Cai v Zheng [2009] NSWCA 13 (25 February 2009)

Last Updated: 27 February 2009

NEW SOUTH WALES COURT OF APPEAL

CITATION:
Cai v Zheng [2009] NSWCA 13


FILE NUMBER(S):
40610/2007

HEARING DATE(S):
04/02/2009

JUDGMENT DATE:
25 February 2009

PARTIES:
Deju Cai - Appellant
Tian Zhen Zheng - Respondent

JUDGMENT OF:
Giles JA Basten JA Hoeben J

LOWER COURT JURISDICTION:
District Court

LOWER COURT FILE NUMBER(S):
3644/2003

LOWER COURT JUDICIAL OFFICER:
Garling DCJ

LOWER COURT DATE OF DECISION:
21 August 2007


COUNSEL:
Mr SG Campbell SC/Mr SE McCarthy - Appellant
Ms S Norton SC/Ms M Fraser - Respondent

SOLICITORS:
McLachlan Chilton - Appellant
Bryden's Law Office - Respondent

CATCHWORDS:
APPEAL – applicable law – change in general law after trial – point not taken at trial – subsequent change in statute law – Motor Accidents Compensation Act 1999 (NSW), s 128(3)
COSTS – issue not raised at trial
DAMAGES – assessment of gratuitous care – application of Motor Accidents Compensation Act 1999 (NSW), s 128(3)
DAMAGES – indemnity – compensation payment to be brought into account – Workers Compensation Act 1987 (NSW), s 151Z(1)(e)
TORT – motor vehicle accident – assessment of damages – economic loss – whether payments received from church after injury should be taken into account when calculating damages – Motor Accidents Compensation Act 1999 (NSW), s 128(3) as amended by Civil Liability Legislation Amendment Act 2008 (NSW) –"proceedings determined before that commencement"
WORDS AND PHRASES – “determined” – “proceedings determined” before commencement of amendment – completed trial – error on basis other than non-application of amended legislation

LEGISLATION CITED:
Civil Liability Legislation Amendment Act 2008
Judiciary Act (1903) (Cth)
Motor Accident Compensation Act 1999
Supreme Court Act 1970 (NSW)
Workers Compensation Act 1987

CATEGORY:
Principal judgment

CASES CITED:
Attorney-General for NSW v Perpetual Trustee Co Ltd [1952] HCA 2; (1952) 85 CLR 237
Calin v The Greater Union Organisation Pty Limited [1991] HCA 23; (1991) 173 CLR 33 at 39
Coulton v Holcombe [1986] HCA 33; (1986) 162 CLR 1
Eggins v Brooms Head Bowling and Recreational Club Ltd (1986) 5 NSWLR 521 at 524
Geaghan v D’Aubert [2002] NSWCA 260; (2002) 36 MVR 542
Graham v Baker [1961] HCA 48; (1961) 106 CLR 340
Harrison v Melhem [2008] NSWCA 67
I & J Foods Pty Ltd v Bergzam Pty Ltd (1997) 14 NSWCCR 486
Malec v JC Hutton Pty Limited [1990] HCA 20; (1990) 169 CLR 638
Marinko v Masri [1999] NSWCA 364
Mercantile Mutual Insurance (Aust) Ltd v Moulding & Anor (No 3) [1997] NSWCA 201
Morawski v State Rail Authority (1988) 14 NSWLR 374
Norris v Blake (No 2) (1997) 41 NSWLR 49
NSW Insurance Ministerial Corporation v Willis (1995) 35 NSWLR 668 at 677-78
Proust v Blake (1989) 17 NSWLR 267
Redding v Lee [1983] HCA 16; (1983) 151 CLR 117, 127
State of New South Wales v Bujdoso [2007] NSWCA 44; (2007) 69 NSWLR 302 at [27] – [34]
State of NSW v Moss [2000] NSWCA 133; (2000) 54 NSWLR 536 at [87]
The National Insurance Company of New Zealand Ltd v Espagne [1961] HCA 15; (1960-1961) 105 CLR 569

TEXTS CITED:


DECISION:
The appeal is allowed.
The judgment in favour of the respondent in the amount of $300,681 is set side and in substitution thereof judgment is entered for the respondent in the sum of $17,447.91.
The appellant is to pay the respondent’s costs of the trial before Garling DCJ calculated as if judgment had been entered in favour of the respondent in the amount of $173,243.
The respondent is to pay fifty percent of the appellant’s costs of the appeal.
The respondent’s application for leave to rely upon her cross-appeal is refused with costs.



