Medical Board exercised a purely disciplinary role vis a vis impaired doctors with the result that they refrained from seeking appropriate treatment for fear of coming to the Board's notice and by the time they entered treatment they were addicted. Opiate and especially pethidine use is a professional hazard of the medical profession, the prime factor being availability. Accordingly, availability together with physical or psychiatric distress might through self medication give rise to pethidine use. The doctor who enters the Impaired Physicians programme uses sporadically and although sometimes dependent is very rarely addicted to opiates. The Impaired Registrants Programme guarantees that the impaired doctor stay in treatment while retaining medical registration and thus in most cases total rehabilitation can be achieved. Conditions imposed are relevant to the particular case and vary according to its severity. These may consist of 3 to 6 monthly assessment by a Board nominated psychiatrist; ongoing treatment by the psychiatrist of the doctors choice; withdrawal of power to prescribe Schedule 8 drugs; thrice weekly or random supervised urine testing; 3 to 6 monthly attendance at the Board; regular visits to the doctor's GP etc. 2 It would appear that Dr Cremona had progressed beyond the need for routine or random urinalysis. This is evidenced by Drs Wilson and Gertler's Reports and by that of the Board's Assessors. 3 Usually relapse occurs within the first six months. I would like to point out that physicians who have become drug dependent during their medical career almost always refrain from obtaining opiates once their Schedule 8 prescribing rights have been relinquished. Such doctors are not prone to illicit acts and once their doctors bag supply is withdrawn they tend to remain opiate free. Relapse would be extremely unlikely to occur after several years of abstaining from opiate use. 4 As stated above doctors are not prone to obtain opiates illegally, accordingly it is usual for Schedule 8 restrictions to stay in force for a number of years (3 to 4) so as to reinforce the doctor's drug free lifestyle. 5 In my opinion Dr Cremona's prognosis with respect to relapse was excellent and had he lived I would expect him to have been discharged from the Impaired Registrants Programme within a relatively short time. I should like to point out that I have specialised and been engaged in the treatment of both drug dependant and addicted doctors for many years both as Consultant Psychiatrist in the United Kingdom (London and Sussex) and as Director of Addiction Services for the Western Metropolitan Region Sydney. In terms of academia Professor Mattick's report is a good study of the available literature. However it lacks the insight and understanding that can only be attained through years of clinical experience."

Dr Dalton also gave oral evidence and was cross-examined. 55 Dr Gertler, in a report of 2 March 1993 said that he felt it would be extremely unlikely for Dr Cremona to again abuse Schedule 8 drugs. "He has the ongoing support of his wife, attends regular meetings of AA and NA and has other supports which he knows that he can use should the necessity arise." In a report of 7 August 1996 Dr Gertler said: 'My experience with general patients who have withdrawn from drug use is that relapse is frequent and is most likely to occur within six months following withdrawal from the drug and generally in fact within the first three months. My experience has been drawn from my work with drug addicts over many years; I first treated drug addicts in the United States and subsequent to my return to Australia in 1972 was involved in establishing the first Methadone clinic in Sydney. Since that time I continue to be involved in the management of persons with problems of drug abuse or drug dependence. It is quite uncommon for relapse to occur several years after a person has withdrawn from drugs. This is especially so if regular supervision has occurred since the withdrawal. My experience with drug dependent medical practitioner patients has been that these patients are even less likely to relapse several years after withdrawal because of the increased supervision which is in force and which in my opinion is necessary because of their responsibilities for others. I have now been involved in both the assessment and management of medical practitioner patients through my involvement with the NSW Medical Board as an assessor. I was in fact asked to become involved with such patients because of my expertise in the area. At the present time I am involved in the management of several such patients. Dr Cremona's prognosis with respect to drug relapse, was in my opinion very good. This was because of the factors mentioned in my report such as the ongoing support of his wife, his regular involvement with self-help groups, the control which he had regained over his practice commitments and the overall increase in stability in his life. The impression which I formed during my assessment, was that Dr Cremona was able to cope with the demands of his practice both at the time I saw him and for the foreseeable future. I did not believe that he would have to modify his practice in any significant way; he was not compulsive in his need to work as he had obviously been previously and had instigated regular breaks from his work, both in the form of holidays as well as other methods of relaxing."

Dr Gertler gave oral evidence. 56 Dr Wilson, who first saw Dr Cremona in December 1990, in a report of 6 September 1996, said that he had regard to the clinical judgment of several named sources including his own, all of whom agreed that Dr Cremona''s prognosis was good and that he was not taking opioids between 5 December 1990 and 23 April 1993 when he was last assessed. In his oral evidence Dr Wilson was asked whether he believed that it was likely that Dr Cremona could have successfully deceived all those people including himself to whose clinical judgment he had had regard. He said: "Certainly not. That it is likely. It's possible I suppose, but most unlikely." 57 Dr Tony Williams, who established the Impaired Practitioners Programme of the Medical Board and had monitored every doctor who entered the programme for thirteen years, saw Dr Cremona a month before his death with a fellow Medical Board psychiatrist. They both expressed the view that it would be "extremely unlikely for Dr Cremona to again abuse Schedule 8 drugs." 58 No satisfactory reason was advanced why Dowd J could not accept this evidence. The written submissions filed on Mrs Cremona's behalf pointed in some detail to a considerable volume of evidence which supported Dowd J's conclusion. The RTA submitted that Dr Cremona had a motor vehicle and his travel within the Illawarra area to see various patients took him well beyond the confines of Dapto. Accordingly it was said that Dowd J erred in basing his conclusion that Dr Cremona had not covertly continued to abuse morphine upon inadequate reasons and in particular his inability in the relatively closed area of Dapto to obtain pethidine or morphine without the appropriate prescribing powers and without being detected by the pharmacists. However, Dr Dalton said that doctors were not prone to obtain opiates illegally and it was usual for Schedule 8 restrictions to stay in force for several years so as to reinforce the doctor's drug free lifestyle. 59 The real problem in this part of the judgment is not with the past but the future and whether his Honour failed, when looking to the future, to consider the chance that Dr Cremona would have reverted to drug abuse and if so how that chance should be taken into account. In para 41 of his reasons when considering unemployment as a contingency his Honour said it was virtually nil "except for a slight chance of relapse into drug dependency". He referred to Mrs Cremona's submission, which he did not accept, that "excluding mortality and including the possibility of drug relapse the provision should be no more than 5 per cent". In para 44 of his reasons he referred to Dr Cremona's "propensity for drug dependency". 60 Dowd J's quotation from Malec v Hutton in para 86 of his reasons immediately before his finding that Dr Cremona would not have reverted to drug abuse, suggests that in para 87 of his reasons, which I have quoted in para 31 above, his Honour treated the prognosis that Dr Cremona was unlikely to revert to drug abuse as an event which had occurred. If his Honour took this approach he erred but the error did not have any practical consequence. The complaint was that Dowd J did not make any allowance for a relapse. But in paras 41 and 44 of his judgment, which I have quoted in para 16 above, when dealing with contingencies his Honour recognised that relapse was a possibility. It was a matter he took into account in applying a discount of 15 per cent for contingencies. Thus it does not appear to me that he erred by failing to take account of and measure the chance of a relapse.

Survival of Marriage 61 Dowd J found that on the evidence the marriage was likely to survive. Again, the principle stated in Malec v Hutton required that the assessment of damages should take account of the chance that, had Dr Cremona survived, his marriage might not. Again, the terms of the reasons for judgment suggest that the trial Judge proceeded on the basis of a finding that on the balance of probabilities the marriage would survive. Again, such an approach was erroneous. The assessment must take account of such a contingency. But also account must be taken, it seems to me, of the consequence, in terms of property distribution, if the marriage did not survive. 62 Mrs Cremona said that she found it quite difficult to be married because she was a very independent person. It took some getting used to. Before the events of 1990 she was content but did not know "about happy". Dr Cremona suffered tremendously with migraines and became very tired. The trial Judge referred to the sacrifices that Mrs Cremona had made and the unlikelihood that Dr Cremona would change his habits which no doubt included his tendency to place Mrs Cremona second after his compulsive working activities. Another factor was his deceiving her about his drug abuse. Mrs Cremona said: "I felt I had got to know the worst part of my husband and, you know, the deepest darkest secret of his soul and I accepted him for what he was and I felt he had done the same with me." 63 Their accountant and friend, Mr Newhouse, commented on their propensity for being sparring partners at dinner parties. Statistically it was said that one marriage in three ends in divorce. The RTA referred us to Martin v Owen (unreported) English Court of Appeal, 21 May 1992 for the proposition that such statistics cannot be ignored. But the evidence of the surviving widow and of the friends who saw and heard the inter-relationship between Dr and Mrs Cremona is far more important. 64 Between 21 February 1991 and 24 September 1992 Dr and Mrs Cremona consulted with Mr Borenstein together on nine occasions. Dr Cremona consulted individually on three occasions. Mr Borenstein's last consultation with them was on 24 September 1992. In his report of 6 November 1995 Mr Borenstein said: "The first session was one of assessment and I gained a history that they had been married some 2½ years and there was a tendency to argue which they sought assistance with. In particular Dr Cremona's opiate dependency was a point of reference as Mrs Cremona was unaware of it until such time as he required treatment. Initially she took on a role as overseer and she was having difficulties trusting Dr Cremona given that he used opiates in the past without her knowing. At the time of initial consultation Dr Cremona was attending AA meetings regularly and he told me he had an admission at Wandene Private Hospital for two weeks where he withdrew from opiates under Dr Wilson's care. They told me they had a baby aged 19 months old (Sarah) who was not planned. Mrs Cremona felt she had given up a considerable amount of her own role and independence for the marriage and motherhood and there was some underlying resentment. She also felt she had made a considerable sacrifice moving to Wollongong away from her immediate social network. In effect she perceived herself to be making the most sacrifices in the marriage. There were issues of control in the relationship which required exploration. There was also much by way of underlying feelings and a sense of imbalance in the relationship to which attention was drawn. It was noted that Dr Cremona was compulsive and very active and it was concluded that this represented his personality as opposed to continuing drug usage. They contracted with me to continue in ongoing counselling aimed at assisting them with their apparent marital and relationship difficulties. During this period of time Mrs Cremona underwent liver surgery for a benign growth and fell pregnant again. There was some support offered to both Dr Cremona and Mrs Cremona around these issues. Attention was drawn to how decisions were made in the relationship. There was considerable work done on improving their listening skills and offering them a structure in which to resolve feelings and prevent their accumulation. I noted on the 12th December 1991 that there has been some improvement. There was desire to introduce some complementarity into their relationship and Dr Cremona was addressing his increased awareness of his tendency to condescend and seek to be in control. Again on the 20th February 1992 there was some further improvement noted in the relationship and there were decisions to be made with regard to buying a new home. There were continuing issues of trust and a tendency to argue which required ongoing attention in the context of our relationship counselling. On the 19th March 1992 Dr Cremona consulted me on his own to address his own need to control and his tendency towards obsessionality. He agreed it was important that he learn to control for his stress levels more effectively. That session and the following session looked at more effective stress management techniques, in particular office reorganisation given an increasingly busy practice, the need for ongoing peer support, and internal stress management techniques of the sort offered by meditation, exercise and lifestyle changes. Their new baby was due on the 5th May. I consulted Dr Cremona again on the 2nd July 1992 and he told me that they had a baby boy (Alex) aged two months. He was concerned about Mrs Cremona who he felt was depressed post-partum and 'I can't console her'. He was clearly worried about her and we discussed ways in which he might be able to offer support. I consulted Dr and Mrs Cremona again on the 6th August 1992. We looked at ways in which they could resolve conflict more effectively. We examined where their relative expertise lay and also discussed parenting issues. On the 24th September 1992 I again consulted Dr and Mrs Cremona and both had agreed that they had reached something of a plateau in our work having made some adjustments to the other but realising there were certain differences that they had to live with." 65 Later in his report Mr Borenstein said he was impressed by Dr Cremona's personality as being obsessional, very active and tending towards controlling. Mr Borenstein believed that in the context of relationship counselling and individual counselling clear progress was being made. Mr Borenstein gained the clear impression that Dr Cremona was taking suggestions that he made on lifestyle and work changes on board and utilising them as best he could to make changes to his working and personal life. He was beginning to draw a boundary between his work and his personal life. Mr Borenstein gained the opinion that Dr Cremona was well on the way to rehabilitating himself and had developed necessary and essential lifestyle changes and psychological strategies to ensure he would not return to the use of narcotic drugs. 66 Mr Borenstein gave oral evidence during which he said that by the time the consultations had finished in September 1992 he felt there had been some considerable progress. "There were clearly some differences, but he felt that Dr and Mrs Cremona were more able to live with those differences." He believed they were dedicated to making their marriage work. Dowd J accepted this evidence. 67 Dr Kathy Allen first worked in Dr Cremona's practice in February 1990. In cross-examination she was asked about discussions she had had with Mrs Cremona about the marriage and whether Mrs Cremona had told her that the drug issue had threatened the marriage. Dr Allen agreed that she did and she was asked whether Mrs Cremona had told her that Mrs Cremona and her husband were still trying to resolve these difficulties at the time of his death. Dr Allen replied: "She said that she felt they had been resolved." Dowd J described Dr Allen as an impressive witness and accepted "her view that the marriage difficulties had been resolved". 68 In the written submissions the RTA emphasised the history of tension and stress, the resort by Dr Cremona to substance abuse, the level of communication and quality time and the personalities of the parties to contend that the marriage scored poorly on each criterion. Mrs Cremona had worked in Sydney until she was seven months pregnant and then had to sacrifice her career as a pharmacist about which she felt some resentment. Various bad omens were revealed by Mr Borenstein's notes. Mrs Cremona said that she did not think she was "Miss Congeniality" and found it difficult to adjust to a marriage situation when she was twenty-four. The RTA submitted that the reasons Dowd J gave for concluding that the marriage would remain intact were devoid of plausibility. Particular attention was directed to references to the acquisition of a new home, to increased social and recreational activity, and to the "most cathartic episode" concerning the discovery of drug taking. It was said that Dr Cremona's religion and attitude towards the sanctity of marriage applied only to one partner. Too much reliance was said to have been placed on the conclusions of a friend who thought that the marriage differences had been resolved. These were all matters which Dowd J was entitled to take into account. It was a matter for him what weight he attributed to them. 69 It could not be and was not suggested that it was not open to the trial Judge to accept the evidence of Mr Borenstein and Dr Allen. It was open to Dowd J to conclude that "the marriage was likely to survive". But that conclusion did not absolve his Honour from measuring and bringing into account the chance that it might not have survived. One factor would have been renewed drug abuse.

