Ryan v Commonwealth [1936] HCA 47; (1936) 57 CLR 136 (7 October 1936)

These cases are consequential upon the decision of the Full Court in Edwards v. The Commonwealth[1] declaring the illegality of the dismissal of an officer in circumstances similar to those in which each of the two present plaintiffs was dismissed. Wrongful dismissal is admitted, and damages have to be estimated.

It is agreed that up to September 30th of the present year, Ryan would have received £1,351 by way of salary. In fact he received £327 in a lump sum in lieu of furlough due at the date of retirement. He has also received since the date of his dismissal £458 by way of pension payments. Being a man of comparatively youthful appearance, and having a young family, he bestirred himself to obtain employment, and has earned £402 as a clerk in the Postal Institute—a fact which enures to the benefit of the defendant.

These three sums in fact received amounted to £1,187 so that, assuming that Ryan would still have been capable of working up to the present as a telegraphist, he has already lost (up to September 30th, 1936) the sum of £164.

The next question to determine is an estimate of the time up to which Ryan would have been capable of performing his duties as telegraphist. I think the answer to this question is up to the age of seventy years certainly, and quite possibly longer. Further, the probable date of his death may be taken as at eighty-one.

Making the calculation by reference to present values of future salary (the plaintiff being assumed able to work until seventy as telegraphist), and including the probable amount he would have received by way of pay for Sunday and holiday work and for overtime, also the allowances of payment for children, the plaintiff should be credited with £970 and debited with £344, being the present value of the pension which will in fact be paid to him until he reaches the age of seventy. This will mean the addition of £626 to the £164 already mentioned, giving a total of £790.

I also find that Ryan's capacity to perform efficient services for the Commonwealth in a capacity other than that of telegraphist would certainly have lasted for some years after he reached the age of seventy. But it has to be remembered that if Ryan had been retained in the service after seventy, he would probably have received a salary substantially less than that assigned to the job of telegraphist. Further, he has to be debited with the pension moneys which he would have received between his reaching seventy years and the time of his ultimate retirement. I think that in respect of his capacity after the age of seventy Ryan should be credited with at least £400, having regard to the fact that he would certainly have been competent to do responsible work for some years past seventy. This increases the provisional total to £1,190. Then, having regard to the period between incapacity and death at eighty-one, a period of (say) about six years, something should be added as compensation for loss of the additional pension of £34 per annum which Ryan would have been entitled to receive if his services had not been dispensed with when they were. The figure for this accumulated pension may fairly be put down as being £130. This brings the total of Ryan's estimated loss to £1,320. From this figure has to be deducted a sum of £42, i.e., the amount required to be paid by Ryan in order to establish his right to a higher pension. This reduces the total to £1,278.

From the figure of £1,278 thus reached has to be taken into account a deduction based upon the probability of Ryan's future earnings outside the service. At present, Ryan has a clerical position with the Postal Institute. But he has no security of tenure in the position. He may lose it in a month, and it is quite unlikely that he will continue to hold the position for any very long period. I think the chances are that, at no far distant date, Ryan will have to give place to some younger person, or his duties may be absorbed by another officer. In my view, if Ryan's probable earnings in his present or other similar capacity are set down at £200, the defendant will be adequately protected.

I assess Ryan's damages as at £1,078. I have worked out the figure upon the above method of calculation and, independently of the method of calculation adopted, I think that having regard to past facts and future probabilities such figure fairly represents the net loss Ryan will have sustained by the wrongful act of the defendant.

In Shephard's case there is a conflict of medical evidence. It is established that, up to the date of assessment (September 30th, 1936), the plaintiff would have lost salary amounting to £1,327, assuming that he would have been capable of performing his duties as telegraphist up to that date.

This view is supported by some of the medical witnesses. I was impressed by both plaintiffs, especially Ryan. Both are lively and keen men, in thorough enjoyment of life. I do not agree with the medical opinion that Shephard was mentally slow; on the contrary, I think that his apparent slowness in answering the doctor's questions was due to caution and that, upon medical examination, he was nervous. Shephard looks his age more than Ryan, but this is largely due to the consequences of an attack of malaria which he suffered in 1898 while he was performing his duties in the Northern Territory. This attack has had no injurious consequences. On the whole, I consider that Shephard would have been able to perform his duties as telegraphist up to the age of about sixty-nine, and that the attainment of seventy-nine years may fairly be put down as his expectation of life. Assuming for the purpose of a calculation that Shephard would have been able to work as telegraphist until seventy, this means that he would have lost wages (including overtime) during the remainder of his period of capacity, and the figure in respect of this may be put down at £690. He would also have lost the present value of a pension between the age of seventy and the probable date of his death, and that present value may be set down at £722. As in Ryan's case, I reject the claim of the plaintiff to the present value of one year's pay in lieu of furlough at the end of the period of capacity. By adding together £1,327, £690 and £722 I reach the figure of £2,739 in respect of the items already enumerated. From this figure has to be deducted the sum of £1,472, being the amount of money actually received by Shephard (no further payment coming to him by way of pension or otherwise). This gives a difference of £1,267. In this calculation I allow nothing for Shephard in respect of his probability of earning money in the service after the age of seventy, and I also deduct nothing in respect of the probability of future earnings which, in the circumstances, is very remote. On the assumption of a capacity life to seventy years, this should leave him £1,267 by way of damages. But I do not consider that Shephard would have been able to work as telegraphist quite up to the age of seventy, and taking into account his consequential increased pension payment, I deduct £200 and reach a figure of £1,067.