JUDGMENT:

IN THE SUPREME COURT
OF NEW SOUTH WALES
COURT OF APPEAL

40610/2007

GILES JA

BASTEN JA

HOEBEN J

Wednesday 25 February 2009

Deju CAI v Tian Zhen ZHENG

JUDGMENT

1 GILES JA: I agree with Hoeben J, save that I would refuse leave to cross-appeal because the respondent had not at the trial submitted that Geaghan v D’Aubert [2002] NSWCA 260; (2002) 36 MVR 542 was incorrect: Eggins v Brooms Head Bowling and Recreational Club Ltd (1986) 5 NSWLR 521 at 524.

2 If the amending Act applies the cross-appeal cannot succeed. If the amending Act does not apply, under the principle in the last mentioned case the respondent should not be allowed to rely on the change in the law. As Hoeben J observes, it is not clear whether the trial judge accepted that the respondent needed attendant care services for the future; he did not quantify any need. Had it been submitted that the law was as subsequently stated in Harrison v Melhem [2008] NSWCA 67, it is likely that his Honour would have contingently made appropriate findings. That gives point to the principle in Eggins v Brooms Head Bowling and Recreational Club Ltd.

3 Accordingly, I prefer not to express a view on the meaning of “proceedings determined before that commencement” in the transitional provision in the amending Act. I agree with the orders proposed in relation to the appeal, and propose the order that leave to cross-appeal be refused with costs.

4 BASTEN JA: I agree with the orders proposed by Hoeben J and with his Honour's reasons.

5 HOEBEN J:

Nature of the appeal

On 11 May 2000 the respondent suffered injuries in a collision between two motor vehicles. At the time the respondent was a passenger and was travelling to work. Breach of duty of care was admitted by the appellant who was the driver of the vehicle in which the respondent was travelling.

6 The respondent brought proceedings in the District Court seeking damages under the Motor Accident Compensation Act 1999 (MAC Act). Those proceedings were heard by Garling DCJ on 13, 14 and 15 August 2007 and decided on 21 August 2007. His Honour gave judgment in favour of the respondent for $300,681.

7 That judgment did not include an amount for non-economic loss since the respondent had not established a whole person impairment greater than ten percent. This was a requirement under the MAC Act before damages for non-economic loss could be awarded.

8 Because the respondent’s injuries were suffered while she was travelling to work, she received payments of compensation under the Workers Compensation Act 1987 (WCA) from her employer. Those payments amounted to $155,795.09. It was common ground that before the hearing in the District Court, the appellant had paid that amount to the employer’s workers compensation insurer.

9 The appellant challenged his Honour’s judgment in two respects. He challenged the amounts awarded for past economic loss and future loss of earning capacity and complained that his Honour had failed to give effect to the defence available to the appellant under s 151Z(1)(e) WCA.

10 The respondent sought leave to cross appeal against his Honour’s refusal to award any damages for future attendant care services under s 128 MAC Act.

Hearing in the District Court

11 His Honour made the following findings of fact. The respondent was born on 28 February 1956 in China. She was aged 44 at the time of the accident and 51 at the time of trial. Before the accident she had a good work history, both in China and in Australia. In China she had obtained qualifications as a bookkeeper, but these were not recognised in Australia. She arrived in Sydney in May 1990 and studied English for a short period before commencing work.

12 At the time of the accident the respondent was working as a seamstress sewing cushions. She was paid $380 net per week for that work. She was interested in opening a small food or a small sewing business but had not done anything about either of those ambitions at the time of the accident.

