Week 3 remedies lecture notes PDF

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Week 3: Tort 2 

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We are now looking at torts materials that we did not previously study. Moving into more detailed considerations are settlements of damages, heads of loss, what type of damages are compensable and big emphasis on personal injury in this topic. o Economic loss  Vicissitudes discounting  New economic needs created  CLA - damages for personal injury - past/future econ loss  Gratuitous attendant care - G v K  Damages for non – economic loss in personal injury  Compensation for: damage to property; mental injury; interference with enjoyment of land; damage/destruction of goods Mitigation o Glavonjic v Foster [1979] VR 536 o This case is primarily for the rule that the pl has a duty to mitigate the loss. To reduce or minimise the extent of the loss that is possible. o Facts o Pl injured in car accident – refused brain surgery – o Issue: Pl duty to mitigate in these circumstances, and if the pl did have a duty to mitigate then the def might not have been liable for the full extent of the loss? o Gobbo J  Pl’s damages reduced if Def proves injuries capable of alleviation and would have been diminished by treatment that Pl refused – established on facts – whether reasonable for Pl to refuse?  Test : reasonable person in Pl’s circs – here Pl and partner both unsuccessful prior surgery – brain surgery more serious - + anxiety & depression - + Pl foreign citizen with limited English – not unreasonable in circs to refuse the brain surgery – no reduction. Here the duty was not applied in this case because it was not reasonable to expect this pl to undergo the surgery. NB: Bear in mind the pl circumstances. Assessment of Damages o Damages for Personal injury  mainly tort, but can be contract eg Grant v AKM  must be itemised/ categorised/transparent description of all the expenses in tort law cases ⇒ under agreed heads of loss + adjustments  Example: damages for loss of earning capacity:  plaintiff obtains a lump sum now for all future losses - once and for all rule  receiving future salary in advance gives Pl advantage - all future income available now to be invested  use actuarial tables to compute present value of future continuing losses, discounted for advantage of getting money in advance  various tables at various interest rates  all past and future damages are assessed in money values at date of assessment (for personal injury, the trial date)  Inflation comes up from time to time, interest - if you put the money into the bank lets say 5% you could go for high risk investments. If you buy property rather than income from the property which is a very dangerous example because it is a very risky strategy. You can pay off but there’s no doubt that there's any contingent liability like upkeep and maintenance of the property e.g. structural damage or anything that might arise. If it was a case of planning to make it capital appreciation, that may not arise. Some ppl who take those risks could face a real prospect of financial ruin. So for someone recovering from a personal injury it is not appropriate to approach the relevant finances.  The stock market and financial market had a financial crisis and the same could apply for shares

Anytime we are looking at the very traditional bank interest payments there’s always a risk element.  All the past and future damages are assessed at money ?? are assessed at the date of assessment AND for personal injury are assessed at the date of the trial. Once and for all rule  Civil Liability Act 2002 Div 7, ss 22-26: structured settlements :  s 22 - provision for periodic payments funded by annuity or similar - the concept being that the def can purchase annuity - can actually buy the financial instrument that gives the specific sum to a person by reference to a yearly rate. So they are going to factor in whether the financial institution has this money, can use this money, will there be inflation or interest as aforementioned. Is this what they are prepared to pay somebody per annum for a specific period of time for that sum of money.  NB: very unusual to find periodic payment - more relevant for a pl not in the position to manage their own finances or where there might be an issue with re to the risk that person has.  Not role of courts to step into the protection of the pl in that manner and so it will be more usual that a pl will appoint a manager - prevents a person to have the capacity to use their own finances.  s 23(1 ) ‘The purpose… is to enable the court to give the parties…a reasonable opportunity to negotiate a structured settlement’  s 23 (3)-(5) - ‘persons in need of protection’  NB Murphy J Todorovic v Waller : established the once and for all rule  Can’t come back 10 years later - ned to look at all potential future vicissitudes in this once and for all rule for settlement.  law on damages for P.I. systematically under-compensates catastrophically injured - avoids placing full costs of accidents on Defs  absurd to assume injured Pls always able to manage /invest large lump sums competently  This last point is important ⇒ because of the risk involved. If the money is actually needed for the care of the person then this is quite detrimental.  Inflation in the past can be much higher than people expect - cash value can come to the stage that if inflation was really high the costs of a cup of coffee would go up by a considerable amount of money. Civil Liability Act 2002 (NSW)  Part 2: Personal Injury damages  Not a code ie common law preserved except where Act contrary eg no provision in Pt 2 for damages for medical expenses or nursing care, but still available  S 11: ‘damages that relate to the death of or injury to a person’  injury includes pre-natal injury, impairment of physical or mental condition, disease  Includes personal injury damages in tort, contract, statute or otherwise: s 11A (2)  S 3B - Pt 2 personal injury damages cannot be compensation are not applicable to intentional acts, sexual misconduct, tobacco, dust diseases, Workers Compensation Act, comp for victims of crime, sporting injuries, discrimination ⇒ there are specific legislation dealing with those diseases e.g. workers compensation / there’s also an interest in the pl having their damages assessed in relation to intentional acts.  Generally excluded for Motor Accidents Act, MACA but some application 

