State Government Insurance Office (Q) v Biemann

High Court of Australia|1980-10-09|Before: Dawson JJ, Campbell JJ, Kneipp J, Kelly J

High Court of Australia Gibbs C.J. Mason, Murphy, Deane and Dawson JJ. State Government Insurance Office (Q) v Biemann [1983] HCA 34

ORDER Appeal allowed. Order of the Full Court of the Supreme Court of Queensland set aside and in lieu thereof order: Appeal allowed in part. Order of the Honourable Mr. Justice Kelly varied by substituting for the second, third and fifth paragraphs of that order (namely the paragraphs that refer to the sums of $142,000 and $25,000) the following:AND IT IS FURTHER ORDERED that the first plaintiff recover against the defendant by election the sum of ONE HUNDRED & FORTY-TWO THOUSAND DOLLARS ($142,000) plus interest on the sum of TWENTY-SEVEN THOUSAND DOLLARS ($27,000) at 5 per centum per annum from 9 October 1980 to 16 March 1982.AND IT IS FURTHER ORDERED that the second plaintiff recover against the defendant by election the sum of TWENTY-FIVE THOUSAND DOLLARS ($25,000). AND IT IS FURTHER ORDERED that the sum of TWENTY-FIVE THOUSAND DOLLARS ($25,000) due to the Second Plaintiff be paid by the Defendant by Election to the Public Trustee for the State of Queensland whose receipt for such sum shall be a sufficient discharge. Order that the appellant pay the respondents' costs to be taxed. Further order that the appellant pay the respondents' costs of this appeal to be taxed.

Oct. 11 Gibbs C.J., Mason, Deane and Dawson JJ.

The question raised by this appeal is whether a judge in exercising his discretion to award interest under s. 72 of the Common Law Practice Act 1867-1981 Q. ("the Act") in an action under Lord Campbell's Act legislation should confine his award to so much of the verdict as represents the loss of dependency to the date of trial. Section 72 provides:

Interest up to judgment. (1) In any proceedings in respect of a cause of action that arises after the commencement of the Common Law Practice Act Amendment Act 1972 in a court of record for the recovery of money (including proceedings for debt, damages or the value of goods) the court may 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 that sum for the whole or any part of the period between the date when the cause of action arose and the date of the judgment.

(2) The powers conferred on a court of record by subsection (1) may be exercised by an arbitrator or umpire.

(a) does not authorize the giving of interest upon interest;

(b) does not apply in respect of any debt on which interest is payable as of right whether by virtue of an agreement or otherwise;

The trial judge gave judgment for the plaintiffs for $188,896.86 with costs. Of that sum $21,896.86 represented damages for personal injury sustained by the first plaintiff and $167,000 represented damages under the Lord Campbell's Act legislation for loss of dependency consisting of $27,000, reflecting loss of dependency to the date of trial, and $140,000, reflecting loss of future dependency. His Honour awarded interest at the rate of 10 per cent per annum on the sum of $167,000 from the date of the writ to the date of judgment and interest at the rate of 6 per cent per annum on the sum of $5,000, being part of the damages for personal injuries, for the same period. His Honour considered that an award of interest on the whole of the damages for loss of dependency was "in accordance with" Ruby v. Marsh [1] . By majority, the Full Court of the Supreme Court of Queensland (Douglas and D. M. Campbell JJ., Kneipp J. dissenting) dismissed an appeal by the defendant, holding that the order for interest in the Lord Campbell's Act claim was correctly made on the ground that it conformed with the views of the majority of this Court in Ruby v. Marsh. 1. (1975) 132 C.L.R. 642.

In Ruby v. Marsh the plaintiff recovered judgment in an action under Pt III of the Wrongs Act 1958 Vict., a descendant of Lord Campbell's Act. Interest was awarded by the trial judge under s. 79A of the Supreme Court Act 1958 Vict., as amended, on the whole of the amount of the verdict, including loss of future dependency. Section 79A provided:

(1) The Judge upon application shall in all actions for the recovery of debt or damages give damages in the nature of interest at such rate not exceeding eight per centum as he thinks fit from the commencement of the action until the entry of the judgment unless good cause is shown to the contrary over and above the debt or damages awarded by the court or jury.