13 The accident involved a significant impact between the two motor vehicles. The respondent was taken to the Royal North Shore Hospital and remained there for five days. The respondent suffered injuries to her back and neck. She sustained a fracture at the T12 with loss of vertical height, and a possible fracture at T11. She sustained disc damage at L4/5, L5/S1 and musculo-ligamentous strains of the lumbar and cervical spine. She sustained disc damage at C5/6. Psychiatrically she suffered from an adjustment disorder and chronic depression.

14 At the time of the accident the respondent was an active member of the Christian Assembly of Sydney, which had a church at Roseville. Approximately 15 months before the accident she had applied to attend the Church’s bible college in Singapore. As to her intentions at that time she gave the following evidence:

“Q. What does a Bachelor of Theology entitle you to do, can you be a Minister if you’ve got one?

A. So, I never intended to be a Minister anyway. I was thinking, if I could run a small business I wanted to do before the accident, I would use my Saturdays and Sundays to serve the Church.” (Black 9D)

“Q. But you were a person weren’t you who apart from having a deep interest in the church and its teachings have always wished to apply any knowledge you could gain with respect to those teachings into a vocational pursuit?

A. Wouldn’t be my main job. My main job would be it as I talked about before with some small business.” (Black 24V)

15 The respondent did not work between 11 May 2000 and July 2001. His Honour found that this was due to the severity of her injuries and awarded damages of $22,800 (i.e. $380 per week for 60 weeks). On discharge from hospital she was invited by a minister of her Church to live at his house and he and his family looked after her. After the first eight weeks her condition improved a little and her need for care was reduced.

16 Between July 2001 and June 2005 the respondent was a fulltime student studying theology at the Singapore Bible College. She was successful in that course of study and obtained a Bachelor of Theology degree. While in Singapore the respondent lived in the College and to the extent that she required assistance this was provided by her classmates. No claim for economic loss was made in respect of that four-year period.

17 In June 2005 the respondent returned to Sydney. His Honour found that between that date and the date of the trial in August 2007, the respondent’s earning capacity had been restricted. He found that she could not work in her previous employment as a seamstress nor could she do work which required a lot of sitting, standing or heavy lifting.

18 His Honour accepted that the respondent had made some efforts to find work but that she had not been particularly active in that regard. Nevertheless, he concluded that she could not have performed suitable light work during that time. He based that conclusion upon the severity of her injuries and because of her lack of ability to communicate in English. He did not think that she could utilise her accounting skills without a working knowledge of English. Accordingly, his Honour awarded damages for economic loss in her favour on the basis that she was totally incapacitated between June 2005 and August 2007.

19 His Honour found that uninjured the respondent would have continued to work as a seamstress. There was no evidence as to what a seamstress would have earned between June 2005 and August 2007. The approach by his Honour was to take into account the increase in average weekly earnings which had occurred between the date of the accident and the date of trial (30 percent) and to apply that percentage increase to the $380 net per week which the respondent was earning at the time of the accident. This produced a figure of approximately $500 net per week, i.e. $52,000 for the period June 2005 to August 2007.

20 After her return to Sydney in June 2005, the respondent performed voluntary work for the Church for about 20 hours per week. She attended the Church on most days of the week. The tasks which she performed comprised answering the telephone, speaking to people who were interested in the Church and from time to time doing some preaching. That situation was continuing as of the date of the trial.

21 There were documents before the Court which indicated that the respondent was receiving money from the Church on a regular basis. Between 26 June 2005 and 24 April 2006 the Church paid the respondent $25,346 (an average of $580 per week). The payments were made into the respondent’s bank account every fortnight. Those payments were continuing at a slightly increased rate as of the date of trial. This money was supplemented by donations which she received from time to time in varying amounts from individual members of the Church.

22 The appellant tendered a document (exhibit 4). This was a letter addressed to the Court, written on the letterhead of the Christian Assembly of Sydney, dated 1 May 2006. It relevantly provided:

“The Christian Assembly of Sydney is a “not-for-profit” association, incorporated on 1 November 2001 and endorsed from that date by the Australian Taxation Office as a Tax Concession Charity.

