A similar approach was taken in this Court in Marsland v Andjelic (1993) 31 NSWLR 162 where Kirby P and Meagher JA held at p 177 that they would allow, "the marginal cost of securing suitable accommodation" . In Nicholson v Nicholson (1994) 35 NSWLR 308, Kirby P, with whom Mahoney and Meagher JJA agreed, held at p 328 that, "the appellant should be allowed the full amount of the marginal cost of securing the suitable accommodation claimed." Likewise, in Burford v Allan (1993) 17 MVR 119 at 131-2, a decision of a Full Court of the Supreme Court of South Australia, Perry J, with whom King CJ and Duggan J agreed, approved the approach of the trial Judge in allowing the cost of "adapting the sort of house that the plaintiff would live in if she was not disabled, to meet her special requirements."
7 The approach taken in those cases is well established and is the normal approach to be adopted unless the facts of the case justify something different. The fact that the acquisition of a house and land would provide, not only accommodation for the injured plaintiff during his or her lifetime but also the capital value thereof, is a factor which must be taken into account and, ordinarily, it is taken into account in a rough and ready way by not including in the award the capital cost of the land and of the home but allowing in full for modification costs. It would be an error not to have regard to that factor. I agree with Mr Bartlett that, in the present case, the trial Judge did not make allowance for that factor and that his assessment erred to that extent.
8 However, I accept the point made by Mr P Neil SC, with him Mr D Hooke of counsel for the respondent, that the facts of each particular case must be taken into account. The general principle to be applied is that stated by Gibbs CJ and Wilson J in Todorovic v Waller (1981) 150 CLR 402, where their Honours said at p 412:
"Certain fundamental principles are so well established that it is unnecessary to cite authorities in support of them. In the first place, a plaintiff who has been injured by the negligence of the defendant should be awarded such a sum of money as will, as nearly as possible, put him in the same position as if he had not sustained the injuries. Secondly, damages for one cause of action must be recovered once and forever, and (in the absence of any statutory exception) must be awarded as a lump sum; the court cannot order a defendant to make periodic payments to the plaintiff. Thirdly, the court has no concern with the manner in which the plaintiff uses the sum awarded to him; the plaintiff is free to do what he likes with it. Fourthly, the burden lies on the plaintiff to prove the injury or loss for which he seeks damages."
9 In applying those precepts, it is necessary to have regard to the particular facts of each case so that the assessment reflects, so far as money can do so, the loss which the injured plaintiff has suffered. It is fundamental that the circumstances of the plaintiff prior to the injury and the future which the plaintiff would most likely have achieved, but for the injury, must be taken into account in order to assess the loss which resulted from the injury.
10 I therefore reject the contention of Mr Bartlett that there is a principle that the cost of a notional basic home is necessarily to be excluded from an award of damages. The award must take into account the facts of the particular case. In some cases, it will be anticipated that the injured plaintiff will live in an institution. In those cases, the cost of the purchase of a home is irrelevant. In some cases, it will be anticipated that the injured plaintiff will continue to live in his or her existing home. In such a case, only the cost of modifying the home will be taken into account. In other cases, it will be anticipated that the injured plaintiff must move from an existing home to another home more suitable to the plaintiff in his or her injured state. In those cases, the standard of the accommodation in which the plaintiff was accustomed to live will be a relevant factor. In other cases, if the plaintiff has lived prior to the injury, not in his or her own home, but in a boarding house or a caravan or in rented accommodation, the award of damages must take this into account.
11 In the present case, Mr Williams, prior to the accident, was living in a caravan and it was likely that he would have continued to do so. This fact gave rise to two relevant factors. The first was that an award which included the cost of purchasing land and a home would confer upon Mr Williams the benefit of a capital asset which, apart from the accident, he would not have acquired. The second was that, as Mr Williams would not have devoted any part of his income to the acquisition of such a capital asset, and, as he would now necessarily have to devote funds out of the damages to that use rather than to income earning purposes, it was proper to make allowance for the reduction in his income earning ability which would result from the diversion of money to that use.
12 Counsel are agreed that the loss of the use of $110,453, the cost of the house and land less the future rent foregone, would, assuming a life expectancy of 28 years and a net return of 3 per cent and calculating the result from the 5 per cent tables, quantify at $50,768. Deducting this from $110,453, the result would be $59,685.
13 The appropriateness in making an allowance for the diversion of funds from income earning activities has been recognised more than once. In Roberts v Johnstone [1988] 3 WLR 1247, May, Balcombe and Stocker LJJ set aside a judgment which had not applied the principle enunciated in George v Pinnock and themselves assessed damages, disallowing the capital cost of purchasing new accommodation but allowing the economic loss resulting from the application of moneys to that use. Their Lordships used a 2 per cent rate but, in this country, a 3 per cent rate is more appropriate. To the figure reached, their Lordships added a sum for conversion costs. A similar approach was taken by Mildren J in Rosecrance v Rosecrance (1995) 129 FLR 310.
14 For these reasons, I am of the view that the award should be reduced by $59,685. I consider that, in the circumstances of the present case, it is appropriate to make this allowance taking into account the factors I have mentioned. I need not discuss cases in which, on other facts, other approaches have been adopted.
15 Mr Bartlett further submitted that a deduction should have been allowed for the capital value of the air-conditioning, $9,500, and of the swimming pool, $62,000, the cost of which the trial Judge had allowed in his award as modification extras. In argument, Mr Bartlett conceded that the total of these sums, $71,500, should be reduced to $32,860, if the diversion of funds from income earning purposes to the acquisition of these assets was taken into account. Mr Bartlett put his argument on the ground that the trial Judge allowed, not only the capital cost of the items, but also for the repair and maintenance. Thus the award included a sum of $89,590 in respect of recurring costs of maintaining the pool and of $41,476 for recurring costs in relation to the air-conditioning.
16 The general approach is not to take account of any sum which modifications may add to the capital value of the anticipated purchase. In Marsland v Andjelic , at p 176, Kirby P and Meagher JA held that no deduction ought to be made in that case for the fact that the alterations for which allowance was made would improve the capital value of the property. Their Honours pointed to two reasons which supported that conclusion. The first was that an increased capital value would only accrue upon the death of the appellant. The second was that the alterations and adaptations would deteriorate over time and would require repair and maintenance.
17 However, those are not the only factors which apply. It is usually impracticable to call evidence as to what value the modifications may add to a property which has not yet been acquired. It should not be assumed that the addition of either air-conditioning or a swimming pool will increase the value of a property by the cost thereof. In the present case, for example, it should not be assumed that the construction of a pool costing $62,000 adjacent to a modest home in the Maitland area would increase the value of the property by that sum. Some occupiers enjoy pools, others do not. If this point was to have been raised, I consider that it should have been the subject of expert evidence. There was no evidence about it.
18 In this area of assessment, the Court must take a pragmatic approach. Had the trial Judge made some allowance for the value added by the pool, I would not have thought it inappropriate to do so. However, his Honour did not make that adjustment, nor did he deal with other matters of fine detail such as the legal fees and stamp duty which would be involved in the acquisition of land. His Honour's approach with respect to the modifications accorded with the general practice of courts. I would not interfere with his Honour's assessment in that respect.
19 For the reasons I have given, I would allow the appeal. I would order that the award of damages be reduced by $59,685 to a figure of $1,743,376. As the appeal was brought on a point of principle and as both parties succeeded in part, I would make no order as to costs.
20 WOOD CJ at CL: I have had the advantage of reading in draft the reasons for judgment of Davies AJA. I agree with his reasons and the orders he proposes.