Prospects of Re-Marriage 70 Dowd J found that there existed a real prospect of re-marriage which the Court was obliged to take into account. His Honour did so by providing "a value on her prospect of re-marriage at 2 per cent but 2 per cent only of the loss of future economic loss only, not of the total amount of damages, and excluding superannuation". 71 In Dominish v Astill at 378 Reynolds JA after referring to several of the authorities said: "It has come to be accepted, and in my opinion correctly, that, although real and not nominal allowance should be made for the revived capacity to marry, such allowance should, in general, be moderated for fear of otherwise doing an injustice to the widow." 72 His Honour proposed a lump sum deduction which was about 11 per cent of the total which otherwise would have been awarded though not so described. Samuels JA was concerned with the conceptual basis for the deduction and referred to Lord Wright's statement in Davies v Powell Duffryn Associated Collieries Ltd at 617 that the lump sum for damages has to be taxed down by having due regard to uncertainties, for instance, "that the widow might have again married and thus ceased to be dependent and other like matters of speculation and doubt". At 380 Samuels JA referred to the necessity "in evaluating the consequences of re-marriage, to have regard to the nature and extent of the financial benefits which the second marriage brings, or is likely to bring, in its train". At 381 his Honour remarked that a reference to Williamson v John I Thornycroft & Co Ltd [1940] 2 KB 658 by the High Court in Willis v The Commonwealth (1946) 73 CLR 105 suggested that the significance of the re-marriage was that it closed the period of the widow's dependency. After citing Jones v Schiffmann Samuels JA said at 383: "It appears from what I have already said there are two possible and alternative reasons for taking account of the widow's freedom to re-marry. The first is that it may affect the value of the notional dependency. The second is that it constitutes a revived capacity which must be valued as a benefit accruing from the death." 73 At 386 Samuels JA said: "But, conventionally, it is not her capacity to re-marry, but the possibility that the widow will do so which is the subject of the valuation. And its purpose is to reduce the tortfeasor's liability by the amount in which the chance of a substituted source of support should be assessed. So again, it is the amount and extent of dependency (as I have used that word) which is in issue." 74 In Dominish v Astill the amount of the deduction fixed by Reynolds JA and agreed to by Samuels JA was against the trial Judge's description of the widow expressing no disinclination to re-marry and being a person of pleasant and agreeable personality and of very personable appearance. Mahoney JA gave separate reasons and agreed with the orders proposed by Reynolds JA. What emerges from the discussion is that in taking account of the chance of re-marriage it is also necessary to take account of the extent to which, if at all, such re-marriage would lessen or remove the widow's dependency. If that dependency is to be valued at X dollars per week it cannot be affected by a re-marriage, which would not have occurred had her husband survived and which provides nothing by way of financial support to the widow. 75 The RTA submitted that 2 per cent was a token and nominal deduction which did not reflect reality given that Mrs Cremona was thirty-six at the date of judgment. It was pointed out that her independent character did not prevent Mrs Cremona from marrying Dr Cremona after a relatively short courtship. There was no reason why the same process could not occur again. Further, since the re-marriage could be to someone with significant earning capacity it was likely there would be a superannuation component in his earnings. As a matter of principle there was no reason to exclude superannuation from the calculation of the benefits of re-marriage. Mrs Cremona recognised that she had very young children whose best interests required a male role model to replace Dr Cremona. It was said that the common justifications for re-marrying, such as not continuing through life alone and to provide a better adult setting for the children would apply. 76 Counsel for Mrs Cremona emphasised the formidable task which the tribunal of fact undertakes, a task which cannot be governed by rules, even imprecise rules. Dowd J had the opportunity to observe Mrs Cremona and described her as a difficult, forthright, determined and strong-willed woman who would not make an easy marriage partner. It was unlikely she would marry a man who would be able to provide the large financial benefits she would have continued to receive from Dr Cremona whose income fell within the top 3 per cent in the community. 77 Mrs Cremona submitted that having regard to the facts that

(a) superannuation accrues only at the end of working life;

(b) that no benefit is received from it week by week; and

(c) that the prospect of superannuation benefit from re-marriage is low,

Dowd J was justified in refusing to reduce the award for superannuation for loss of superannuation benefits by reason of the possibility of marriage. The effect of adding the 2 per cent re-marriage contingency to the vicissitudes allowed for in respect of superannuation would have a minimal effect and could be ignored as a matter of judicial discretion. 78 The difficulty in measuring the chance of re-marriage and the huge advantage that Dowd J had in seeing Mrs Cremona and hearing her evidence together with his Honour's finding that the independence of Mrs Cremona in fiscal and personality terms meant that any contribution to her future support was likely to be relatively small leads me to the conclusion that no error has been shown in the 2 per cent deduction his Honour proposed. 79 Dowd J did not explain why this contingency factor for the prospects of re-marriage was not applied to the claim for superannuation. Re-marriage might have substituted in whole or in part for this source of future support. In my opinion, the contingency discount should have been applied to superannuation.

Superannuation 80 Dowd J's award was attacked by the RTA for being based on a flawed methodology and by Mrs Cremona on the basis that the payment she had already received by way of a death benefit of $163,780 should not have been deducted as to do so was contrary to the requirement of s3(3)(b) of the Act.

Methodology 81 Dr Cremona at the date of his death was a member of the Scottish Amicable Managed Superannuation Fund. Due to the poor performance of this fund Dr Cremona had elected not to make any superannuation contributions during the year ended 30 June 1993 and was looking to transfer to a new fund. The last contributions made before his death were $21,592 in 1991 and $18,698 in 1992. At the time of his death he had a fund balance with the fund in the amount which was paid to Mrs Cremona on 12 August 1993 by way of death benefit. His Honour's approach to assessment of the benefit that Mrs Cremona would have derived if Dr Cremona had survived from his superannuation was based on a report prepared on 19 March 1999 by Mark Robert Ronan, a partner of Deloitte Touche Tohmatsu. Mr Ronan relied upon the following facts and assumptions when preparing his report. "3.1 Dr Cremona was born on 9 September 1954. 3.2 Mrs Minna Cremona was born on 30 April 1964. 3.3 At the date of his death Dr Cremona has accumulated superannuation benefits of $163,780. 3.4 We have used a 3% discount rate in order to reflect future dollars in today's terms. 3.5 When determining an appropriate growth rate for funds invested in superannuation we have had regard to rates published by 'In Tech Market-Linked Pooled Fund Performance Survey' on 31 January 1999. The survey shows a ten-year average of 11.0%. We note that the rate is expressed net of tax, ongoing fees and expenses. 3.6 We have assumed that from 1 July 1993 Dr Cremona would have recommenced making annual superannuation contributions through L.J.C. Cremona Pty Limited in the amount of $25,000. These contributions would have continued until Dr Cremona reached age 65 years on 9 September 2019. 3.7 We have assumed that Mrs Cremona would have been appointed a Director of L.J.C. Cremona Pty Limited on or before 1 July 1995 and commencing 1 July 1995 $8,000 per annum would have been contributed to a superannuation fund on Mrs Cremona's behalf through L.J.C. Cremona Pty Limited. Contributions made on behalf of Mrs Cremona would have ceased on 9 September 2019. 3.8 We have assumed that the salary paid to Mrs Cremona for her services as director would not exceed $70,000 per annum and accordingly she would not be subject to the superannuation surcharge. 3.9 It has been assumed the existing income tax regime will remain applicable. 3.10 It has been assumed the life expectancy of an adult male aged 65 years is 15.4 years. 3.11 It has been assumed that upon Dr Cremona attaining age 65 years would have elected to maximise his lump sum superannuation benefit receiving the balance as a life pension. 3.12 It has been assumed that a male aged 65 years could acquire an annual lifetime pension of $1 for $11. 3.13 It has been assumed Mrs Cremona would have elected to take her entire superannuation benefit at 9 September 2019 as a lump sum benefit. 3.14 When determining Mrs Cremona's level of dependency on Dr Cremona's accumulated superannuation funds a dependency level of 72.8% has been used." 82 These assumptions included the assumption that the fund would grow at an average of 11 per cent per annum "net of tax, ongoing fees and expenses" and the assumption that Dr Cremona would recommence annual superannuation contributions through a company in the amount of $25,000 until he reached the age of 65. It was also assumed that Mrs Cremona would be appointed a director of that company on a particular date and an amount of $8,000 per annum would be contributed to a superannuation fund on her behalf through the company, such contributions also ceasing on the date of Dr Cremona's attaining the age of 65. The assumption of her level of dependency was higher than that Dowd J thought appropriate (63 per cent). No express reference was made to the effects of inflation nor was any opinion expressed about inflation. It was assumed that there would be no change in the existing income tax regime. In assessing the loss of future earning capacity courts invariably use current wage rates net of income tax. 83 On the basis of these assumptions Mr Ronan calculated Mrs Cremona's lost superannuation benefits as at 2 April 1999, resulting from premature death of her husband as follows:

Loss of personal superannuation benefits 360,754 Loss of entitlements to Dr Cremona's Superannuation benefits 1,082,443

This is an accepted method for calculating a loss of superannuation benefits; see for example Rouse v Shepherd (1994) 35 NSWLR 250 at 262. It is not clear to me that the argument now advanced and based on Todorovic v Waller was put at trial. The RTA's expert, Mr Rossetto, stated "on the basis of Dr Cremona's level of income, we consider that this amount of contribution level is not unreasonable" and calculated superannuation based on $25,000 per annum contribution. 84 There was dispute about whether the average growth rate should be treated as 11 per cent or some other percentage, ie, 7 per cent. Geoffrey Ian McRae, a qualified actuary with 28 years experience in insurance and superannuation and a principal in William M Mercer Pty Limited, gave his opinion that Mr Ronan's report of 19 March 1999 seemed to provide a better estimate of what the actual loss of superannuation would have been. 85 In calculating Mrs Cremona's loss, Dr Cremona's assumed future contribution of $25,000 to a superannuation fund was deducted from his assumed future income. It was treated separately and differently as a contribution to superannuation which would produce a different benefit to him if he had survived and to Mrs Cremona as his wife dependent upon him. The product was a fund enhanced not only by regular annual contributions and the earnings on resultant investments but also by having the advantage of a tax regime less onerous on the earnings and designed to encourage such an investment. Mr Ronan said: "Investments in superannuation have very significant tax benefits. There are several thresholds which entice people to invest in superannuation. There are thresholds for lump sums so you can receive up to an amount presented in the region of $98,000 which is tax free if you receive it by lump sum superannuation payment. Similarly if you decide to take a lump sum payment in concert with a pension there are also tax breaks for the pensions up to a certain degree." 86 Even so the RTA submitted that effectively it should be treated not as a contribution to a superannuation fund but as an annual amount of anticipated income from which Mrs Cremona might benefit. 87 Support for the RTA's submission was said to be found in Jongen v CSR Limited. In that case the plaintiff claimed damages for personal injuries sustained in the course of his employment with the defendants. The plaintiff voluntarily participated in a private superannuation scheme to the extent of an amount of his salary per annum. His employer contributed a further amount. Anderson J found that the plaintiff would have continued his contributions at the level stated until his retirement at the age of 70. By reason of his disability as a result of the injuries he sustained, his membership of the scheme was terminated. He claimed to be compensated for what was described as "loss of superannuation benefits". Anderson J observed: "This item of claim was approached by counsel for both parties on the basis that there is as yet no conventional method of working it out. If this is so, it may be because the nature and the extent of the loss in any particular case will depend upon the features of the particular scheme." (61,711) 88 After referring to terms of the policy his Honour said at 61,712: "In summary, where a policy of insurance is taken by the trustees in respect of a member, the proceeds of which are payable to the trustees upon disablement of that member, then if the employee is terminated by reason of that disability, the trustees are obliged to pay over the proceeds of the policy to the member in addition to all other benefits to which the member is entitled. This 'insured benefit' is plainly a benefit he would only receive on being forced to retire through disability. What then is to be awarded to the plaintiff in this case by reason of the fact that he was deprived of the opportunity to continue in this scheme until his planned retirement in February 1998? On behalf of the plaintiff it is said that he is entitled to be compensated for the loss of what would have been the employer's contribution to the fund, net of tax, and discounted for present payment. Formulated in that way, it is not really a claim for 'loss of superannuation benefits'. Put thus, it is simply a claim for loss of a benefit in the nature of additional salary. The defendant took a different approach, contending that it was necessary to compare the total benefits accruing to the plaintiff on early termination of his participation in the scheme (including the insurance payment) the total benefits that would have accrued to him had he continued in the scheme until 1998." 89 After reciting competing expert evidence at 61,713 Anderson J said: "I think the preferable approach in this kind of case is to leave out of account altogether any consideration of the benefits likely to be received on maturity and actually received by the plaintiff on early termination and to have regard only for the value of what would be the employer's contribution if the disability had not occurred, appropriately discounted for tax and the fact that it is a payment to a privately administered fund rather than into the hands of the plaintiff. This approach has the virtue of simplicity and, in regard to the exclusion from consideration of benefits actually received, such as in this case the 'insured benefit' of $9,326, iIt seems to me to accord with the rule in the National Insurance Co of New Zealand Limited v Espagne (1961) 105 CLR 569. I think it is more in accord with principle to regard the benefits actually received by the plaintiff due to early termination of the superannuation scheme as collateral benefits which do not go in mitigation of common law damages for loss of future earning capacity. Paff v Speed ( 1961) 105 CLR 539 per Menzies J at 536 . It follows from what I have said above that I prefer (although with some modification) the general approach adopted on behalf of the plaintiff." 90 Anderson J emphasised the singularity of the circumstances of the case before him. No general principle can be derived from the conclusion he reached applicable to the facts of this case. The question here is to determine the value of Dr Cremona's accumulated superannuation fund at a future date, if he had not been killed, part of the benefit which Mrs Cremona would have enjoyed as a dependant. No expert suggested that that entitlement could be measured appropriately in the way the RTA suggests. Rather, the RTA argued that the method of calculation was dictated by the cases and referred to Todorovic v Waller. 91 In Todorovic v Waller the relevant question under consideration was how in an action for damages for personal injuries where there had been a loss of earning capacity likely to lead to financial loss in the future the present value of the future loss ought to be quantified. The answer to that question was obscured by considerations of the effect of inflation, future changes in rates of wages and prices and the impact of income tax not only on future salary but also on the investment of the lump sum awarded by way of damages as compensation for the loss. The High Court decided by a majority that in an action for damages for personal injuries, where there has been a loss of earning capacity which is likely to lead to financial loss in the future, or where the plaintiff's injuries will make it necessary to expend in the future money for the provision of goods and services for the plaintiff's health and comfort, the present value of the future loss ought to be quantified by adopting a discount rate of 3 per cent in all cases, subject to any relevant statutory provision. No further allowance should be made for inflation, the future changes in rates of wages or prices, or for tax upon income from investment of the sum awarded. 92 The Court of Appeal (Todorovic v Waller (1981) 1 NSWLR 97) had held at 102 that in personal injury cases in times of high inflation the fairest and simplest practice for courts to follow was to award compensation for future losses and future outgoings without any discount for the interest earning capacity of the product either in respect of losses and expenditure commencing immediately or for those deferred to a future time. The only discount required by law was that to be applied throughout the process of assessment to allow for the contingencies of life. In adopting a zero rate of discount the liability of the plaintiff to be assessed to tax on the invested lump sum was to be disregarded entirely. 93 Part of the claim was for loss of superannuation. At 104 the Court said: "The calculation of the value of the respondent's lost superannuation benefits should proceed on the basis that upon retirement he would be earning the salary appropriate to a Grade 5 operator at the time of trial, and that for the appropriate period after his retirement in 2009 he would receive, during his life expectancy, a pension calculated upon that salary. His Honour found, and the evidence establishes, that his pension would amount to 50.5 per cent of the salary of a Grade 5 operator ie $8,234. He would have had the further right of applying his accumulated contributions towards an additional pension amounting to 20 per cent of his actual salary. He had a number of alternatives which he might have adopted and, for the purposes of this calculation, we will assume this is the one he would have selected. This would bring his total pension to $11,495. The life expectancy of an adult male aged sixty-five years is 12.33 years. If he enjoyed his pension, therefore, for his life expectancy he would receive a gross sum of $141,388. Although this represents compensation for the loss of benefits which would not have fallen due until long after the trial it is no longer necessary to discount them. But from the figures calculated the sum of $5,726 which the respondent received upon his retirement in 1978 must be deducted, leaving an amount of $135,662. This figure has in our opinion to be substantially discounted for vicissitudes. He may not have attained the age of sixty-five years. The discount has to be arbitrary, and we apply 33 1/3 per cent. On this basis the present loss of pension benefits amounts to $90,747." 94 The High Court held that the Court of Appeal had erred in adopting a zero rate of discount. In the judgment of Gibbs CJ and Wilson, with whose orders Mason, Aickin, and Brennan JJ agreed, there appears the following at 426-427: "In calculating the value of the respondent's lost superannuation benefits, the Court of Appeal proceeded on the basis that the pension payable to the respondent on his retirement would be 50½ per cent of his gross salary at retirement which was $16,306 [which equals $8,234 in the Court of Appeal judgment]. They assumed that out of a number of alternatives open to him the respondent would have exercised the further right of applying his accumulated contributions towards an additional pension amounting to 20 per cent of his salary. That would have brought his pension to $11,495. They said that the life expectancy of a male aged sixty-five years is twelve and one-third years. Reference to tables of expectation of life shows that what the Court of Appeal has done is to consider what the expectation of life of the respondent would have been if he had survived until 2009, rather than what it was at the date of the trial. The Court of Appeal then held that if the respondent had enjoyed his pension for twelve and one-third years from the date of his retirement he would have received $141,388 [$11,495 x 12 1/3] from which had to be deducted an amount of $5,726 which he in fact received on his retirement. The resulting amount was $135,662. The Court of Appeal then made a deduction of 33 1/3 per cent in respect of the vicissitudes of life and thus arrived at the loss of $90,747. The deduction of 33 1/3 per cent cannot be criticized, particularly since the Court of Appeal favoured the respondent in taking twelve and one-third years as his expectation of life at a future date. The calculation of the actuary shows that the present lump sum equivalent in value to the loss of a superannuation benefit of 70½ per cent of $16,306 [which equals the $11,495 in the Court of Appeal judgment] per annum for a period of twelve and one-third years, at a discount rate of 3 per cent, is $39,250. When a deduction of 33 1/3 per cent is made the resulting figure is $26,170. After deducting the $5,726 actually received the loss under this head of damage is seen to be $20,444. Again, since the appeal is limited to questions of principle, we are content to proceed on the basis of the calculations of the appellant's actuary without questioning the accuracy of their details, since we have no reason to believe that they operate unfairly to the respondent. If the figures of $198,450 and $20,444 are substituted for the amounts of $275,000 and $90,747 adopted by the Court of Appeal the resulting damages payable to the respondent total $300,490, plus $14,000 for interest to date of trial."