(a) authorize the granting of interest upon interest;

(b) apply in relation to any sum upon which interest is recoverable as of right by virtue of any agreement or otherwise;

(d) authorize the allowance of any interest otherwise than by consent upon any sum for which judgment is pronounced or entered by consent;

(e) apply in relation to any sum on which interest might be awarded by virtue of section seventy-eight or section seventy-nine of this Act; or

(f) limit the operation of any enactment or rule of law which apart from this section provides for the award of interest.

(3) Where the damages awarded by the court or jury include or where the Judge in his absolute discretion determines that the damages so awarded include any amount for -

(a) compensation in respect of liabilities incurred which do not carry interest as against the person claiming interest;

(b) compensation for loss or damage to be incurred or suffered after the date of the award; or

the Judge shall not allow interest in respect of any amount so awarded or in respect of so much of the award as in his opinion represents any such damages.

(4) The Judge may if he thinks fit request a jury to specify in its verdict any amount included in the verdict in respect of the matters referred to in sub-section (3) of this section.

Although the award of interest by the trial judge was unanimously upheld, the members of the Court gave different reasons for reaching this conclusion. Barwick C.J. [2] (with whose reasons McTiernan J. substantially agreed) said that "no relevant distinction can be drawn between the case of an assessment of damages under Pt III of the Wrongs Act and that of the assessment of damages for personal injury where economic loss by reason of the destruction by the injury wholly or partially of the capacity to earn is an element. In each case the loss is wholly suffered at the one time; in the first case at the date of the death, and in the second at the date of the receipt of the injury." His Honour declined to accept the decision of the English Court of Appeal in Jefford v. Gee [3] , in which the Court treated so much of the general damages as represented the present value of future earnings, less a discount for contingencies, as an amount for compensation for loss to be suffered in the future and therefore as compensation for a loss yet to be suffered (Ruby v. Marsh [4] ). His Honour commented that the limitation in sub-s. (3) together with those in sub-s. (2) strongly suggest "that the interest prima facie is to be upon the whole verdict" [5] . Later [6] he said of s. 72 of the Act now under consideration that it: "gives the Court a discretion to award interest on the whole or part of a verdict for damages at such rate as the court may fix for the whole or any part of the period between the date when the cause of action arose and the date of judgment. There is no provision comparable to s. 79A(3)." 1. (1975) 132 C.L.R., at p. 650. 2. [1970] 2 Q.B. 130. 3. (1975) 132 C.L.R., at p. 651. 4. (1975) 132 C.L.R., at p. 644. 5. (1975) 132 C.L.R., at p. 654.

Gibbs J. also considered that damages awarded under Lord Campbell's Act are awarded as compensation for a loss that occurs at the moment of death [7] . Unlike Barwick C.J., Gibbs J. held that damages for personal injuries may include loss incurred or damages suffered in the future. However, his Honour thought that the principle on which damages are awarded under Lord Campbell's Act differed from that governing the award of damages for personal injury [8] .

(1975) 132 C.L.R., at p. 658. 2. (1975) 132 C.L.R., at p. 659.

This reflected the critical difference between his Honour's judgment and those of Stephen and Jacobs JJ. Like Gibbs J., they held that damages for personal injuries may include loss incurred or damages suffered in the future in which event it would come within s. 79A(3)(b) of the Victorian statute.

Jacobs J., with whose approach Stephen J. agreed, though delivering a separate judgment, observed that "the theory of the law is that the right to damages accrues when the act is done or event occurs which occasions liability", that damages are an indivisible lump sum and that it "does not matter that the physical or material consequence of the injury has not been felt at the time of the injury or of assessment" [9] . However, his Honour said [10] that s. 79A(3)(b) referred "not to the juristic concept of damages but to the practical concept that a plaintiff receives damages by way of compensation in respect of loss or damage incurred or suffered up to the date of trial and verdict and in respect of loss or damage (if any) which he will incur or suffer in the future".

(1975) 132 C.L.R., at p. 667. 2. (1975) 132 C.L.R., at pp. 667-668.

Although no juristic distinction by itself permits the cause of action under Pt III of the Wrongs Act to be treated differently from the cause of action for personal injuries, it does not follow that for the purposes of the application of s. 79A(3)(b) regard should not be had to the fact that it has commonly been treated differently. The common method of calculation of compensation in actions under Pt III of the Wrongs Act and its equivalents elsewhere does not lend itself readily to the application of s. 79A(3)(b), since allowance must in such a case be made for the fact that although the compensation is not received and does not earn interest until the verdict is given the sum of compensation is calculated not only in theory but in practice from the moment of death. Where the common practice is followed and the distinction is not drawn between compensation up to the date of trial and compensation thereafter and where allowance is made either by arithmetical calculation or by application of general principle for the fact that the benefits are received in a lump sum instead of being received over an extended period and where it is further assumed that that lump sum is received at the moment of the death of the deceased it would be unfair to make any simple apportionment. 1. (1975) 132 C.L.R., at p. 669.

