Workers Compensation Nominal Insurer v Gary Luke by his Tutor Matthew Charles Luke

Judgment 1McCOLL JA : I agree with Handley AJA's reasons and the orders his Honour proposes. I also agree with Campbell JA's additional remarks. 2CAMPBELL JA : I have had the advantage of reading a draft judgment of Handley AJA. I agree with it, and add the following remarks concerning the first ground of appeal. 3Section 151G(1) draws a clear distinction between "damages for past economic loss due to loss of earnings" and "damages for future economic loss due to the deprivation or impairment of earning capacity" . "Earning capacity" is the potential to earn money. An injured plaintiff can have a "deprivation or impairment of earning capacity" if that plaintiff is rendered unable, or less able, to earn money, regardless of whether the plaintiff was earning money in that particular way prior to the accident in question. 4It will often happen that, before being injured, a plaintiff was not in the fortunate position of having a substantial lump sum from which investment income could be earned. Even so, if a plaintiff is injured in a way that results in him or her becoming mentally incapable, or less capable, of earning money by investment, that plaintiff's earning capacity has, in that respect, been lost or reduced. Such a plaintiff sustains a "future economic loss" if the plaintiff has less money through having to pay an expense. An expense of funds management is "due to the deprivation or impairment of earning capacity" if it is caused by the plaintiff being unable, or less able, to earn money for himself or herself through investment. 5In the Nominal Defendant v Gardikiotis (1996) 186 CLR 49 McHugh J at 54 said: "If a defendant's negligence results in the plaintiff being so mentally or physically incapacitated that she is unable to manage day-to-day tasks, the basic principles of compensation for tortious conduct entitle the plaintiff to damages both for the disability and the expense of managing those tasks. The expense is just as much a product of the defendant's negligence as is the disability. It is compensable therefore unless it is damage of a kind that a defendant could not reasonably foresee. Similarly, if a plaintiff can no longer manage her affairs with the same skill as before the accident, both the reduction in skill and any expense reasonably incurred in bringing the management of those affairs to the pre-accident level are compensable in damages." 6Brennan CJ, Dawson, Toohey and Gaudron JJ said, at 52: "... but for the accident, the respondent would not have a verdict to invest and, thus, would not need assistance in its management. But it is contrary to common sense to speak of the accident causing the need for assistance in managing the fund constituted by her verdict moneys in circumstances where her intellectual abilities are not in any way impaired . It would be otherwise in the case of a plaintiff who is intellectually impaired as a result of a defendant's negligence or by reason of some pre-existing disability ." (emphasis added) 7Gummow J at 67 approved the statement of King CJ in Campbell v Nangle (1985) 40 SASR 161 at 192: "If the plaintiff has been rendered by the wrong for which he recovers damages incapable of managing his affairs so that the fund resulting from the damages must be managed for him, the fees payable to the manager will reduce the real return from its investment. Unless an amount is included in the damages to compensate for those fees, the plaintiff will not receive the full restitution to which the law entitles him. It seems to me that the liability for the fees is a loss flowing directly from the wrong and is recoverable as damages caused by the wrong." 8I agree with the orders proposed by Handley AJA. 9HANDLEY AJA : This appeal from the decision of Sidis DCJ to award $108,280 damages for funds management to the plaintiff raises questions under s 151G and s 151IA of the Workers Compensation Act . The plaintiff was injured on 21 December 2004 while working as a roof tiler for an uninsured employer. He fell 3 m on to a concrete surface and suffered head and back injuries. As a result of his head injuries he suffers from short-term memory loss and is unable to manage his own financial affairs. Liability was not in issue. 10Section 151G, in its relevant form, was inserted by Act No. 94 of 2001. It provides that "the only damages" that may be awarded to an injured worker against his employer are for past and future economic loss. His rights to compensation for permanent impairment and pain and suffering pursuant to ss 66 and 67 are not affected if enforced before damages are recovered: s 151A(1)(a). 11The Judge awarded $526,356 for past and future economic loss, but weekly compensation amounting to $124,691.48 had to be deducted pursuant to s 151A(1)(b), leaving an investible fund of about $360,000. This part of the award was not challenged. The Judge awarded a further $108,280 for the cost of fund management. 12Section 151G in its relevant form provides: " 151G Only damages for past and future loss of earnings may be awarded (1) The only damages that may be awarded are: (a) damages for past economic loss due to loss of earnings, and (b) damages for future economic loss due to the deprivation or impairment of earning capacity. (2) ...". 13The Judge overruled the defendant's objection that an award for the cost of fund management was contrary to s 151G. In doing so she followed the decision of Patten AJ in Baghdadi v P&M Quality Small Goods Pty Ltd [2008] NSWSC 566 [10] (not [2008] NSWSC 406 [105] which is not relevant) where the Judge said: "The phrase 'due to' is wide. It is perhaps a matter of [impression] but given that the legislature must have contemplated the situation of a very seriously injured plaintiff I think the expression is wide enough to encompass funds management where the negligence of the employer creates the need for the management as occurred in this case." 14The Judge held [40] that the incapacity which required the plaintiff to incur the cost of fund management "is itself a form of impairment of income earning capacity", and that s 151G did not clearly and unequivocally take away this right. 15The heading of s 151G would restrict an injured worker to damages for past and future loss of earnings. However the heading is not part of the Act (Interpretation Act s 35(2)), but is extrinsic material. Section 34(1) allows such material to be considered to confirm the ordinary meaning of a statutory provision or to determine its meaning if this is ambiguous or obscure. 