The fault in the Court of Appeal's decision derived from the failure to consider the respondent's life expectancy at the date of the trial, which the court had adequately compensated by the discount for vicissitudes, and the failure to make any discount to arrive at the present lump sum equivalent in value to the loss of superannuation benefit. 95 The only point of any significance which can be applied to the present case is that a 3 per cent discount was used to determine the present value of a future entitlement. That was exactly what Mr Ronan did in making the calculations which Dowd J accepted. Mr Ronan made no assumption and expressed no opinion about inflation or other possible future changes in wage rates or taxation. The chance of such changes was embraced by the fixed 3 per cent discount. The method by which Dowd J calculated the value of the lost superannuation benefits was based on expert evidence open to be accepted and was unexceptionable, apart from the dependency percentage which was higher than Dowd J though appropriate.

Deduction of $163,780 96 Section 3 of the Act was amended in 1928 by the Compensation to Relatives (Amendment) Act 1928 Act No 8. In the Second Reading Speech it was said that the bill was to bring the law into line with English law. The Minister said: "The other matter is this: supposing one of the Hon members of this House should have the misfortune to run over another man with his motor car, and kill him. The present position is that that man may be insured, and the Hon member then would be in this position: if he did not kill him, but only maimed him, he would be mulcted in heavy damages, but if he killed him outright he might not have to pay anything - the reason being that the family might be better off because the man was dead. That is to say they would have got the insurance money. ….. That was set right in England, I believe, in 1908, and we think it should be set right here." 97 Section 3(3) of the Act provides that in assessing damages in an action under s3(3) there shall not be taken into account (b) "any sum paid or payable" out of any superannuation or like fund. The RTA submitted that the subsection denied Mrs Cremona's claim to damages for the diminution or loss of superannuation rights. On the other hand, the RTA submitted that, if damages were recoverable under this head, a deduction was rightly made to take account of the amount of $163,780 paid to Mrs Cremona out of the fund, paid as a death benefit. Mrs Cremona submitted that s3(3) prohibited such a deduction. As the Second Reading Speech to the 1928 Act indicates the amendment is directed to prevent the wrongdoer avoiding liability to compensate the deceased's family by arguing that, for example, the superannuation payment on his death would result in the family being better off. 98 If Dr Cremona had not died as the result of the accident but had been injured to an extent which meant that he could not continue with superannuation contributions so that his ultimate entitlement would have been diminished he may have been entitled to damages to compensate him for the loss. If as a result of the accident he became entitled to an immediate payment out of the fund and received such an amount the damages assessed would have to take account of this payment. In Paff v Speed, the case of a former policeman compulsorily retired because of physical unfitness who claimed as part of his damages in an action for negligence against the owner of a motor vehicle loss of pension rights, Fullagar J said at 560: "But the fundamental assumptions invited were that the plaintiff would have continued in his career as a policeman, that a policeman's lot is a very happy one indeed, and that the plaintiff had been deprived of all the benefits attaching to that happy lot. Among those benefits was the pension which has been mentioned.

When the plaintiff puts his case in this way, it seems to me impossible to deny to the defendant the right to adduce evidence to show that in fact the plaintiff has not lost all the benefits attaching to the career which he has had to abandon, but is in fact receiving, and will in all probability continue to receive for the rest of his life, a very substantial benefit which is an incident of that career. …. Here the plaintiff was claiming, although as general, and not as special, damages, for the value of a totality of specific benefits, which he said he had lost. In such a case it must be open to the defendant - just as it would be in relation to any item of special damages - to prove that the plaintiff has lost not that totality but something less."

99 At 562-3 Menzies J said: "I think the evidence was admissible and find some difficulty in understanding how it can be maintained that a plaintiff, who to increase his damages alleges and proves what, because of the premature determination of his services, he has lost under a pension scheme can at the same time shut out evidence that upon that determination he was granted benefits under the scheme that would offset, either wholly or in part, the pension loss of which he was complaining. The principle of completeness not only justifies but requires the admission of this evidence." 100 At 565 Windeyer J remarked that it would have been contrary to common fairness not to allow the defendant to prove the true facts. See also per Dixon CJ at 551. 101 In Parry v Cleaver [1970] AC 1, a case also concerned with how a policeman's pension rights should be taken into account in his claim for damages for negligence arising out of a motor vehicle accident, Lord Reid said at 20-21: "So by having to leave the police force the appellant lost two things: first the wage which he would actually have received until his retirement from the police force if he had not been injured, that is, his gross wage of £21 18s 3d minus the sum which would have been retained as a contribution £1 3s 1d; and secondly the opportunity, by continuing to serve and to make his contribution, to obtain his full retirement pension. On the other hand, he gained two things, the wage which he received as a clerk, which must admittedly be set off against the wage which he lost, and the ill-health pension. The main question in the case is whether this pension must be brought into account, and for the reasons which I have given I am of opinion that it must not. That is the position up to the retiring age from the police force. Thereafter the position is different.

For a time after retirement from the police force he would still have been able to work at other employment, so allowance must be made for that. As regards police pension, his loss after reaching police retiring age would be the difference between the full pension which he would have received if he had served his full time and his ill-health pension. It has been asked why his ill-health pension is to be brought into account at this point if not brought into account for the earlier period. The answer is that in the earlier period we are not comparing like with like. He lost wages but he gained something different in kind, a pension. But with regard to the period after retirement we are comparing like with like. Both the ill-health pension and the full retirement pension are the products of the same insurance scheme; his loss in the later period is caused by his having been deprived of the opportunity to continue in insurance so as to swell the ultimate product of that insurance from an ill-health to a retirement pension. There is no question as regards that period of a loss of one kind and a gain of a different kind." See also Auty v National Coal Board (1985) 1 WLR 784 at 807. 102 Section 3(3)(b) provides that "any sum paid or payable" out of any superannuation shall not be taken into account. Mrs Cremona claimed damages for superannuation entitlements lost and hence not paid and never payable because of Dr Cremona's death. The subsection is directed to sums which have been paid or are payable out of superannuation. The RTA's submission that a claim for a lost superannuation entitlement cannot be included in the assessment of damages because of the language of subs (3) fails because of the language of the sub para let alone the intention of the provision: see Mangan v Cornish (1962) 80 WN (NSW) 143 to which I refer below: McIntosh v Williams [1979] 2 NSWLR 543 at 572C. 103 Cantwell v Criminal Injuries Compensation Board is a decision of the House of Lords of 5 July 2001 which at the date of writing is unreported. The case concerned the application of an extra statutory compensation scheme for the victims of violent crimes. Subject to immaterial exceptions compensation was to be assessed in the same way as common law damages. The respondent, a police officer, was forced to retire by injury the result of a crime of violence. He lost from the normal date of retirement the retirement pension he would but for his injury have drawn but gained an ill health pension which, but for his injury, he would not have drawn. The question was whether he should be compensated for the loss of his retirement pension after his normal retirement date without giving credit for his ill health pension during that period. The First Division of the Court of Session felt constrained to hold that he should be so compensated by s10(a) of the Administration of Justice Act 1982 which provided: 104 "Subject to any agreement to the contrary, in assessing the amount of damages payable to the injured person in respect of personal injuries there shall not be taken into account so as to reduce that amount (a) any contractual pension or benefit …"

This section was not limited to claims under Lord Campbell's Act ( Fatal Accidents Act 1846 (UK)). 105 The fund was to be treated as one to which the respondent contributed with the remainder being made up by the police authority. The respondent claimed, in part, that he had been denied the opportunity to increase his pension entitlement by continuing to work until he reached the normal retirement age (para 16). The question was whether in assessing the amount to be paid for this head of damage, account should be taken of the amount of the ill health pension payable which he had received and would continue to receive. The First Division noted what has been said in Parry v Cleaver about the comparison of like with like, to which I have referred. Even so the Court concluded that s10(a) excluded any deduction, while recognising that the result was inequitable. 106 Lord Hope of Craighead, with whose reasons the other members of the House agreed, stated in para 22 that the guiding principle was that damages for personal injury are intended to be compensatory and that the compensation which the injured party received should as nearly as possible put him in the same position as he would have been in if he had not sustained the wrong for which he is to be compensated; per Lord Blackburn in Livingstone v Rawyards Coal Co (1880) 7 R (HL) 1 at 7 (see LR 5 App Cas 25 at 39). His Lordship said: "The compensatory approach requires like to be compared with like. The nature of the loss for which the injured party seeks to be compensated must be identified. If it can be shown that he has received, or will receive, a benefit which is of (sic) same as that which he has lost, that benefit must be set off against the loss. If this is not done, the injured party will be placed in a better position than he was before the accident." 107 Lord Hope of Craighead said that in some cases, as Windeyer J explained in Paff v Speed at 567, it will be sufficient for the defendant simply to call evidence which contradicts the case the pursuer seeks to establish. If the claim is for the loss of a pension the evidence would show the plaintiff has a pension and so on. "In each case as Windeyer J said the first consideration is the nature of the loss or damage that the pursuer says he has suffered" (para 23). As his Lordship pointed out, in Parry v Cleaver which raised the question whether an ill health pension was to be brought into account in the assessment of damages, Lord Reid at 13 put the following questions: 1. What did the plaintiff lose as a result of the accident? What are the sums which he would have received but for the accident but which by reasons of the accident he can no longer get? 2. What are the sums which he did in fact receive as a result of the accident but which he would not have received if there had been no accident? Finally, must the latter sum be deducted from the former in assessing damages?

Ill health pensions had to be left out of account up to the retiring age because one was not comparing like with like. The plaintiff lost wages but got something different in kind, a pension. But with regard to the period after retirement like was being compared with like. It was a simple comparison of pensions. In Parry v Cleaver Lord Pearce said at 33: 'Since he is claiming for that period in respect of a diminution of pension it is obvious that he must give credit for the smaller pension which he will get against the larger pension which he would have got.' 108 Lord Hope of Craighead said that the extent of the prohibition and of the direction in s10 turned upon what was meant by the words "so as to reduce that amount". Those words are not found in subs (3) but in Mangan v Cornish Herron ACJ, with whom Maguire and Collins JJ agreed, dealing with para (b) said at 146: "The obvious intendment of the section was to prohibit the reduction of damages by a jury because of benefits from a life policy or payment out of a superannuation or provident fund to which the dependents of the deceased became entitled as of right." That proposition could not be doubted. 109 Section 10 of the Administration of Justice Act listed both benefits not to be taken into account (the prohibition) and benefits to be taken into account (the direction). By reference to the latter the language suggested that the "prohibition" and the "direction" must be applied to the particular head of loss or damage rather than to the total amount. His Lordship said: "35 These examples show that the correct approach is to apply the prohibition or the direction in section 10, as the case may be, only in so far as the nature of the payment or benefit that is in issue is relevant to an assessment of the head of damages claimed. The first step is to identify the nature of the loss claimed and then to calculate the amount of that loss. Only when this has been done does the question arise as to whether or not the listed receipts should be taken into account so as to reduce that amount.