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Provision for structured settlements Pt 2 Div 7, s 22-26 – by negotiation, not court order - allows periodic payments funded by annuity or other, contrary to ‘once and for all’ rule.  NB Supreme Court and D/C also have powers to award interim damages where liability not in issue, as long as Def insured and not suffer undue hardship (Supreme Court Act 1970 s 76E (4); District Court Act 1973 s 58 (4))  NB CL Act refers to ‘economic loss’ and ‘non economic loss’ rather than special & general damages  General damages - same as non economic loss - pain and suffering  Economic loss - is quantifiable and specific financially calculated  Civil Liability Act 2002 (NSW)  Div 2 – damages for economic loss  s 12 – past & future economic loss  s 13 – vicissitudes discount  s 14 – present value discount  s 15 – Griffiths v Kirkemeyer damages → carer costs  Div 3 – damages for non econ loss  s 16 (2) – capped at $400, 000 (indexed) for ‘a most extreme case’ (MEC)  s 16 (1) min threshold 15% Most Extreme Case  In terms of application ⇒ think about the consequences of those caps. If an injury is not meeting that threshold of 15% of the most extreme case, you are not going to get any damages for non-economic loss (no pain and suffering associated with that) unless the quantum of damages is concerned.  For the most extreme case the most amount of pain and suffering that can be suffered is capped at that level $400,000. Every year there’s a statutory instrument that tells us the indexation for that. o Date of assessment of damages previous strict rule : date of assessment = date of the wrong (tort and contract) only exception - personal injury : date of trial ‘Where actual facts are known, speculation as to the probability of those facts occurring is surely an unnecessary second-best’: Willis v The C’wealth (1946) 73 CLR 105 at 109 (Latham CJ) causes difficulties in times of high inflation Johnson v Perez - no rule on this - overall aim is fair compensation, and inflation must be taken into account Pl has obligation to mitigate damages prima facie rule : assess at date of the wrong, but now flexible o Damages for economic loss A. Loss of capacity 1. Loss of earning capacity Earlier she said we are looking forward. But we are looking back at what was the position before the event and then we are looking forward. E.g. i'm involved in a car accident. At court I say i have lost earnings for a year (which may or may not be the case) (make distinction b/w loss of earnings and loss of earning capacity is important). Sharman v Evans (1977) 138 CLR 563 (SVW p 560) Facts  20 y/o female secretary with good prospects (PL) – involved car accident – serious brain stem damage – quadriplegia, trauma-caused epilepsy, 

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respiratory impairment, inability to speak, not intellectually impaired – Pl awarded $300,547 at trial – record award in Aust at time - Def lost appeal to NSW CA, appealed to HCA on quantum  