The Christian Assembly of Sydney does not have any employees, either at the present time or previously. All offices and functions of the Association are fulfilled by volunteer workers.

Miss Tian Zhen Zheng (Ruth Zheng) is not an employee of the Christian Assembly of Sydney and has never at any time been an employee of the Christian Assembly of Sydney. Consequently, concerning the records specified in items A through F inclusive of the schedule in section B of the attached Subpoena, none of the specified records exist.

Miss Tian Zhen Zheng (Ruth Zheng) commenced as a volunteer worker for the Christian Assembly of Sydney on 19 June 2005 and has continued as a volunteer worker to the present time. The Christian Assembly of Sydney has provided financial support to Miss Tian Zhen Zheng for her daily living and accommodation expenses to allow her to function more effectively as a volunteer worker ...” (Blue 367)

23 The respondent denied that she was employed by the Church. On that issue his Honour found as follows:

“The defendant tendered that document I’ve just referred to. There was no other evidence called relating to her position with the Church. I accept what the plaintiff said. I accept what the Christian Assembly of Sydney said and I find that the plaintiff was not employed by the Christian Assembly of Sydney. I am satisfied they paid her an amount to assist with her rent and living expenses, that those moneys were provided by donations to the Assembly and that the plaintiff did voluntary work there, which she commenced on 19 June 2005 and has continued.” (Red 31K)

24 The respondent did not know whether the Church would continue providing financial assistance following the trial. Her evidence was:

“Q. For all you know, these payments you’re receiving are going to continue after your case, that’s correct, isn’t it?

A. I don’t know, I don’t know whether these payments will continue or not. I don’t know what the Church will do in regard to this case.” (Black 116E)

25 The respondent was extensively cross-examined and her credit was put in issue. While accepting that the respondent’s evidence was not always accurate, his Honour found that the respondent was an acceptable witness. In written submissions this finding was challenged by the appellant, but that challenge was withdrawn in the course of the appeal.

26 In relation to future loss of earning capacity, his Honour found that, uninjured, the respondent would have continued to work as a seamstress or in some analogous occupation. He accepted the submission made on her behalf that as of the date of trial she would have been earning $600 net per week in such a position. His Honour found that for the future the respondent would have had a residual earning capacity of between $100 and $200 net per week. Using those figures he calculated the respondent’s damages for loss of future earning capacity at $400 net per week for 14 years reduced by 15% for vicissitudes. Applying the 5% tables this component of the respondent’s damages was assessed at $180,000.

27 His Honour’s assessment of the respondent’s past and future superannuation loss was based on his findings as to past economic loss and future loss of earning capacity, ie $6,732 for past superannuation loss and $19,800 for the future.

28 In relation to gratuitous attendant care services, his Honour found that for the first eight weeks following the accident the respondent needed 10 hours per day of assistance. Thereafter until she departed for Singapore she still required assistance but at a lower level. His Honour therefore assessed the respondent’s need for assistance in the 12 months following her accident at an average of 6 hours per week, i.e. $6,240.

29 For the period thereafter, his Honour described the respondent’s need for attendant care services as follows:

“The problem is that the plaintiff on her evidence requires little assistance since she returned from Singapore. People in the Church seem to be very kind, they look after the plaintiff. There was a lady called to give evidence who was a neighbour who went out of her way to look after the plaintiff. She invites the plaintiff to her home for meals, she does some cleaning and things like that for the plaintiff and other members of the Church have done a lot to assist the plaintiff.