36 The prohibition in section 10(a) refers to 'any contractual pension or benefit'. Where the head of damages which is in issue is a claim for loss of earnings, the prohibition is plainly relevant to the calculation of the amount of the injured party's pecuniary loss for the relevant period. But what is to be done where the head of damages which is in issue is a claim for the loss of a contractual pension or benefit is met by evidence of the receipt of a pension, or a benefit of the same kind, under the same contract? The answer is to be found in the nature of the claim. In the situation which I have envisaged, the injured party's loss can only be measured by comparing the pension or benefit which has been lost with that which has been received. The measure of the loss is the difference between these two amounts, comparing like with like. There is no place for the prohibition in that calculation. The loss can only be measured by taking the contractual pension or benefit into account. Once that calculation has been completed there is no need of the prohibition. It is obvious that the contractual pension or benefit cannot be taken into account again at that stage. That would be open to the objection of double-counting." 110 Lord Hobhouse of Woodborough, with whose judgment both Lord Steyn and Lord Scott of Foscote agreed, took a broader approach. His Lordship said: "51 In my judgment the appellants are right. Like very many questions arising in relation to the law of the assessment of damages, it is really a question of fact and finding the answer depends not so much upon any principle of law but on the application of sound processes of reasoning. In the present case what is involved is Mr Cantwell's loss of pension following his reaching the age at which he would ordinarily have retired. There is no dispute between the parties as to the treatment of the earlier period between the time he received his injuries and the time he reached his normal retirement age. On any view the first question to be answered is what loss has Mr Cantwell suffered. Mr Cantwell has been enabled to formulate his claim only because the pension scheme uses different terms to describe the full-term pension - the 'ordinary' pension - and the advanced but reduced pension - the 'ill-health' pension. He will not get the former; he will only get the latter. But he will get a pension under the scheme. It is still the same scheme; the payer remains the same. It remains the same type of pension, that is to say, a pension paid out of contributions which are treated as having been made over the duration of his employment in the police service. The only thing that has changed during the relevant period is that it is paid at a reduced rate. In this situation, to say that the sum which Mr Cantwell would have received but for the accident and which, by reason of the accident, he can no longer get was £15,200 pa does not accord with the admitted facts. He has not lost the whole of that sum. He has only lost part of it. The correct way to describe what has happened is to say that his pension has been reduced. Similarly, if the reduction in his pension had been smaller, say, £100 pa, it would more readily be appreciated that it would be an abuse of language to say that he had lost £15,200. Yet the logic of this argument would be the same. Mr Cantwell's argument fails on the facts. (See also Lord Reid's dictum at [1970] AC pp 20-1 stressing the need to compare like with like, followed and applied by Oliver LJ in Auty v NCB .

52 In view of this there is no need to go into the legal fallacy which underlies much of the argument of Mr Cantwell. The law draws a distinction between the suffering of a loss and the mitigation of that loss. Mitigation is a form of the avoidance of loss either as the result of receiving some benefit which would not have been received but for the incident which gave rise to the loss or as the result of voluntarily taking advantage of an opportunity to reduce the loss. The subject matter of s10 is the inclusion or exclusion of mitigation. The statute makes additional provision for what may and may not be taken into account by way of mitigation in qualification or supplement of the common law rules. But the original structure is still there. The question of mitigation only comes into the assessment after the loss itself has been ascertained. It is true that criteria of causation are used throughout the enquiry as are criteria of remoteness. But mitigation and avoidance of loss remain concepts of the mitigation and avoidance of losses which have already been identified. It is the first vital step which Mr Cantwell's argument misses out." In like manner it can be said in the present case that the measure of Mrs Cremona's loss of the superannuation benefit cannot include the amount that she has been paid on account of it. 111 Mrs Cremona's submissions relied upon the decision of this Court in Watson v Dennis [1968] 88 WN (Pt 1) (NSW) 491. The plaintiff was the widow of a deceased retired public servant. She claimed damages under the Act. The deceased was totally incapacitated and received a pension under the Repatriation Act 1920 (Cth). He received $7 per week superannuation and a repatriation pension of $28.50. During his life the plaintiff received a repatriation pension of $3.50 per week. After his death she continued to receive the superannuation and her repatriation pension was increased to $20 per week. The jury was told to ignore the repatriation pension received before death and told that the only relevant income of the deceased to be taken into account was the superannuation. This resulted in a verdict confined to funeral and associated expenses. At 495-6 Walsh JA referred to Bradburn v Great Western Railway Co (1874) LR 10 Ex 1 where the Court was concerned with a claim for personal injuries, and it was held that money received by the plaintiff from an accident insurance policy was not to be set off in assessing damages. The contrast was noted between the rule for claims under Lord Campbell's Act and personal injury claims under the common law. Accordingly, as Walsh JA said at 497, special provision was made for the purpose "that if a financial gain of the class specified occurs, it is not to be taken into account; that is to say, it is not to be taken into account as a set-off against the loss of the benefits which the plaintiff would probably have continued to have received if the death had not occurred." His Honour said:

"These benefits, which in a case such as the present the plaintiff would have probably gone on receiving, were the food and the clothing and the pocket money and so on supplied by the husband to the wife; the benefits which probably she would have gone on receiving did not consist of a right to receive the pension of the husband; she did not have, and would not have received, that pension. On the assumption that is being made, that he had continued living, what she would have received would have been whatever money the husband might from time to time have given her, and whatever food and clothing and so on that she might have brought out of money supplied by him.

I come, therefore, to the conclusion that, having regard to the subject matter with which the amending provisions which are now contained in subs(3) were dealing, it is wrong to say that the provision that 'there shall not be taken into account any sum paid or payable by way of pension under the Repatriation Act' has the result that in a case where, plainly, the wife would have gone on receiving benefits from her husband, one must, contrary to the fact, say that she would not have gone on receiving any benefits; the benefits which she probably would have received were not pension benefits, they were provisions made for her by her husband; and the section, in my opinion, has nothing to say contrary to recognizing that she was receiving such benefits and would probably continue to receive them. When it is said that there shall not be taken into account any sum paid or payable by way of pension under the Act, what is meant is that, having ascertained the prima facie value of the benefits which she would have received, you do not set off against it the amount which she receives subsequently to the death under the Act." 112 I do not think the passages relied upon support Mrs Cremona's submission. As both Walsh JA in the last sentence quoted and Lord Hobhouse of Woodborough point out, before any consideration is given to what may not be set off under the terms of s3(3), it is necessary to ascertain the benefits which the widow would have received. In the present case, ultimately, the supposition is that Mrs Cremona would have benefited from the superannuation fund when it matured. That was the loss on the basis of which damages have to be assessed. But to the extent that the fund was reduced by payments made to her she suffered no loss. She had received that amount. In my opinion, s3(3)(b) of the Act does not apply to prevent that payment being taken into account in assessing damages and Dowd J's conclusion about the matter was correct.

Practice Growth 113 Mrs Cremona relied upon a report of 25 September 1996 prepared by Kevin Forde, a lecturer in the School of Health Services Management at the University of New South Wales. In the report Mr Forde said that he had attempted to estimate the future growth of the practice - both financially and in patient numbers - up to the estimated date of retirement of Dr Cremona. He assumed that Dr Cremona would have retired at age 65 and then would have undertaken a few sessions per week until he was 70 years of age. He analysed separately two possible scenarios, that Dr Cremona remained in solo practice until he retired and that he engaged a partner to help run the practice. Statistics revealed that for the last two years up to and including the twelve month period ended on 30 June after his death he had virtually no help from other doctors, assistants or locums in generating his gross fees. 114 Mr Forde prepared a summary of statistics showing the percentage growth in number of patients, number of services and gross fees over the years from 30 June 1987 to 30 June 1993. The percentage growth in number of patients ranged from minus 7.8 in the year ended 30 June 1991 during which Dr Cremona had been in hospital up to plus 15.1 per cent, in number of services from .3 per cent in the year ended 30 June 1991 to 18.6 per cent and in gross fees from 3.2 per cent to 21.5 per cent. If one ignored the year ended 30 June 1991, the lowest growth percentage in number of patients was 4.7 per cent and in number of services 1.2 per cent. Mr Forde acknowledged that ultimately there would have been a physical limit on the number of patients Dr Cremona could have seen in any year and that there did not seem to have been much potential to increase profitability by increasing the number of patient consultations as he was already working approximately 60 to 70 hours per week. 115 Mr Forde expressed the opinion that it would be realistic to expect Dr Cremona's practice to have grown in patient numbers by around 4 per cent between 1993 and 1998. If he continued in sole practice Mr Forde would have expected his income to have peaked when he was in his mid-40s. He estimated that between 1993 and 1998 the growth in the gross fee income would have been around 6 per cent per annum, 4 per cent due to the estimated increase in patient numbers and 2 per cent as a result of the estimate increase in the Medicare rebate. He also anticipated that if Dr Cremona decided to stop bulk billing his practice income would increase although probably he would see fewer patients. Off-setting this would be an increase in some of the costs of running the practice such as bad debts and increased accounting and administration costs. If he abandoned bulk billing he anticipated the estimated increase in gross fees during the period 1993 to 1998 would be 9 per cent per annum. If Dr Cremona worked with a partner or associate Mr Forde expected that from 1993 to 1998 there would be an increase in patient numbers of 15 per cent per annum and in gross fees of 15 per cent per annum. Mr Forde gave oral evidence and was cross-examined. 116 Dowd J said that notwithstanding the intensive level of Dr Cremona's work it was difficult to see that he could continue that level. He found that for a period of 5 years nominated by Mrs Cremona that there would continue to be growth initially at a higher percentage tapering off to the end of the period but that a proper assessment of the increase for that period would be to average growth of 2 per cent until 30 June 1998. The trial Judge considered that the practice would have thereafter plateaued until he was aged 65. After that time he would have worked part-time from age 65 to 70. 117 Mr Barry submitted that as a matter of commonsense the trial Judge should not have accepted any increase. He should have taken the view that in Dr Cremona's circumstances, building a new house and with commitments, he was working as much as he possibly could. As appears from Dowd J's judgment of 19 July 2000 at paras 10 and 11 Dowd J relied on Mr Forde's report of 25 September 1996. 118 No submission was put beyond the assertion, which Dowd J took into account, that Dr Cremona was already working at his peak and that it was unreasonable to find on the probabilities that over the next five years he would have increased the size of his practice by 2 per cent per annum and then sustain that increased level until age 65. Dowd J did not, as it was suggested, blindly follow mathematical projections. He used the material prepared by Mr Forde as an aid in assessment and reached a conclusion which was open to him on the material. No good ground has been shown for challenging that conclusion.