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Issues  Loss of earning capacity; whether lost years should be included? Gibbs and Stephen JJ  NB earning capacity (a capital asset) not lost earnings  HCA - danger of double recovery - compensation for loss of earning capacity + compensation for medical costs  Pl permanently in hospital, so deducted cost of food and board if had lived at home from sum for lost earning capacity  Also deducted savings from no longer having to commute to work  no reduction for prospects of marriage  NB see Murphy J – loss of capacity not loss of earnings – critical importance for unemployed etc - NB contrast with Barwick CJ  Loss of earning capacity in ‘lost years’  ‘Lost Years’ rule ⇒  Whether can recover damages for loss of earning capacity in the lost years? ie 24 lost years that Pl would have worked but cannot now because of reduced life expectancy  Allow recovery but costs of Pl's own maintenance in lost years must be deducted: Skelton v Collins  Often reduces amount to zero for lower income Pls as little surplus income after living expenses  Likelihood of future exercise of earning capacity - no loss unless capacity would have been exercised  Held  Appeal allowed (on quantum) - award reduced to $270, 547 Process in earning capacity cases:  estimate earnings over lifetime if uninjured - taking away the fact that the person was injured as if they weren’t injured what would they be earning over their lifetime  deduct what their now capable of earning  convert to a lump sum  Adjust for contingencies - whether they are positive / negative Adjusting the award: Discounting for contingencies/ vicissitudes  Wynn v NSW Insurance Ministerial Corporation  (1995) 184 CLR 485)  Facts  Pl 30 y/o or 50? She keeps changing the numbers female Amex executive – car accident – prior back injury (successful spinal op) aggravated by this accident  forced to give up career 2 yrs later – part time work  D/C awarded $990,000 - 5% discount for vicissitudes  Also took into account the possible unpaid maternity leave ($ loss) balanced by possible promotion ($ gain)  NSW/C/A  Anyone who has worked on these kinds of cases will understand that a lot of this comes down to the evidence. She was a person being identified as getting a promotion showing a lot of promise. The def - will be trying to say that is not the case and using evidence to negate that this is not the case.  substantial reduction for possible adverse career prospects - young woman - possible children – allowed for 2 yrs maternity leave  8% discount + further discount for possibility of giving up career for less demanding job when she has children

also reduced for costs of domestic help & childcare of possible children  total discount for vicissitudes 28%  award reduced to $678,000  Critique - subject - not something that is primary analysis. Reasonable person, community standards. For a judge to come up with something like this nowadays would be destroyed in the media. High Court - Majority  correct to make allowance for possible period unpaid maternity leave  but wrong to make large deduction childcare costs so Pl can continue demanding career  Now they are not going to be taking maternity leave beyond the … paid by the state. That’s going to be irrelevant - research suggests how couples approach relationships now is that they tend to regard responsibilities as dual responsibilities.  D/C correct re prospects of promotion (specific evidence)  saved outgoings necessary to realise earning capacity eg travel costs, tools, must be deducted : Sharman v Evans ⇒ e.g. someone who is tradie - if they are no longer working, they no longer need to buy their tools to make the earnings that are relevant.  no basis for treating domestic help as necessary for realisation of earning capacity - C/A wrong  Childcare a possible expense of working parents – women & men equally - private cost - should not be taken into account ie no deduction  5% balance maternity leave/promotion correct except:  Pl possible deterioration from pre-existing neck injury – must be allowed for – otherwise Def paying for injury not caused by him  conclusion: discount for contingencies of 12.5%  very favourable - usual discount for contingencies NSW 15%  majority: this Pl more likely than average to have positive employment history  NB see judgment of Brennan J. Macarthur Districts Motorcycle Sportsman v Ardizzone  [2004] NSWCA 145  Facts - 12 y/o injured in motor cross event – club negligent  Issues  Meaning s 13 CLA (NSW) – Future Econ loss – claimant’s prospects and adjustments – relationship betw s 13 CLA and Malec v Hutton - vicissitudes discounting  Hodgson JA  ‘In my opinion, the provisions in s 13(2) and 13(3) concerning a ‘percentage’ are meant to be a statutory implementation of the practice of making a deduction in relation to future economic loss for ‘vicissitudes’, for which 15% is the percentage conventionally adopted in most cases.’  IOW the statutory provision is a mirror of the common law and thus the statutory requirement of the vicissitudes discount is 15%  Norris v Blake (No. 2) (1997) 41 NSWLR 49 – proper approach is to assess what Pl likely to have earned then adjust for contingencies – includes possibility that Pl might have done far better in future 