His Honour then dismissed the appeal because he thought that the damages awarded by the jury could not realistically be divided between past and future loss.

Subsequently, in Fire and All Risks Insurance Co. Ltd. v. Callinan [12] , the Court, in a unanimous decision, held that in an action for damages for personal injuries in exercising its discretion to award interest under s. 72 of the Act a court must pay due regard to the distinction between items of detriment already suffered and those to be suffered in the future, and to the time of manifestation and the duration of various items. The Court in its joint judgment reviewed the conclusions of the Full Court of Queensland in this way [13] :

In the case of loss of earning capacity interest should, they concluded, be allowed only on that part of the damages awarded under that head which represents compensation for those detriments the practical impact of which, in terms of economic loss actually incurred, has already, at the date of judgment, been experienced by the plaintiff. In the case of pain, suffering and loss of amenities it was said they too "should have a time differential applied to them for the purpose of giving interest on damages within the terms of s. 72". These conclusions accurately reflect the application to the Queensland legislation of the principles enunciated by a majority of this Court in Ruby v. Marsh. 1. (1978) 140 C.L.R. 427. 2. (1978) 140 C.L.R., at p. 432.

The Court's decision in Fire and All Risks Insurance Co. Ltd. v. Callinan accorded with the approach subsequently taken in Atlas Tiles Ltd. v. Briers [14] , in an action for damages for wrongful dismissal where it became necessary once again to consider the application of s. 79A(3) of the Victorian Act. To the same effect were the decisions of the Privy Council in Thompson v. Faraonio [15] and of this Court in Cullen v. Trappell [16] . Thompson v. Faraonio related to an award of interest under s. 30C of the Supreme Court Act 1935-1974 S.A. in an action for damages for personal injuries. Cullen v. Trappell raised a similar question as to the application of s. 94 of the Supreme Court Act 1970 N.S.W. in an action of the same kind. Section 30C requires the court to make an award of interest unless good cause is shown to the contrary whereas s. 94, like s. 72, leaves the trial judge with a general discretion. However, both s. 30C and s. 94, like s. 72, do not contain a provision similar to s. 79A(3) of the Victorian Act. Gibbs J. [17] (with whose judgment Stephen, Mason and Wilson JJ. agreed) quoted a passage from the judgment in Fire and All Risks Insurance Co. Ltd. v. Callinan [18] and went on to say:

This decision supports the view that, in general, the distinction between detrimental consequences already suffered and those to be suffered in future should be regarded by a judge exercising his discretion to allow interest not only on damages awarded in respect of economic loss, but also in respect of damages awarded for non-economic loss. Later he said [19] : The decision in Fire and All Risks Insurance Co. Ltd. v. Callinan permits a dissection to be made in appropriate circumstances, but does not require it to be made in all cases. Where interest is allowed, it should be allowed at ordinary commercial rates. As the words of s. 94 show, in New South Wales interest may be awarded from the date when the cause of action arose: the position is not the same in all States. Special circumstances may require the discretion to be exercised differently in some cases. However, the award of interest should always be approached in a broad and practical way, and this matter should not be allowed to assume disproportionate importance either at the trial or in the judge's consideration of the matter. 1. (1978) 144 C.L.R. 202. 2. (1979) 54 A.L.J.R. 231; 24 A.L.R. 1; [1979] 1 W.L.R. 1157. 3. (1980) 146 C.L.R. 1. 4. (1980) 146 C.L.R., at pp. 20-21. 5. (1978) 140 C.L.R., at p. 432. 6. (1980) 146 C.L.R., at pp. 21-22.

Since Ruby v. Marsh [20] this Court has had no occasion to consider an award of interest on a verdict in a fatal accident claim. However, the House of Lords considered the question in Cookson v. Knowles [21] . It held (1) that in a normal fatal accidents case, the damages ought, as a general rule, to be split into two parts: (a) the pecuniary loss which it was estimated the dependants had already sustained from the date of death up to the date of trial, and (b) the pecuniary loss which it was estimated they would sustain from the trial onwards; (2) that interest on the pre-trial loss should be awarded for a period between the date of death and the date of trial at half the short term interest rates current during that period; and (3) that no interest should be awarded on future loss. The relevant statutory provision, s. 3 of the Law Reform (Miscellaneous Provisions) Act 1934, as amended by s. 22 of the Administration of Justice Act 1969, gave the trial judge a discretion. The House of Lords judgment effectively prescribed the guidelines according to which that discretion was to be exercised.