Bulk Billing 119 In her cross-appeal Mrs Cremona submitted that an allowance should have been made for the chance that Dr Cremona would have abandoned bulk billing from 1998. Bearing in mind, as his Honour saw it, that in a discrete area such as Dapto with sixteen other doctors continuing to bulk bill in what was described as a lower socio-economic area it was likely "notwithstanding that I accept the relative price insensitivity of a change from bulk billing to a full charging practice that Dr Cremona would have continued to bulk bill". Dowd J referred to the convenience of doing so as compared with the problems of collecting fees from patients describing this as an off-setting advantage to the increased gross profit that would come from charging AMA recommended rates. The point made was that applying Malec v Hutton his Honour should have measured and taken into account the chance that Dr Cremona would abandon bulk billing. This his Honour did not do. 120 Mr Forde referred to the possibility and anticipated that if Dr Cremona decided to stop bulk billing his practice income would increase although he probably would see fewer patients. Mr Forde said: "Suppose that Dr Cremona abandoned bulk billing and charged an average of $30 per service. Further suppose that this caused a drop of 10 per cent in the services provided. This means that Dr Cremona would [have] seen about 6,600 patients and would have provided 16,630 services at an average of $30 each - giving gross fee income of $498,900 - an increase of around 8.5 per cent on the adjusted gross fees for 1992/1993." 121 Mrs Cremona said in evidence that Dr Cremona had expressed an intention that bulk billing had to be discontinued at some near point in the future. His major concern was his attachment to certain patient families. Mr Newhouse who had been Dr Cremona's accountant for many years described the doctor's zeal, his capacity to work and his desire to pass (ie overtake) everyone. Mrs Cremona submitted that steps had been taken towards abandoning bulk billing in the form of investigating the Kalamazoo method of accounting suited to a non-bulk billing practice, that Dr Cremona was of an entrepreneurial nature motivated by wealth generation and that his investigations into the prospects of abandoning bulk billing would ultimately have led him to the same conclusions as Mr Forde. 122 In my opinion the chance that Dr Cremona would abandon bulk billing should have been taken into account in the assessment of damages.

Mrs Cremona's Dependency 123 Dowd J found that a proper dependency for Mrs Cremona herself was 63 per cent which his Honour acknowledged was at the lowest range in Table 9.1 on page 369 [sic 396] of Professor Luntz's book on damages. In coming to this conclusion he took account of Mrs Cremona's strongly expressed view that she had no current intention of returning to work and had worked very hard in Dr Cremona's practice. However, his Honour considered that she would have gone back to work and the death of Dr Cremona would have made no difference. Therefore her dependency on him would have been reduced. 124 Professor Luntz said of the table Dowd J referred to that some guidance might be obtained from it as to the proportion spent on members of the family other than the deceased "in cases where better evidence is not available". Reference was made to Stanbury v Eden (1985) 38 SASR 437 at 439 where Cox J pointed out that the proportion of a husband's income available to the wife and children is influenced by many variable matters other than the number of children, such as the size of the husband's income, his personal habits and attitudes, and the possible earnings of the wife and children themselves. His Honour's opinion was that the evidence usually given in such cases by the widow, though not always ideal, was a better guide than the rough averaging which lay behind table 9.1. Mrs Cremona prepared a document showing the split up of disposable income "1991-1992". According to this the proportion of income expended on the family by average was 80.26 per cent. 125 Mr Rossetto in a report to the RTA's solicitor dated 27 June 1996 dealing amongst other things with the dependency factor referred to Mrs Cremona's detailed analysis and the 80.26 per cent claimed dependency. He said: "The approach adopted by the Deliotte Touch Tohmatsu report is incorrect in that the 80.26 per cent dependency factor is only in relation to income actually expended. It does not provide any dependency factor in respect of savings. The analysis provided to us prepared by Mrs Cremona indicates that during the period 1991 and 1992, savings amounted to $120,200. This clearly indicates that based upon the deceased's income a large component of his net income after tax was allocated to savings. The DTT report in its assessment of damages has applied the dependency factor of 80.26 per cent to the total net income and claimed that the dependents are also dependent upon savings to the extent of 80.26 per cent." 126 Reference was made to Professor Luntz's work and table 9.1. Mr Rossetto observed: "It should be noted that this table of percentage of dependency assumes that the total income of the deceased is expended. Accordingly, no percentage is determined for the savings elements of the deceased's income.

We consider that it must be questioned as to whether dependents have a claim to the savings element of the deceased's income. Furthermore, if dependents are entitled to make a claim, consideration must be given as to the rate of dependency. We consider this rate cannot be calculated by reference to the rate of expenditure spent on dependents compared to total expenditure. Accordingly, we are not in a position to assess what this dependency rate should be, if any rate at all." 127 Although for various purposes Mr Rossetto went on to assume the dependency factor determined by Mrs Cremona clearly doubts were raised about its legitimacy. 128 Mrs Cremona was cross-examined about her document. It is not clear that that cross-examination was directed to its legitimacy. Mr Rossetto did not give evidence. No mention of Mrs Cremona's calculations is to be found in the reasons for judgment. In his report of 18 March 1999 Paul Joseph Johnson from Deliotte Touche Tohmatsu assumed the dependency factor of Mrs Cremona and the two children on Dr Cremona's income to be calculated to be 85.26 per cent. In his oral evidence Mr Toomey walked him through his report of 18 March 1999 and directed his attention to the dependency figure. Mr Johnson was cross-examined as follows: "Q. Could I just take you, then, to page 7 of your report where at D you deal with the percentage dependency of the family of the deceased's income as being 80.26 per cent and that then is later referred to as being 85.26 per cent after you add on an extra 5 per cent which Professor Luntz allows for the extra child. Do you have that? A. Yes.

Q. That figure was derived from Mrs Cremona's analysis of the family expenditure for the year ended 30 June 1992? A. That's correct.

Q. Do you agree that Professor Luntz's figures are based upon figures extrapolated from a household expenditure survey which was done by the Australian Bureau of Statistics, is that right? A. In 1984, yes.

Q. Do you agree that that was an analysis which assumed that all of the money was, in effect, fully expended without there being any savings? A. I don't know if you can assume that it is without any savings because savings forms the whole pool. In a family expenditure situation a saving that might occur in year one could be an expenditure, an expenditure in year 3. So I don't think I could say that it would be separated from it.

Q. What I am putting to you is that a percentage of 80.26 per cent derived from Professor Luntz's table, which itself is extracted from the Australian Bureau of Statistics analysis of certain families, makes an assumption that there is a fully - that the income is fully expended as distinct from there being significant savings after the expenditure process. Am I right or am I wrong? A. Well my recollection is that it is just straight household expenditure.

Q. Did you observe in the figures prepared in relation to the affairs of Dr Cremona and Mrs Cremona that in the 1992 year, and I am speaking entirely from memory, there was savings of about $120,000? A. That's correct.

Q. Do you accept that savings can be either kept for a long period or a short period, or spent in different ways on different timetables, just in general terms? A,. Yes, savings can be for any form.

GROSS: Q. Do you agree it is incorrect to assume that when the savings ultimately get spent, they get spent with the same percentage benefit going to the wife and the children as occurred when, in effect, the week-to-week expenses in the running of the household were being paid? A. Is this in a general term or in relation to the Cremonas?

Q. I am just talking in general terms? A. In general terms, yes.

Q. In relation to the children do you agree this is the situation, that you have assumed that they are totally dependent at all times solely upon Dr Cremona as distinct from being dependent on or receiving benefits from, both Dr Cremona and Mrs Cremona? A. Well again I guess it goes back to your previous question, that one follows the other." 129 Mr Johnson was re-examined as follows: "Q. Mr Johnson can I take you to the assessment of dependency? You were asked by Mr Gross a question to this effect: It is quite inappropriate, is it not, to assume that savings will be spent in the same percentages as household expenditure, and your answer, I think, was to the effect that generally you would accept that? A. Mm.

Q. What about in the case of Dr Cremona? Were there any factors which would influence your view in respect to him? A. Yes. I mean we know for a fact that the pool of savings was actually being created for a new family house and that the pool of savings was really, you could look at it another way, that in a normal sense if you have got a target to save for, you obviously forfeit other household expenditure, the holiday or the buying new clothes for children or whatever in the aim of maximizing savings for this potential goal. So in this case we could see the savings were going to be converted into household items at some point in time.

Q. What about what you know about his life, that is his long hours of work, his dedication to his practice and so on; he is hardly the man who is going to go out and buy a Bentley? A. Well, I don't think he actually had, but also the savings obviously - and given the aim of the savings we saw at the time in 1992 - these savings were used to support his wife and two children to have a life-style in a house. It wasn't for him to expend on his own ability and, on the figures, he didn't have time.

Q. There is a general comment relating to this in Mr Daniels' report for Ernst & Young dated 10 May 1996. Paragraph 4.3 Mr Daniels says this - I am sorry, the report I am looking at is 20 May 1997.

TOOMEY: Q. What Mr Daniels said was this: 'The book Assessment of Damages for Personal Injury and Death Professor Luntz provides an estimate of the average assessment of dependency of a wife and children for a family with average income. The percentages will vary depending on the income level of the family. The table does not provide percentages for families in the upper levels and we were unable to obtain figures for other bands. However, the percentages of dependency are normally expected to be lower for families with higher levels of income.' Can I ask you first do you agree that the percentages of dependency are normally expected to be lower for families with higher levels of income? A. No, I don't agree.

Q. If one were looking at a lower level of income obviously you might get to a stage where a man had to take out from the family income an amount just to subsist? A. That's correct.

Q. Which would be a higher percentage than if he had a larger income? A. That's correct.

Q. Further I think the table in Professor Luntz's book is based on the 1984 ABS statistics, is it not? A. That's correct.

Q. You have seen, I believe, for the first time today a later survey? A. Yes.

Q. That's 1994, is it not? A. Household expenditure survey 1994, yes.

Q. I think you haven't had a chance to fully digest that, but does it suggest that in fact --

EXHIBIT #M REPORT OF AUSTRALIAN BUREAU OF STATISTICS 1993/1994 HOUSEHOLD EXPENDITURE SURVEY TENDERED, ADMITTED WITHOUT OBJECTION (M).

GROSS: Q. Might it be noted that both parties are agreed that they will tender the marriage statistics on the next occasion.

TOOMEY: Q. Are there some figures in the 1994 survey which in fact to an extent do make up the deficit in the earlier figures noted by Mr Daniels? A. Well, the survey just explains, and it looks at gross incomes and where the money is spent and it breaks it down into the various groups. What the document illustrates is that as the groups go up there is a sharp rise in expenditure for each item. There is no point in summarising for every type of expense available and for each expense the same occurs. It is mostly higher in the items of recreation, personal care and items, they do go up I guess even sharper for the higher level of income earners.

Q. What would you expect would cause that, children having dancing lessons, horses, having their own pony? A. I think just from a normal accounting purpose the fact is the more income you have the more you spend. That is a general known fact." 130 A little later Dowd J asked some questions as follows: "Q Can I ask this, the percentage of dependency, - and say if it is outside your expertise - but you have made certain value judgments in your evidence about percentage of dependency? A. Yes.

Q. If a high income earner saved everything to go towards a house? A. Yes.

Q. You would assume that it was a hundred per cent, that is if everything else that was earned was to go towards a house, one hundred per cent of it, of the income, would be for the whole family? A. Yes.

Q. How do you take into account the factor for the non dependant, that is the deceased? A. Well, I guess the problem is, and if you do - in Luntz it even raises the issue that there are items that are fixed costs, and for these fixed costs, eg a house, and various items I there is one or three it's the same cost. So therefore realistically we could have looked at the savings factor that we have brought into the dependency rate and even raised the dependency rate higher and say that 120,000 would be all attributable just to the three and not to the four. So I guess we haven't taken it into account and just pooled it, but in that situation because we have actual figures there is scope to do it that way..

Q. Accepting that establishing a family on a high income may result in 100 per cent of income being expended to wife, children and self, and in the fullness of time as children grow up and leave the nest and the house is paid for at what point in time is it correct to reduce the dependency factor? And if so by how much and on what basis?