The plaintiff lives in a unit. It is only a small unit. At times she lives with other people, at times she does not and I am sure that she gets some assistance, particularly with some heavy lifting and heavy work round her place. But I can see no reason on the medical evidence why she cannot cook for herself, do the normal cleaning of the house and there is no way I could find that after her return to Australia she needed anything but the most basic of assistance and even that I find difficulty in seeing how she could be awarded that. As for the future she is not going to get anywhere near 6 hours per week and therefore would not get over the requirement of 6 months of 6 hours per week and I am not prepared to award any other amount for gratuitous services.” (Red 40B)

30 The judgment in favour of the respondent was made up of the following components:

Past economic loss

11 May – 11 July 2001 $22,800.00

July 2005 – July 2007 $52,000.00 $ 74,800.00

Future Loss of Earning Capacity $ 180,000.00

Past Superannuation Loss $ 6,732.00

Future Superannuation Loss $ 19,800.00

Past out-of-pocket expenses $ 9,109.00

Future out-of-pocket expenses $ 4,000.00

Past domestic care $ 6,240.00

$ 300,681.00

Submissions on appeal and consideration

Economic loss

31 In relation to economic loss and loss of earning capacity, the appellant did not challenge the damages of $22,800 awarded for the period 11 May 2000 to 11 July 2001. The damages for past and future superannuation were only to be reduced if the challenges to the balance of damages awarded for past economic loss and future loss of earning capacity were successful.

32 The appellant’s first submission was that the respondent had always intended to attend the Singapore Bible College and obtain her theological degree. He submitted that thereafter she intended to devote her energies to the service of the Church and not resume fulltime employment. The appellant accepted that as a result of her injuries, the respondent had suffered a diminution in her earning capacity but submitted that this was not productive of financial loss since the respondent did not intend to resume fulltime employment once she obtained her degree.

33 As was pointed out in the course of argument, the difficulty with this submission was that it had not in terms been put to the respondent and it had not in terms been put to his Honour. There was the further difficulty that to the extent that there was any evidence on the subject it did not support the submission (see [14] above). Since his Honour found the respondent to be an acceptable witness and her evidence on this issue was not challenged, the submission fails.

34 The appellant’s second submission was that his Honour had applied the wrong test when seeking to characterise the payments which the respondent had received from the Church. The appellant submitted that his Honour’s approach was that if the payments were not received as part of a contract of service between the respondent and the Church, they should be disregarded when assessing economic loss. The appellant submitted that this was incorrect and that the payments should be taken into account when assessing economic loss. He submitted that the correct approach was to analyse the nature of the payments themselves and in particular the intention of the donor, i.e. the Church.

35 It seems clear that his Honour did apply the wrong test in characterising the payments received by the respondent from the Church. This was implicitly accepted by the respondent. That of course does not resolve the issue. It merely gives rise to the questions of what is the correct approach to characterising these payments and how those payments should be characterised.

36 Both the appellant and the respondent relied upon parts of the judgment of Windeyer J in The National Insurance Company of New Zealand Ltd v Espagne [1961] HCA 15; (1960-1961) 105 CLR 569:

“It is generally accepted that aid given by friends and philanthropic persons to ameliorate the lot of a sufferer ought not to be taken into account in assessing damages. Subscriptions from members of the public or workmates to a fund for the dependants of men killed in an accident, for example, have for various reasons been disregarded in actions under Lord Campbell's Act ... My brother Fullagar said in Attorney-General for N.S.W. v Perpetual Trustee Co Ltd:

" ... It would surely be out of the question to reduce damages by a sum which some benevolent persons had collected for the benefit of a man crippled in an accident".

This applies even more cogently to damages for personal injuries than to actions under Lord Campbell's Act. For, if voluntary pecuniary aid may not be set against pecuniary loss, then even more surely it should be disregarded in reckoning damages which include compensation for pain and suffering and for deprivations or diminutions of what life has to offer... “ (p 597)

“The benefits of benevolence do not reduce damages recoverable. That may be accepted. Why is this?

...