Although in Cookson v. Knowles Lord Fraser of Tullybelton said [22] that s. 79A is in terms broadly similar to those of the English legislation considered in that case, s. 79A differs from the English legislation, as it does from s. 72 of the Queensland Act, in a number of respects, which were relied upon by Kneipp J. in his dissenting judgment in the present case. First, s. 79A provides that the judge "shall" award interest "unless good cause is shown to the contrary", and not that he "may" do so. Secondly, s. 79A does not expressly permit the giving of interest on part only of the amount awarded. Thirdly - and this important ground of distinction was pointed out in Cullen v. Trappell [23] - s. 79A contains, and s. 72 does not, an express prohibition on the allowance of interest on that part of the damages which is awarded as compensation for loss or damage to be incurred or suffered after the date of the award. The decision in Ruby v. Marsh [24] depended on the particular words of s. 79A and in particular on the question whether the words of s. 79A(3)(b) are concerned with a juristic concept or a practical one. That question does not arise in the present case, where, to use the words of Thompson v. Faraonio [25] , the effect of s. 72 "was simply to leave the point resting on principle", namely, the principle expounded in relation to actions for personal injuries in Fire and All Risks Insurance Co. Ltd. v. Callinan [26] and in relation to fatal accident claims in Cookson v. Knowles [27] . In other words, the general discretion given to a trial judge by s. 72 to award interest should be exercised in fatal accident claims as well as in actions for personal injuries so as to draw a distinction between detrimental consequences suffered before the date of the trial and those to be suffered thereafter. Accordingly, in cases which arise under s. 72 of the Queensland Act and under such legislation of other States as is indistinguishable from that section, it will be appropriate for a trial judge (1) when he is able to do so to split the award into two parts, as did the trial judge in this case, the first part reflecting loss of dependency before the trial and the second part reflecting loss of dependency after that date; and (2) to award interest only on the loss before the date of trial, making no award of interest in respect of the loss to be suffered after that date. In our view, the comments made by Gibbs J. in Cullen v. Trappell [28] which we have already quoted should be applied to fatal accident claims, subject to the qualification that we are here concerned with loss of dependency and not with pain and suffering and loss of amenities.

[1979] A.C., at p. 578. 2. (1980) 146 C.L.R., at p. 18. 3. (1975) 132 C.L.R. 642. 4. (1979) 54 A.L.J.R. 231; 24 A.L.R. 1; [1979] 1 W.L.R. 1157. 5. (1978) 140 C.L.R. 427. 6. [1979] A.C. 556. 7. (1980) 146 C.L.R., at pp. 21-22.

In the present case the award of interest for the action under Lord Campbell's Act should be confined to the sum of $27,000, representing loss of dependency to the date of trial. Although interest could have been awarded on this sum from the date of the accrual of the cause of action, i.e. 17 September 1978, until the date of trial, the respondents did not object to the selection of 9 October 1980 as the time from which interest should run. There was no attack on the selection of 10 per cent as the appropriate rate, but in accordance with what we have said interest should be allowed at half that rate.

In the result we allow the appeal and substitute for the award of interest in the fatal accidents claim made by the trial judge and confirmed by the Full Court, interest at 5 per cent per annum on the sum of $27,000 from 9 October 1980 to 16 March 1982.

Special leave to appeal to this Court was granted by consent upon the condition that the appellant pay the respondent's costs of the appeal in any event and that the orders for costs made in the Supreme Court of Queensland remain undisturbed. Accordingly, we would order that the appellant pay the costs of the respondents of this appeal and make no further order as to costs.

Section 72(1) of the Common Law Practice Act 1867-1981 Q. gives a wide discretion to a court to order interest "at such rate as it thinks fit" on the whole or any part of a judgment for recovery of moneys (including damages) for "the whole or any part of the period between the date when the cause of action arose and the date of judgment".