TOOMEY: Does your Honour mean for the children leaving home?

HIS HONOUR: Q. Not only that, A) children leaving home, B) the fact that the widow probably only needs one house and it's paid for? A. I guess it becomes complex because there is a lot of expenses on that one house that would still be of a fixed nature that would obviously be attributable.

Q. Accepting the ongoing maintenance and painting and electricity costs and repairs and all that? A. I would have to say it would be an unknown. The only reason why I would say that is that there are situations where the wife might decide to buy even a better house in a later life that is in another area and so the expenditure rate goes up again. There could be situations where the family home, exactly what you said, paid for and the person lives there until virtually they die or retire and there is no costs. And there is another situation where they could go ahead and continually want to increase their lifestyle right until the time they died too. It's impossible to factor in I believe.

Q. But someone who would in the normal course have children leave the nest? A. Yes.

Q. And not bring home the grandchildren and have only one person live in that home? A. Yes.

Q. In the normal course are relatively smaller percentage of an income would be a dependency factor? A. Yes." 131 In Nance v British Columbia Electric Railway Company Limited the Privy Council, after dealing with sums which would have been applied out of the deceased's income to the maintenance of his wife and family, said at 615-6 "The figure having been arrived at under this first head, there should be added to it a figure arrived at under the second head. The question there is what additional amount he would probably have saved during the [estimated] years [of his life] if he had so long endured, and what part, if any, of these additional savings his family would have been likely to inherit." 132 In Public Trustee (WA) v Nickisson (1964) 111 CLR 500 at 505 Kitto J clearly had in mind an allowance for "future savings lost". The difficulty is calculating the rate of dependency on such savings. 133 Dealing with the possibility of future employment of Mrs Cremona and its effect on dependency Mrs Cremona submitted that but for her husband's death, any return to work by her would most likely have involved her working in Dr Cremona's medical practice and any return to work which might now occur after his death was not likely to generate significant net income. It was submitted that calculations did not justify more than say a 2 per cent reduction on Mrs Cremona's personal dependency from 74.26 per cent to 72.26 per cent "but say 71 per cent as contended for at trial". 134 The primary reason Dowd J gave for reducing the rate of dependency was his view that Mrs Cremona would have gone back to work even if Dr Cremona had survived so that her dependency on him would have been reduced. Mrs Cremona submitted that a reduction on such a basis in her dependency from 1993, the year of Dr Cremona's death, was unjustified. She then had two children aged nearly 4 and 1. At the age 55 it was likely she would have semi-retired with her husband turned 65. Mr Johnson said that reducing Mrs Cremona's dependency from 74.26 per cent to 63 per cent reduced the damages by $844,083. To replace that she would need to earn the equivalent of a salary of $177,501 per annum. Such salaries were wholly unrealistic for a part-time pharmacist in Wollongong. 135 Neither Mrs Cremona's document showing the split up of disposable income nor Mr Johnson's evidence about it were addressed in the judgment and no precise reason was given for rejecting them. Nor was any reason given for choosing a percentage which was at the lowest range in Professor Luntz's table. 136 Mrs Cremona's calculations for the years in question may have overstated the degree of dependency. However, Mr Johnson's evidence suggests that the calculations should have been taken into account. Furthermore, while it is appropriate to bring into account the chance that Mrs Cremona might have gone back to work, it is less likely that she would have done so while the children were small or that she would have continued to do so when her husband became semi-retired. I am persuaded by the evidence that the degree of dependency found by the trial Judge failed to take account of part of Mrs Cremona's evidence and was so low as to indicate error. The lack of reasoning beyond the reference to the prospects of the plaintiff going back to work had Dr Cremona survived suggests that his Honour gave this factor excessive weight. I think the error is such that this Court should interfere. No precise calculation is possible. Taking account of the fact that Mrs Cremona might have gone to work for a limited time when her children went regularly to school and before her husband became semi-retired for a salary which was not likely to have greatly reduced her dependence on her successful husband and bearing in mind the calculations which she had made I am of opinion that her dependency allowing for contingencies would be appropriately fixed at 71 per cent. Although no argument was directed to this I think the calculation of the loss of superannuation should be adjusted to take account of her 71 per cent dependency.

Contingencies 137 Dowd J referred to Mrs Cremona's submission that in looking at Dr Cremona's future earning capacity there were reasons why the "usual" 15 per cent contingency discount should be reduced to no more than 5 per cent. Mrs Cremona submitted that the chance of Dr Cremona becoming unemployed was virtually nil except for a slight chance of relapse into drug dependency but contended that excluding mortality and including the possibility of drug relapse the provision should be no more than 5 per cent. Mrs Cremona submitted that this was supported by Dr Cremona's excellent health. In his Honour's view the evidence was to the contrary. There was evidence that notwithstanding a habit of having little sleep Dr Cremona was working very long hours, a circumstance likely to create stresses that affected health. Dr Cremona had difficulty coping with dying patients as a result of being emotionally close to patients. The marriage was generative of stress and was likely to continue so notwithstanding the adjustments that had been made. Dowd J said: "….the overriding concern that I have is that someone who generates a serious level of migraine and is a poly-substance abuser over a period of 4 years whilst building up his substantial medical practice has a risk factor which must be taken into account when assessing vicissitudes.

Dr Cremona was pushing himself in his work and was likely to be suffering psychologically and had shown a propensity for drug dependency over a significant part of his life prior to discovery. He is statistically likely to relapse because of the stresses although I will deal specifically with that likelihood of relapse under another heading." 138 His Honour agreed that the vicissitudes contingency factor ought to be low for a self-employed general medical practitioner in private practice. However, he considered that in the particular circumstances of Dr Cremona's history it was proper to adopt a 15 per cent contingency factor for vicissitudes. 139 In Moran v McMahon (1985) 3 NSWLR 700 at 706 Kirby P, speaking of the conventional discount of 15 per cent for the vicissitudes of life said: "Why there should be any conventional discount, and why it should be 15 per cent regardless of the infinite variety of chances which may befall an injured party, has never been adequately debated."

140 In Arthur Robinson (Grafton) Pty Limited v Carter at 659 Barwick CJ said: "that the vicissitudes of life are not adequately reflected by merely - and blindly - taking some percentage reduction of a sum which ignores them. The calculation of that sum has a disarming appearance of introducing some mathematic accuracy into the assessment of the compensation."

141 A conventional deduction may bring some apparent certainty into the assessment of damages in personal injury cases but it is not sacred and Dowd J's refusal simply to adopt it without further examination cannot be validly criticised. Had Dr Cremona indeed enjoyed excellent health it was well within Dowd J's discretion in assessing damages to fix a percentage for vicissitudes well below 15 per cent. But the trial Judge brought into account the history of drug abuse and stress as elements each of which could exacerbate the potential of the other and alone or together undermine Dr Cremona's health. Moreover, as the RTA pointed out in its submissions a return to drug abuse might have led to Dr Cremona being de-registered and losing the source of his substantial income. Dowd J found that Dr Cremona would not have reverted to drug abuse. The evidence which the trial Judge accepted, particularly of Dr Dalton, and of the lapse of time between December 1990 when he was admitted to Wandene Private Hospital and 28 May 1993 when he was killed, during which period there had been no relapse, leads to the conclusion that the chance of relapse was slight. Moreover, the knowledge that any relapse could lead to de-registration was a powerful incentive for a man dedicated to his profession and with a wife and two young children to resist any temptation. 142 Inevitably, once attention has been paid to the material matters to be taken into account the choice of the particular percentage discount is a matter for the trial Judge. Opinions as to the appropriate percentage will vary and it is no part of the function of this Court to impose its views unless some error has been shown in the trial Judge's approach. In my opinion, the 15 per cent Dowd J selected was within an appropriate range and no ground has been shown for interfering with it. 143 For reasons which he then gave, Dowd J said that he considered that the only vicissitude likely for Mrs Cremona was re-marriage which he fixed at 2 per cent of the loss of future economic loss excluding superannuation. Separately his Honour thought it proper "for a reduction from the normal vicissitudes of 15 per cent when taking into account the normal factors of an employee which is not her circumstance and since she has a fairly wide range of skills" to allow 7.5 per cent for vicissitudes "being half of the normal contingency factor". For each of the children he chose 2 per cent. However, nothing was allowed for the chance that the marriage might not have survived. As I have said, it was open for Dowd J to conclude, as he did, that "the marriage was likely to survive". But what of the chance that it might not have survived? 144 A countervailing factor would be that if the marriage had not survived Mrs Cremona and her two children would have had claims upon Dr Cremona's property. These claims could have been substantial though no doubt less than a claim based upon dependency under the Act. To my mind some discount should have been made for the chance that the marriage might have failed. Dowd J apparently did not bring this into account. I would increase the 7.5 per cent for general vicissitudes to 9 per cent to take account of the chance that the marriage would not have survived. 145 Finally, Dowd J considered that the discount factor on the amount awarded for loss of superannuation entitlements should be 10 per cent in relation to Dr Cremona's fund and 7.5 per cent in relation to Mrs Cremona's fund. In my opinion, the chance that the marriage would not survive requires that this percentage of 7.5 per cent also be increased to 9 per cent. The rate of dependency fixed for the children was not challenged.

Interest on Past Losses 146 Dowd J held, despite the RTA's submission that the rate of 4 per cent would be appropriate, that interest on past losses should be calculated as provided by the Supreme Court Rules to date of judgment. 147 In Haines v Bendall (1991) 172 CLR 60 at 66-67 Mason CJ, Dawson, Toohey and Gaudron JJ said: " The power to award interest and its exercise

The power to award interest on damages for the period between the date when the cause of action arose and the date on which a judgment takes effect is conferred by s94 of the Supreme Court Act. The section confers power on the Supreme Court to order that there shall be included, in the sum for which judgment is given, interest at such rate as it thinks fit on the whole or any part of the money between the date when the cause of action arose and the date when the judgment takes effect.

An award of interest up to the date of judgment is an award of interest in the nature of damages; Fire and All Risks Insurance Co Ltd (1978) 140 CLR at 431. This statement acknowledges that the award of interest is an integral element in the attainment of the object of damages, namely, to compensate a plaintiff for injury sustained. Hence the award of interest is compensatory in character. While '[I]nterest should not be awarded as compensation for the damage done' (emphasis added) ( Jessord v Gee [1970] 2 QB 130 at 146), the award of interest is nevertheless an essential element in the achievement of true compensation for that damage. In Thompson v Faraonio (1979) 54 ALRJ 231 at 233 , the Privy Council stated that '[t]he reason for awarding interest is to compensate the plaintiff for having been kept out of money which theoretically was due to him at the date of his accident' (emphasis added): see also Batchelor v Burke (1981) 148 CLR at 455, per Gibbs CJ; MBP (SA) Pty Ltd v Gogic (1991) 171 CLR at 663-665; cf Ruby v Marsh (1975) 132 CLR 642 at 652-653, per Barwick CJ. The award of interest for the period of delay in payment between the date of accrual of the cause of action and judgment affords the fair legal measure of compensation: Pheeney v Doolan [1977] 1 NSWLR 601 at 613, per Reynolds JA. Thus, it is the award of damages and, where appropriate, interest awarded on damages for the period up until the judgment takes effect which allows the plaintiff to be placed in or restored to the situation, as far as money can do, in which he or she would have been but for the defendant's negligence.