The most satisfying of the reasons that have been given for refusing to diminish damages because of voluntary gifts is that they are given for the benefit of the sufferer and not for the benefit of the wrongdoer. That, it may be said, cuts across the principle that damages for negligence are compensatory and not punitive. It may be that, at all events since Bradburn's Case, there are some limits to strictly logical applications of that principle. But I do not think the two propositions necessarily come into collision. A donor can say who is to benefit by his generosity. If, out of sympathy for a man unfortunately responsible for a motor accident, someone gives money to the victim, stating that he does so in the interest of the tortfeasor and to diminish the damages he must pay, effect must be given to his intention. If, on the other hand, the donor's expressed intention is that the injured man shall enjoy his bounty in addition to whatever rights he may have to recover damages from the tortfeasor, effect must in my opinion, be given to that intention. And if nothing be said, the intention of the giver may be inferred from the circumstances.” (p 598)

“In assessing damages for personal injuries, benefits that a plaintiff has received or is to receive from any source other than the defendant are not to be regarded as mitigating his loss, if: ...

(b) they were given or promised to him by way of bounty, to the intent that he should enjoy them in addition to and not in diminution of any claim for damages ...

The second description covers a variety of public charitable aid and some forms of relief given by the State as well as the produce of private benevolence. In both cases the decisive consideration is, not whether the benefit was received in consequence of, or as a result of the injury, but what was its character: and that is determined, in the one case by what under his contract the plaintiff had paid for, and in the other by the intent of the person conferring the benefit. The test is by purpose rather than by cause.

Nevertheless it is not, I think possible, to enunciate an exhaustive rule for all parts of this vexed topic. And the questions that arise can never be determined in the abstract. Each must depend on the terms of the particular contract, pension scheme, charitable benefaction or statute governing the benefit conferred.” (p 599/600)

37 The respondent relied upon those passages to support the submission that the moneys paid by the Church were benevolent in nature and were intended to ameliorate the financial difficulty caused by her injuries. She submitted that the clear intention behind the payments as demonstrated by the letter was to benefit her, not the appellant.

38 The appellant accepted that the intent of the donor was an important consideration in characterising the payments. He submitted, however, that the effect of the letter from the Church was that the intent behind the payment was to provide financial support to the respondent for her daily living and accommodation expenses “to allow her to function more effectively as a volunteer worker”. The real intent behind the payments was to enable the respondent to perform volunteer work more effectively for the Church. The appellant submitted that that factor gave to the payments a quality which took them outside the category of benevolent payments to ameliorate the loss of an injured person. It gave to the payments a quality which was more analogous to a payment for services.

39 The appellant also relied upon another feature of the payments as taking them outside the benevolent donations envisaged in the passages from Espagne. This feature was that the payments were received by the respondent to replace wholly or in part her lost wages which she otherwise would have spent on her accommodation and living expenses. To that extent the payments took on something of the character of that for which they were substituted. In support of that proposition, the appellant relied upon the decision of this Court in Marinko v Masri [1999] NSWCA 364.

40 That case concerned a plaintiff whose wife had suffered catastrophic injuries and who was making a claim for economic loss as a result of nervous shock suffered by him in consequence of her injuries. Before the plaintiff’s claim was heard his wife had already recovered substantial damages which were being administered by the Protective Commissioner. It was against that factual background that the appellant relied upon the following passages from the judgment of Handley JA:

“44 After the wife’s damages were received the Commissioner began paying a family allowance of $800 per week to the husband which was reduced to $500 when the family moved to Lebanon, but increased to $800 again in December 1997. These payments were the sole source of income for the family ...

45 Mr Sullivan QC submitted that the family allowance paid by the Commissioner was received by the husband as income which replaced his lost wages wholly or in part. In his submission they were in the nature of unemployment benefits, and should be deducted from the husband’s damages for economic loss.

46 The evidence does not reveal the basis on which the Commissioner decided that these amounts were appropriate and this makes the Court’s task more difficult. However the wife’s damages included awards for past and future economic loss at the rate of $300 per week. It would be entirely appropriate for the Commissioner to include that amount in the weekly payments and I see no reason why these amounts should be deducted from the husband’s damages. The payments of $800 after 1 December 1997 included $180 a week for an additional carer for the wife. I see no reason why this amount should be deducted from the husband’s damages. The balance of $320 a week does appear to represent both a living allowance for the husband and the children and remuneration for his care of his wife. He could only provide substantial care while remaining out of the workforce, and to this extent the payments can be viewed as compensation for his unemployment.

