Haines v Bendall
(1991) 172 CLR 60(Decision by: McHugh J.)
Haines
v Bendall
Judges:
Mason CJ; Dawson J; Toohey J; Gaudron J.
Brennan J
Deane J
McHugh J
Judgment date: 1 May 1991
SYDNEY
Decision by:
McHugh J.
The question in this appeal is whether, in determining the amount of interest payable in New South Wales to a plaintiff in respect of damages for non-economic loss to the date of trial, account can be taken of a lump sum payment made pursuant to the provisions of s.16 of the Workers' Compensation Act 1926 (N.S.W.) ("the Act") (now repealed). Factual Background
2. As the result of an incident which occurred in 1979, the respondent (the plaintiff) suffered an incomplete C5 quadriplegia. In 1988 in an action for damages in the Supreme Court of New South Wales, Carruthers J. found that the appellant's negligence had caused the plaintiff's injury. His Honour assessed the general damages of the plaintiff for pain, suffering and loss of the amenities of life at $180,000. For the purpose of calculating interest, his Honour apportioned $75,000 of the $180,000 to the pre-trial period.
3. In 1985, the plaintiff's employer had paid to the plaintiff the sum of $49,037 pursuant to the provisions of s.16 of the Act. Section 16(1) provides:
"A worker who has received an injury mentioned in the first column of the table hereunder set forth shall be entitled to receive from his employer by way of compensation for that injury, in addition to any other compensation prescribed by this Act, the amount indicated in respect of that injury in the second column of that table."
The table contains two columns. The first is headed "Nature of Injury" and specifies various physical losses, e.g. "Loss of either arm, or of the greater part thereof". The second column specifies the amount payable in respect of the total loss appropriate to each particular loss. Section 16(4) provides that, for the purpose of the table, the expression "loss of" includes "permanent loss of the use of". Section 16(5) provides that, for the purpose of the table, the expression "loss of" also includes the "permanent loss of the efficient use of", but that in such case a percentage of the prescribed amount payable, equal to the percentage of the diminution of the full efficient use, might be awarded in lieu of the full amount.
4. Section 63(1) and (2) of the Act gives a worker the right to proceed against his or her employer both under the Act and independently of the Act. Where any payment by way of compensation under the Act has been made, the payment, to the extent of its amount, is "a defence to proceedings against the employer independently of this Act in respect of the injury": s.63(5). Section 64 provides that, where injury for which compensation is payable under the Act was caused under circumstances creating a legal liability in some person other than the employer to pay damages in respect thereof, the worker may take proceedings both against that person to recover damages and against any person liable to pay compensation under the Act. However, the worker is not entitled to retain both damages and compensation. In such a case, if the worker recovers compensation before he or she recovers damages, the worker is liable to repay to the employer out of the damages the amount of compensation which the employer has paid in respect of the injury. If the worker has recovered compensation under the Act, the person who has paid the compensation is entitled to be indemnified by the person liable to pay the damages. Where any payment is made under that indemnity and, at the time of the payment, the worker has not obtained judgment for damages against the person paying under the indemnity, the payment, to the extent of its amount, shall "be a defence to proceedings by the worker against that person for damages": s.64(1)(c). But the Act makes no reference as to the effect of a payment under the Act in calculating interest in a common law action.
5. Carruthers J. rejected the appellant's contention that the sum of $49,037 or some part of it should be taken into account in considering the interest payable on the sum of $75,000 for non-economic loss sustained to the date of trial. His Honour awarded $52,800 as interest on that sum. The interest was calculated on a figure of 8 per cent per annum for the whole period. The purpose of an award of interest
6. Section 94(1) of the Supreme Court Act 1970 (N.S.W.) provides:
"In any proceedings for the recovery of any money (including any debt or damages or the value of any 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 the money for the whole or any part of the period between the date when the cause of action arose and the date when the judgment takes effect."
7. It has been authoritatively determined that the purpose of an award of interest in a personal injury case is to compensate a plaintiff for the detriment suffered by being kept out of his or her money during the relevant period: Thompson v. Faraonio (1979) 54 ALJR 231, at p 233; 24 ALR 1 , at p 7; Cullen v. Trappell (1980) 146 CLR 1 , at p 18; Batchelor v. Burke (1981) 148 CLR 448, at p 455; M.B.P. (S.A.) Pty. Ltd. v. Gogic (1991) 65 ALJR 203, at p 205; 98 ALR 193 , at p 196.
Applicability of Batchelor's Case
8. In Batchelor, this Court unanimously held that interest should not be awarded in respect of any damages for earnings lost before trial where periodic payments under the Workmen's Compensation Act 1971 (S.A.) had replaced those earnings. Gibbs C.J., with whose judgment Aickin, Wilson and Brennan JJ. agreed, said (at p 453):
"In my opinion it is not possible to say that workers' compensation received in respect of an injury in respect of which damages have been awarded is completely collateral or too remote to be taken into consideration in deciding whether the plaintiff in being deprived of his wages has suffered a detriment which should be remedied by an award of interest. It is not necessary to attempt the impossible task of devising a 'principle so general as to be capable of covering the great variety of benefits from one source or another which may come to an injured man after, or because, he has met with an accident', to use the words of Lord Wilberforce in Parry v. Cleaver ( [1970] AC 1 , at pp 41-42). The answer to the question whether the compensation should be taken into account in the present case is largely provided by a consideration of the legislation under which the compensation is payable - the Workmen's Compensation Act 1971 (S.A.), as amended."