I will now refer to several matters mentioned in argument. In assessing damages in Ryan's case, for instance, I have deducted the sum of £327 paid to the plaintiff upon his dismissal in lieu of twelve months' furlough. The plaintiff contends that this figure should, after deduction, be again credited to him in assessing damages or (which is the same thing) not deducted at all. The argument is, that, if the plaintiff had remained in the service, he would have received an equal sum of money for furlough leave when sixty-four years of age. The possibility of his receiving it at the date of his ultimate retirement is too remote.

In cases like the present, a comparison has to be made between the plaintiff's financial position if not dismissed, and his financial position after dismissal. If not dismissed, the payment of £327 to Ryan would not have been made except at the age of sixty-four, and the plaintiff would have been compelled to take his leave of absence. As it was, he was paid the same sum (or approximately so) and rendered no services to the Commonwealth. The effect of the actual payment—when a comparison is made—makes no difference, because the inquiry is as to the loss of working life—in the Commonwealth Service—caused by the dismissal. If (say) Ryan's capacity would have ended at sixty-seven—four years after his dismissal at sixty-three—the comparison would be between what he would have got if retained in the Service, i.e., four years' pay (though in respect of one year from sixty-four to sixty-five he would have been on leave), and what he received in fact, i.e., one year's pay (though in respect of that year also he was not required to work). The financial difference to the plaintiff in such case would be three years' pay. The example clearly shows that, in estimating the damages due to the defendant's wrongful act, where the period of the plaintiff's working capacity in the defendant's service has to be estimated, the proper procedure is to fix the age of probable retirement (e.g., sixty-seven in the above example) as at so many years from the date of his dismissal (e.g., four in the above example), to credit him with the salary for such four years, and debit him with the salary or amount paid by way of furlough allowance. As I pointed out in argument, exactly the same result would be reached by regarding the payment of £327 to the plaintiff as postponing the date of his effective dismissal for the period of one year. Then, upon the hypothesis that at sixty-seven years he would have been incapable of performing his duties, the loss in such case would still be three years' salary.

In Lucy v. The Commonwealth[2] the matter was not analyzed in the above way, but the decision of the court supports the view that the lump sum payment should be deducted (per Knox C.J.[3]).

Another question discussed was whether the overtime payments should be taken into account. The evidence is to the effect that officers such as both plaintiffs were required to work overtime, and the result thereof was to augment their earning by a regular sum of money. There is nothing in Lucy's Case to prevent the court taking into consideration this closely associated source of increased remuneration. All that Knox C.J. said in Lucy's Case[4] dealing with the "right" to use of residence, profit on sales of stamps, &c., was that the particular plaintiff had no "right" to such emoluments enforceable against the Government of South Australia and so preserved by sec. 84 of the Constitution (See p. 239, and par. 5, p. 231). It was never suggested that, if additional emoluments had been attached to Lucy's employment with the Commonwealth, instead of his having only a regular salary, such emoluments should not have been taken into consideration, provided there was a probability of their continuance if he had not been dismissed. Generally speaking, in an action for wrongful dismissal, a plaintiff is entitled to recover not only the salary he is wrongfully prevented from earning, but also any benefits or advantages attached to the contract of service.

Of course, but for Lucy's Case, it might have been contended that it is only the "rights" of the transferred officer under State law which should be regarded in estimating damages. This contention, as expressed by Isaacs J., was that sec. 84 of the Constitution should be interpreted as merely protecting a transferred officer's existing and accruing salary rights as under South Australian law. But this interpretation was definitely rejected in Lucy's Case[5], for Higgins J. emphasized (1) that the contract broken was not a mere promise to pay money but to pay wages for service; and the breach of contract consisted in not allowing the employee to continue in the service so as to get the wages (at p. 248), and (2) that sec. 84 of the Constitution merely added a certain term to the contract, viz., that the right to a conditional life tenure was expressly preserved (at p. 249).

Another question is whether the court is necessarily bound to assume that at the age of seventy (after which he would probably not have been able to continue as telegraphist) Ryan would have been immediately dismissed by the Commonwealth. My view is that, at the time when Ryan was finding himself unable to perform efficiently his duties as telegraphist, he would probably have been able to perform other important duties in the department or the Service. Must I assume as a fact that, acting under the power defined in sec. 28 of the South Australian Civil Service Act, the Commonwealth would certainly have dismissed Ryan at seventy because of his then incapacity as a telegraphist? I do not think so. On the contrary, I think that Ryan would probably have anticipated his growing inefficiency as a telegraphist by seeking other suitable Commonwealth employment, and the policy of the department seems to be, as stated by Mr. Simmons, not to object to a transferred officer who has a life tenure being placed in another suitable departmental position though less strenuous and not so well remunerated. Moreover, even if incapacity began to reveal itself at the age of seventy and it was then proposed by superior officers to initiate a move to secure Ryan's dismissal, a good deal of time would necessarily elapse before the process could be completed.

In Shephard's case I think that the probability of his seeking and obtaining further service under the Commonwealth (after incapacity as a telegraphist) is so remote that I should ignore it.

The moneys paid into court will be paid out to the plaintiffs and deducted from the amount of damages awarded.

Solicitor for the defendant, W. H. Sharwood, Crown Solicitor for the Commonwealth, by Fisher, Powers, Jeffries & Brebner.

[1] [1935] HCA 84; (1935) 54 C.L.R. 313.

[2] [1923] HCA 32; (1923) 33 C.L.R. 229.

[3] (1923) 33 C.L.R., at p. 239.

[4] (1923) 33 C.L.R., at p. 239.

[5] [1923] HCA 32; (1923) 33 C.L.R. 229.

High Court of Australia

Ryan v Commonwealth [1936] HCA 47; (1936) 57 CLR 136 (7 October 1936)

HIGH COURT OF AUSTRALIA