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Blake approach ‘adopted in most cases as practical way to give effect to Malec principle; and s 13 may be regarded as making it mandatory to do this’  Purposive interpretation of s 13(2) may permit adjustments for positive vicissitudes but ‘doubtful that s 13 would permit upward adjustment if positive vicissitudes… outweigh negative vicissitudes’  Suggests Parl’t reconsider wording s 13 – 3 deficiencies re above  In reality it doesn’t necessarily have to be a discount. Vicissitudes shouldn’t have to be a discount - its something that is increasing an award.  NEW ECONOMIC NEEDS CREATED – past & future care o Medical expenses - pre-trial and post-trial sums Sharman v Evans (see above) Pls duty to mitigate – here must live in hospital as cheaper for Def All medical expenses constitute mitigation: Pl’s damages reduced if refusal of treatment leads to extra harm o Civil Liability Act 2002 (NSW) o Div 2: Fixing Damages for Economic loss S 12 - past & future econ loss  Past/future deprivation /impairment of earning capacity [which is/will be productive of financial loss: Medlin v SGIO, Graham v Baker]  loss of expectation of financial support  S 12 (2) and (3):  The damages for economic loss are capped - max 3 times av. weekly earnings NSW at date of award.  This is why income protection insurance is very popular b/c if you look at high earning capacity. E.g. someone was at the prime of their career earning a couple 100,000. If they are injured and their earning potential is damaged in a way that they are not able to earn that money anymore, then the most they can earn is the maximum 3x average earnings in NSW at the date of award. These figures are published annually and it is really luck  example: av w/e NSW F/T adult: $1410.50 (19/5/12) x 3 = $4231.50 max s 13: Future econ loss: Pl’s prospects and adjustments  onus on Pl - assumptions re future earning capacity, or other "events," must accord with future likely circs if uninjured - s 13 (1)  court must adjust damages by ref to % possibility that 'events' might have occurred but for injury - s 13(2) – consistent with C/L Malec v Hutton (SVW 568)  s 13(2) & (3) - statutory formulation of vicissitudes discount: Macarthur Motorcycle v Ardizzone but cf Penrith City Council v Parks [2004] NSWCA 201 – no uniform approach  s 13 identical to s 126 Motor Accidents Compensation Act 1999  ‘most likely future circs' - ie no award unless the loss is probable o Gratuitous attendant care services This sub category of gratuitous attendant care services - e.g. a family member decides to volunteer (no contractual obligation) in terms of personal injury. This is diff in other cth jurisdiction. Carers that provide gratuitous care are awarded sums or compensation directly to them in their capacity as carer in other jurisdiction. Whereas in Australia, if you are going to claim this kind of loss it would be a sum that could be recovered by the pl. There’s nothing tort law context preventing the pl from going after that money - can be claimed as part of the losses in a personal injury claim. Issues: 1. Should care provided gratuitously by family to Pl be factored into damages award at all? G v K 2. Free care provided by (family) Def? Kars v Kars 

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Free services previously provided by Pl to others? eg child care - Sullivan v Gordon 1.Griffiths v Kerkemeyer (1977) 139 CLR 161 (SVW 581) Facts 21 y/o Pl – car accident – quadriplegic – cared for by fiancee and family at home – alternative nursing home – incr periods in nursing home req’d in future – at trial: $15,000 was awarded for past gratuitous care and $45,000 for future grat. care upheld HCA Issue  Should care provided gratuitously by family to Pl be factored into damages award?  Might argue it's not a loss to the pl - if someone willingly serves to the pl for free then why are they giving them money for something they are not paying for Gibbs J  “…this court should not abandon the principle that a Pl whose injuries have created a need for hospital or nursing services cannot recover damages…unless the need is or may be productive of financial loss…it should no longer be held that the fact that the services have been and will be provided gratuitously is conclusive…  First, is it reasonably necessary to provide the services, and would it be reasonably necessary to do so at a cost? If so, the fulfilment of the need is likely to be productive of financial loss.  Next, is the character of the benefit… such that it ought to be brought into account in relief of the wrongdoer? If not, the damages are recoverable.’ Stephen J  ‘The charitable friend or relative is a peculiarly inappropriate person to be saddled with any ultimate loss, being inherently unlikely to have any capacity to serve as an efficient loss distributor. (IOW that carer doesn’t have any right in law to seek damages from the def b/c there isn’t sufficient grounds for that to happen)  Accordingly a result which allows the injured person to recover damages in respect of the provider’s services so that he may …reimburse the provider is a desirable policy goal; the wrongdoer, likely to carry liability insurance, will prove a much better loss distributor.’  Can link these to early law concepts  Insurance related to distributive justice -sharing the loss  Corrective justice - to do with correction of the wrong and the...