After examining the statutory scheme, his Honour said (at pp 454-455):
"Clearly the advantage given to a workman by this legislation is not conferred upon him with the intention that he may retain the compensation even if he enforces his right to damages, and since the amount received as compensation is repayable to the extent to which damages are recovered the fact that the injured worker has received compensation will not relieve the tortfeasor who caused the injury of liability. That however does not mean that any advantage or disadvantage which results to the injured worker, and which is relevant in some other way to the assessment of damages, should be disregarded as collateral or remote. The legislation has treated the payment of compensation and of damages in respect of any one injury as closely related, and the fact that the lost earnings have been replaced by compensation paid under a statutory scheme whose very purpose is to provide money to take the place of the lost wages should be regarded when the court comes to consider whether a plaintiff has suffered any practical detriment by the loss of the earnings. In the present case it was not suggested that there was any significant lapse of time between the loss of earnings and the payment of the compensation. In those circumstances, when the plaintiff who has lost earnings has received compensation instead, he has not been out of pocket by reason of the failure to pay him damages, even though the compensation is repayable when the damages have been received. The circumstance that the compensation was paid by a third person (the employer) obviously does not mean that the payment was irrelevant to the enquiry whether in fact the plaintiff has suffered a practical detriment by the loss of his wages, and it does not provide any reason in law for disregarding the fact that the plaintiff received the compensation in place of the wages."
9. If the purpose or character of a payment made pursuant to s.16 of the Act was to compensate a plaintiff for an injury and its consequences in the same way that damages at common law compensate a plaintiff for an injury and its consequences, the reasoning in Batchelor would be relevant. It would then be difficult to resist the conclusion that, to the extent that a plaintiff has received payment under s.16, he or she has suffered no practical detriment by being deprived of his or her common law damages to the date of trial. Accordingly, it is necessary to determine the purpose and character of a payment made pursuant to s.16 of the Act. The purpose and character of a s.16 payment
10. In my opinion, the purpose or character of a payment under s.16 is not in any practical sense the same as the purpose or character of an award of damages for pain and suffering and loss of amenities occurring up to the date of the trial. The amount paid pursuant to the provisions of s.16(1) depends upon the objective nature of the injury and the extent of the loss of use of the bodily part affected and not upon its effect on the worker personally. Under s.16, the worker receives the same amount for an injury whether he or she is aged 16 or 60. The worker receives the same amount if the loss of part of his or her body or of its efficient use is accompanied by great pain over a long period or with little pain over a short period. In some cases, the s.16 payment will be far greater than the amount which will or would be received as damages for pain and suffering and loss of amenities in a common law action. In other cases, the s.16 payment will be far less than will or would be obtained in a common law action. An award of damages for pain and suffering, on the other hand, is "based upon solace for a condition created not upon payment for something taken away": Skelton v. Collins (1966) 115 CLR 94 , per Windeyer J. at p 130. That case established that, in Australia, general damages for an injury and its non-economic consequences are awarded to compensate a plaintiff more for the change in his or her subjective feelings than for the objective fact of the injury. Thus, Taylor J. said (at p 113):
"It may be said, of course, that a person who is completely incapacitated as a result of his injuries suffers such a loss whether or not his injuries are of such a character to render him insensible to his loss. But, in my view, a proper assessment can be made only upon a comparison of the condition which has been substituted for the victim's previously existing capacity to enjoy life and where the mind is, as it were, willing and the body incapable there is, in my view, a much higher degree of loss than where the victim is completely insensible to his lost capacity. Perhaps, in other words, it may be said that a person who is obliged for the rest of his life to live with his incapacity, fully conscious of the limitations which it imposes upon his enjoyment of life, is entitled to greater compensation than one who, although deprived of his former capacity is spared, by insensibility, from the realization of his loss and the trials and tribulations consequent upon it."
11. The 60 year-old worker who, by reason of brain damage, is unaware that he has lost the use of both arms and legs is entitled to the same s.16 payment as the 16 year-old worker who has suffered the same injuries and is conscious of her losses. But the 60 year-old worker's common law damages for pain and suffering and loss of amenities would be small indeed compared to those of the 16 year-old worker.
12. A s.16 payment is a tariff for interference with the body and its functions and the payment is in no way proportioned to the consequences of the injury to the worker concerned. While the provisions of s.16 give the Workers' Compensation Commission a discretion in determining the amount of a s.16 payment, the fact remains that it is a compensatory payment for the loss of a bodily part or function. It bears more resemblance to the bots prescribed by Anglo-Saxon law than to a common law award of damages. If a s.16 payment is intended to compensate a worker for pain, suffering and the loss of amenities of life, it does so without regard to the actual pain, suffering or loss of amenities of that worker.
13. Moreover, if a s.16 payment is made to compensate the worker for the consequences of an injury of the prescribed kind, it must be for all the consequences - financial and non-financial - of that injury for the rest of that person's life and not merely for pain and suffering and loss of amenities for the period between the date of injury and the date of trial. Counsel for the appellant contended that this problem could be overcome by an apportionment. But ex hypothesi the award for damages for pain and suffering and loss of amenities and the s.16 payment are incomparables; apportionment is not an option. Conclusion
14. It follows in my opinion that the receipt of a s.16 payment is not a matter that should be taken into account in determining the detriment which a plaintiff has incurred by being deprived of his or her damages for pain and suffering and loss of amenities to the date of the trial. When the tortfeasor is a person other than the worker's employer, the receipt of the s.16 payment is no more relevant to the interest issue in the common law action than a payment by an insurer under an accident policy. When the tortfeasor is the employer, the s.16 payment cannot be dismissed as res inter alios acta . Nevertheless, even in that case, the purpose and character of the s.16 payment and the award of damages are so different that the s.16 payment cannot be regarded as a payment on account of a plaintiff's damages for pre-trial pain and suffering and loss of the amenities of life.
15. The appeal should be dismissed.