16The heading is of no assistance because it differs so significantly from the text. The first limb of the section, par (a), which is unambiguous, allows loss of earnings to be awarded for past economic loss. The second limb, par (b), does not mention future loss of earnings. It permits an award of damages for "future economic loss due to deprivation" of the worker's "earning capacity" 17Damages for the cost of fund management are awarded for a cost that will almost invariably be incurred after the trial. It is a component of the plaintiff's future economic loss. The section only permits this if the loss is "due to" the impairment of the plaintiff's earning capacity. 18"Due to" imports causation. This is the appropriate dictionary meaning, confirmed by statements in The Commonwealth v Bourne [1960] HCA 36, 104 CLR 32 at 38, 39 and 40; and The Commonwealth v Thompson [1960] HCA 28, 104 CLR 48 at 53, 56. 19The need for fund management arose from the creation of the fund to compensate the plaintiff for "the deprivation" of his "earning capacity". It was a component of his future economic loss which he would incur because his earning capacity had been lost. 20Mr King SC for the appellant submitted that para (b) was limited to loss of earnings, what would otherwise have come in, and did not extend to an outgoing. 21However the ordinary meaning of loss includes an expense paid or incurred. As Campbell JA said during argument, loss involves a comparison, and an expense that would not otherwise have been paid or incurred is a form of loss. 22The construction of s 151G must be considered in the light of s 151, enacted in 1989, which provides: "This Act does not affect any liability in respect of an injury to a worker that exists independently of this Act, except to the extent that this Act otherwise expressly provides." 23The cost of fund management was a well recognized component of an injured plaintiff's future economic loss prior to the 2001 amendments: The Nominal Defendant v Gardikiotis [1996] HCA 53, 186 CLR 49. Those amendments, and s 151G in particular, did not "expressly provide" for that right to be taken away. However s 151G was enacted after s 151 and if the sections are inconsistent the later would have full effect, even if the inconsistency only arose by necessary implication: Rose v Hvric [1963] HCA 13, 108 CLR 353, 357. Section 151G does not, in terms, deny recovery for this form of future economic loss and there is no necessary implication to that effect. 24The deprivation of the plaintiff's earning capacity created, or caused, a need for fund management with its attendant cost which did not exist while his earning capacity was intact and he was receiving wages. It can also be said that the award of a substantial lump sum, which he would never have otherwise possessed, created or caused that need. In either case the loss was "due to" the deprivation of the plaintiff's earning capacity. 25In my judgment therefore the plaintiff is entitled to an appropriate award for the cost of managing his lump sum. 26The appellant's second ground of appeal related to the period for which that cost was awarded. The plaintiff was 58 at the date of trial. The life expectancy of an average person of that age was then 26.96 years (red 96) and the Judge awarded the cost of fund management for that period. Section 151IA provides: "In awarding damages for future economic loss due to deprivation or impairment of earning capacity ... the court is to disregard any earning capacity of the injured worker after age 65." 27Mr King submitted that the section prohibited an award for the cost of fund management after the plaintiff turned 65. The Judge rejected this submission and so do I. Her primary award for future economic loss was based on the plaintiff's lost earning capacity to age 65 as required by the section. Her award for the cost of fund management after age 65 was not based on any earning capacity the worker may otherwise have had after that age and was not contrary to s 151IA. 28The final issue concerns the allowance for the cost of managing the fund so that $72,000 or 20% of the fund will remain at the end of the plaintiff's life expectancy. On this assumption the fund under management will be greater during his expected lifetime than otherwise, increasing the cost of its management. 29The plaintiff's life expectancy of 26.96 years based on the Medium Life Expectancies, Australia 2010", in an expert's view the appropriate assumption for the life expectancy of a normal made of the plaintiff's age (red 96). It would be entirely reasonable for the plaintiff and his advisers to conserve the fund against the chance that he will live longer. The issue is whether the defendant should be required to pay for the extra expense. 30The Court, in awarding damages, endeavours to be fair to both parties. For this purpose the Court adopts the plaintiff's life expectancy unless there is evidence personal to him which supports a different life expectancy. There is no such evidence in this case. 31In General Motors-Holden's Pty Ltd v Moularas [1964] HCA 39, 111 CLR 234, 258 Windeyer J said that average mortality experience based on the life tables allowed for the possibility of the assumed life being cut short by death. It necessarily allows for the possibility of longer life. 32The issue involves a future possibility and, in accordance with Malec v JC Hutton Pty Ltd [1990] HCA 20, 169 CLR 638, 639 "the court must form an estimate of the likelihood that the possibility will occur". The figure in the life tables balances the chances of death before or after the stated life expectancy. Since, in the absence of evidence, the chances are equally balanced, the appropriate decision, fair to both parties, is to adopt the average figure in the life tables. 33In my judgment therefore the appeal should succeed on this point. The Court was told that the parties would probably be able to agree on the reduced amount that should be substituted. I would allow 21 days for this purpose. That question can be determined later if necessary, pursuant to UCPR Pt 36.16(3), although the notice of motion is filed outside the 14 day time limit in Pt 36.16(3A) and (3B). 34The appellant has only succeeded on the last and least important point in the appeal, which took very little time. It should be ordered to pay 80% of the respondent's costs. The following orders should be made: (1) Appeal allowed in part. (2) Judgment for the plaintiff in the District Court for $538, 483.10 set aside save as to costs. (3) The parties to bring in short minutes of orders within 21 days to give effect to this Court's decision that the cost of fund management should be allowed on the assumption that the fund is exhausted at the end of the plaintiff's life expectancy of 26.96 years at the date of trial. (4) The judgment to be substituted in accordance with the short minutes to take effect from 18 June 2010. (5) The appellant to pay 80% of the respondent's costs of the appeal. (6) Liberty to apply for further or other orders.