Section 94(1) of the Supreme Court Act confers a wide discretion on a court awarding interest. That discretion must, however, be exercised in accordance with legal principle: Cullen v Trappell (1980) 146 CLR at 17, per Gibbs J. That means that the discretion must be exercised in conformity with the general principles governing the award of damages so that an award of interest on damages for personal injury should do no more than assist in the restoration of a plaintiff to the position in which he or she would have been but for the defendant's negligence." 148 In Marsland v Andjelic (No 2) (1993) 32 NSWLR 649 at 652 Kirby P and Meagher JA said: "The section [s73 of the Motor Accidents Act 1988] provides that, once the barriers erected by s73 are overcome, the court 'may' order the payment of interest. The use of the facultative verb obviously imports a discretion, but equally obviously that discretion must be exercised judicially: Bennett v Jones [1977] 2 NSWLR 355 at 375. In our view, the plaintiff's submission that once the plaintiff has overcome his statutory hurdles ordinary principles apply is irresistible. By far the most important of these principles is that enunciated by Mason CJ, Dawson, Toohey and Gaudron JJ in Haines v Bendall (1991) 172 CLR 60 at 66: '….The award of interest for the period of delay in payment between the date of accrual of the cause of action and judgment affords the fair legal measure of compensation.' Viewed in that light, it is difficult to see why a successful plaintiff has not got almost a vested right to an award of interest, so that circumstances have to be indeed exceptional before he or she can be deprived of it on any discretionary ground. This, it seems to us, is consistent with what this Court decided in Pickering v Brown [1993] Aust Torts Reports 62,124. Of course, it remains in every case for the Court to consider the circumstances and to exercise its discretion. No hard and fast rules can be laid down.

The plaintiff's prima facie entitlement should be for the full period. It must follow that some of the decisions of judges at first instance cited to us are erroneous. Examples of such decisions are Dell v Dalton (Abadee J, 11 December 1990, unreported) where interest was granted from the date when the statement of particulars was filed under two weeks before judgment, and Richardson v Wagga Rent-a-Bus (Wood J, 23 July 1990, unreported) where interest was awarded as from the date when it was proper to offer to settle.

As to the rate of interest, prima facie it is whatever are the Supreme Court interest rates." 149 In its written submissions the RTA conceded the common expectation that in ordering interest to be paid pursuant to s94 of the Supreme Court Act 1970 the Court uses "gross" rates of interest. It submitted that the assumption had been that the interest the plaintiff received was taxable. However, in Whitaker v Commissioner of Taxation the Full Federal Court held that such interest payments were not taxable in the plaintiff's hands. Accordingly, it was submitted that Mrs Cremona has received a windfall by an order that interest be paid at Supreme Court rates. Dowd J rejected this argument. 150 In Whitaker Black CJ, on the issue of whether an amount included in an award of damages for personal injuries in accordance with an order for interest under s94(1) was income according to ordinary concepts and so should be included in the appellant's assessable income under s25(1) of the Income Tax Assessment Act 1936 (Cth), agreed with the judgments of Lockhart J and Burchett J that the amount of the pre-judgment interest did not have the character of income but was a receipt of a capital nature. His Honour said at 263-4: "It is well established that in actions for damages for personal injuries, the payment of what is called 'interest' in s94(1) of the Supreme Court Act and equivalent provisions in other jurisdictions is to compensate a plaintiff for the loss and detriment which he or she has suffered by being kept out of his or her money during the relevant period: see MBP (SA) Pty Ltd v Gogic (1991) 171 CLR 657 at 663 and Haines v Bendall at 63. In other contexts the characterisation of an amount ordered to be paid as 'interest' as compensation for the loss or detriment suffered by a person by being kept out of his or her money would point to an amount receivable as income rather than as capital. The present context is, however, of a special character since there is a broader and fundamental function involved, namely the compensation of an injured person by means of an award of damages for negligence and the amount of interest is an integral and essential element in the attainment of that object: see Haines v Bendall at 63. An amount ordered as interest in these circumstances takes its character from the award of damages for negligence and is of a capital nature.

I would add that the position here differs greatly from the commercial situation in which interest is payable as the price of being kept out of a specific or calculable principal sum. The entitlement to damages at the time of injury is entirely theoretical in a case such as the present and, at lease in respect of non-economic loss, there can be no fixed or objectively calculable 'principal sum' until damages are assessed."

151 Lockhart J at 269 said: "The primary purpose of an award of pre-judgment interest is to compensate a successful plaintiff for the loss of detriment which he or she has suffered by being kept out of his or her money during the relevant period; that is to compensate the plaintiff for having been deprived of the use of the money: Ruby v Marsh (1975) 132 CLR 642; Batchelor v Burke (1981) 148 CLR 448; and MBP (SA) Pty Ltd v Gogic (1991) 171 CLR 657. See PD Finn (ed), Essays on Damages (1st ed, 1992) and in particular the essay by J L R Davis, 'Interest as Compensation', p149-152.

There is a secondary purpose for awarding pre-judgment interest, namely, to provide a discouragement to defendants from delaying the conclusion or settlement of the proceeding: Ruby v Marsh per Barwick CJ at 652; with whose reasons for judgment McTiernan J agreed at 655. However, it is not a purpose of the award of pre-judgment interest to punish a defendant for having been dilatory in conducting the case or settling the plaintiff's claim. As Gibbs CJ observed in Batchelor v Burke (at 455): 'The interest is awarded to compensate the plaintiff for the detriment that he has suffered by being kept out of his money, and not to punish the defendant for having been dilatory in settling the plaintiff's claim.' Aickin, Wilson and Brennan JJ agreed with the reasons for judgment of Gibbs CJ.

This second purpose of awarding interest is less frequently referred to today than it used to be, doubtless because of the increasing role played by trial judges in case management which is designed to ensure greater control by the Court over the conduct of cases by the parties and to discourage any propensity for dilatoriness by parties."

152 At 274 Lockhart J said: "It should not be assumed that a successful plaintiff would have invested the money awarded in the judgment in such a way as to earn assessable income. The plaintiff may have done all manner of things with the amount of the award: purchased a home for himself or herself and family, or a car, or travelled overseas, or spent the money in any of the multifarious ways which are possible. In Tipper v Williams (unreported, Court of Appeal, NSW, Full Court, No 40034 of 1990, 12 May 1993) Priestley JA said (though in dissent) (at 2): 'I do not see why the plaintiff should be treated as having invested the judgment moneys in such a way as to earn taxable interest; he might have bought a home to live in; he might have bought shares with fully franked dividends; he might have bought vacant land with a view to holding it as a gift for his children in twenty years time; the possibilities are endless, and not all have the same tax consequences.' In Golec v Scott (1995) 38 NSWLR 168 Meagher JA, (though in Tipper v Williams he was one of the two judges in the majority) said (at 171) that he agreed with what was said by Priestley JA in Tipper v Williams on this point.

The views which I have expressed concern interest included in awards of damages in personal injury cases. The position would be different in some cases, especially where, for example, the claim is for loss of profits arising from a business in circumstances where it may be reasonably assumed that the award of damages, if available at the time of the accrual of the cause of action, would have been spent by the plaintiff for the derivation of further profits and this would be of an income nature, so would be interest."

153 At 281 Burchett J referred to a passage in the judgment of this Court in Metropolitan Meat Industry Board v Williams (1991) 24 NSWLR 54 at 56-57 to the effect that the notion that the recovery of the verdict turns the plaintiff into an investor has been effectively demolished. At 283 his Honour said: "While the award of interest upon so much of the general damages as is apportioned to past pain and suffering and loss of the amenities of life provides the most obvious illustration of this point [ it does not replace any actual income lost but is a guide to the determination of an appropriate amount of damages ], I think the position is the same with reference to interest calculated upon past economic loss. It is not ordinary experience that the wage earner invests the whole, or even any substantial part, of his wages to earn interest. Wages are normally spent as they are earned. The amount added to the award is to compensate the plaintiff for being kept out of his money. It is a matter of common observation that, in many cases, needy plaintiffs, unable to work, have had to borrow from friends or relatives or from less generous lenders. They may have to make repayments with interest. They may have had to buy household requirements pursuant to deferred payment arrangements involving significant expense, or they may have had a motor car or appliance repossessed because no wages were coming in. Even if a particular plaintiff suffered no special difficulty, the loss of the opportunity to do what he wished with his own wages when they should have been received, and the loss in the value of the money over the period until receipt, require compensation. That compensation has nothing to do with a notional investment at interest. It is, in Lord Wright's phrase, 'estimated in terms of interest', but interest it is not.

Indeed, the apportioned award itself of damages for loss of earning capacity for the past does not necessarily imply an imputed receipt by the plaintiff of a particular sum of wages which could be notionally invested. That may be the normal case, but in principle the award is for the loss of an earning capacity, not for particular wages."

154 At 285 Burchett J referred to the dictum of Davies J in Commissioner of Taxation v Northumberland Development Co Pty Ltd (1995) 59 FCR 103 at 106 which he said was correct. "A court in this country would be unlikely to hold that an award of pre-judgment interest, included in an award of damages for personal injury, constituted a receipt in the nature of income."

Davies J added: "The Court has indeed not been referred to any reported instance in Australia where pre-judgment interest has been assessed to tax as income."

155 On this issue Burchett J concluded at 285: "What I have said so far would justify upholding the appellant's claim that the 'interest' allowed under s94 in respect of past economic loss, as well as that allowed in respect of past personal damages, does not have the character of income, even if included in an amount of damages assessed in respect of a claim based on inability to continue to earn in an employment held at the time of the injury."

156 Having been referred to Whitaker there could have been no thought in the mind of Dowd J that the interest awarded under s94 would be part of Mrs Cremona's taxable income. His Honour regarded it as an amount which appropriately compensated Mrs Cremona for being deprived of the use of her money and so, as was said in the passage I have quoted from Haines v Bendall, to place her or restore her to the situation, as far as money can do, in which she would have been but for the RTA's negligence. No other ground is advanced to suggest that the award was so excessive that this Court should interfere and accordingly the ground of appeal should be rejected.

Conclusion 157 In my opinion, the RTA's appeal succeeds to the extent that some adjustment needs to be made to account for the greater contingency percentage applicable to take account of the chance that the marriage would fail and to apply the contingency percentage discount to the loss of the superannuation benefit. In addition, though not part of any of the grounds of appeal, the damages for loss of the superannuation benefit need to be adjusted to take account of a dependency percentage of 71 per cent. The cross-appeal succeeds to the extent that the dependency percentage appropriate to allow for Mrs Cremona's dependency should be increased from 63 per cent to 71 per cent. In my opinion, the Court having handed down its reasons, should adjourn the matter to allow the parties to put such submissions as they would wish about costs and to prepare short minutes of order.

1. Parties to file and serve written submissions on costs by 4 pm on 27 November 2001. 2. Parties to bring in Short Minutes of the orders to be made in the appeal at 9.30 am on 30 November 2001. 3. Stand over the further hearing of the appeal to 9.30 am on 30 November 2001 for orders to be made. 158 STEIN JA: I agree with Sheller JA. *******

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