The claim was by a dependant for damages for injury caused by a death on 17 September 1978. The trial judge's order (on 16 March 1982) was for inclusion of interest at the rate of 10 per cent from the date of the writ (9 October 1980) on the whole of the damages including $27,000 which represented the accumulated notional loss of dependency from the death to trial. Neither party challenges 10 per cent as an appropriate rate. As the notional loss was accumulating over the period, it would have been excessive to allow 10 per cent for the period from death to trial on the whole $27,000. Assuming an even accumulation, the obvious course was to allow half the interest on the total. The accumulation was not even because the $27,000 was arrived at on the basis that the deceased's earnings (and therefore the loss to the dependants) would have increased up to the trial. A crude, but rough approximation was to allow the 10 per cent on somewhat less than half the period, which is what the trial judge did. Thus his allowance of interest of 10 per cent in respect of $27,000 from date of writ to trial was appropriate and should not be disturbed. Section 72 in giving the judge power to choose the rate and the period allows room for adjustment of either to arrive at a fair and easily calculable amount which was achieved in this case.

The allowance of interest on the remainder of the award was an exercise of discretion. Although discretionary decisions have often been said to be much less open to disturbance on appeal than other judgments (see House v. The King [29] ), this depends on the subject of the discretion. Procedural decision such as adjournments and numerous interlocutory decisions should not be easily disturbed, unless they determine or substantially determine the outcome of the proceedings. Other cases where the exercise of discretion is the substance of the determination should not be brushed aside on appeal as exercises of discretion. The attempt to classify numerous important judicial determinations, such as assessment of damages, as discretionary, coupled with application of a strict test such as that in House v. The King, would whittle away the right of appeal.

I find it unhelpful to decide this case by reference to provisions which are substantially different from s. 72 such as s. 79A of the Supreme Court Act 1958 Vict., which was considered in Ruby v. Marsh [30] .

I do not accept that there is some critical difference between a claim for damages by a dependant and a claim for damages for personal injury. In a dependant's claim the jury "may give such damages as they may think proportioned to the injury resulting from such death": s. 13, Common Law Practice Act 1867-1979 Q.. The damages are said to be based on the loss of reasonable expectation of "pecuniary benefit or benefit reducible to money value": see Lincoln v. Gravil [31] ; Davies v. Powell Duffryn Associated Collieries Ltd. [32] . As I pointed out in Jacobs v. Varley [33] the words "benefit reducible to money value" are often forgotten (very often by those representing the claimants) and the words "pecuniary benefit" are treated as if they referred only to monetary contributions, such as a portion of the deceased's wages. The action extends to damages for "deprivation of those benefits in cash, in kind or in services rendered, which the deceased would have been expected to have provided had he survived": see Stephen J. in Ruby v. Marsh [34] ; Jacobs v. Varley [35] ; also Naum v. Nominal Defendant [36] , Jeffrey J.; St. Lawrence and Ottawa Railway Co. v. Lett [37] ; Vana v. Tosta [38] . The claimants are entitled to recover for loss of all those services which are reducible to money value, just as loss of enjoyment of life is reducible to money value in a personal injury claim.

(1954) 94 C.L.R. 430, at p. 441. 2. [1942] A.C. 601, at p. 611. 3. (1976) 50 A.L.J.R. 519, at pp. 526-527; 9 A.L.R. 219, at p. 234. 4. (1975) 132 C.L.R., at p. 664. 5. (1976) 50 A.L.J.R., at p. 527; 9 A.L.R. 219, at pp. 234-235. 6. [1974] 2 N.S.W.L.R. 14. 7. (1885) 11 S.C.R. 422. 8. (1967) 66 D.L.R. (2d) 97.

In the present case, these principles were ignored, and the loss was claimed as if the deceased were unlike the ordinary Australian. The claim was presented as if the deceased, had he survived, would have provided no services to his wife or children and contributed only part of his earnings to the household finances. However the case should not be treated differently to a claim for all the injury which is generally suffered as a result of death of a husband and father, or a claim for personal injury.

As it appears that the damages were calculated by reference to loss of benefits which would have been received post-trial, in money values current at the date of trial, no justification appears for interest on the damages referable to that loss. If the damages had been assessed in terms of that loss (or the whole loss) as at the date of death and in the money value then current, it would have been appropriate to award interest on that loss or the whole loss from the date of death.

The appeal should be allowed, judgment in respect of the dependancy varied by allowing interest at 10 per cent on $27,000 only from the date of the writ (9 October 1980) to judgment (16 March 1982).

At a glance

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Decision date

Before

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Judgment (50 paragraphs)

Parties