47 These payments are not properly characterised as gifts made from motives of charity or benevolence. The Courts have held that such gifts are normally intended to benefit the recipient and not the tortfeasor. See The National Insurance Co of New Zealand Ltd v Espagne [1961] HCA 15; (1961) 105 CLR 569, 573, 597-9. These payments were made pursuant to the powers of the Commissioner to apply the wife’s estate for her benefit and the benefit of her family... Their discretionary nature does not require past payments to be disregarded in the calculation of the husband’s damages. See Redding v Lee [1983] HCA 16; (1983) 151 CLR 117, 127. Since these payments, to the extent of the residue of $320, or $200 as the case may be, may not have been made if the husband was in full time paid employment I would characterise them as both remuneration for his care for the wife and compensation for his unemployment. To this extent they should be treated as reducing his economic loss. ...”

41 I have concluded that the submissions of the appellant should be accepted. The only evidence as to the intent of the Church in making the payments comes from the letter of 1 May 2006 (see [22] above). That letter makes it clear that the payments were intended not merely to benefit the respondent insofar as her daily living and accommodation expenses were concerned, but to enable her to function more effectively as a volunteer church worker. As described in Marinko v Masri these payments would not have been made if the respondent had been in paid employment and they constituted a form of compensation for her inability to obtain employment.

42 One also cannot ignore the regularity of the amount and the frequency of the payments. This is to be contrasted with the donations by individual members of the Church which although for the benefit of the respondent, were variable and of their nature unpredictable as to their amount and when they would be made. Both sides agreed that those latter payments were correctly characterised as benevolent payments to ameliorate the lot of the respondent such as were envisaged in Espagne.

43 When the payments by the Church are taken into account as reducing the respondent’s economic loss, they extinguish the $52,000 awarded to the respondent for the period 25 June 2005 to August 2007. This is because the amounts received from the Church (in excess of $580 per week) exceeded the $500 per week which his Honour found would have been earned by the respondent as a seamstress during that period had she not been injured. As explained in Graham v Baker [1961] HCA 48; (1961) 106 CLR 340 for this period the respondent’s injuries had not been productive of financial loss.

44 The appellant made a similar submission in respect of his Honour’s award of damages for future loss of earning capacity. The appellant submitted that while the possibility that the Church might cease payments following the Court case existed, the strong likelihood was that payments would continue. In those circumstances, the appellant submitted, the respondent’s entitlement to damages for loss of future earning capacity would be adequately met by a modest cushion. The figure of $30,000 was suggested.

45 The only evidence on this issue was the Church’s letter of 1 May 2006. The respondent did not know whether payments would continue if her claim were successful (see [24] hereof). Contrary to the appellant’s submission, I do not read that letter as strongly indicating that payments would continue beyond the conclusion of the respondent’s case.

46 The letter was written to the Court and made specific reference to the case number. The Church was therefore fully aware of the claim and its nature. In its terms the letter identified the reasons for the payments to the respondent “for her daily living and accommodation expenses to allow her to function more effectively as a volunteer worker”. Once another source of funding for daily living and accommodation expenses became available there would be no reason, on the basis of that letter, for the Church to continue payments on the same regular basis and in the same amounts for the future.

47 The inference I draw from the Church’s letter is that following the conclusion of the respondent’s case, the more likely scenario was that the Church would cease making such payments to the respondent. Given the sparse nature of the evidence that inference must be attended by some doubt. In those circumstances the most appropriate way to approach the question is on the basis set out in Malec v JC Hutton Pty Limited [1990] HCA 20; (1990) 169 CLR 638, i.e. by allowing for the chance that such payments may have continued despite the outcome of the case.

48 In accordance with that approach, I assess the likelihood of the Church ceasing its payments to the respondent following the conclusion of the case at 75%. It follows that I reject the appellant’s submission that the respondent’s entitlement to damages for loss of future earning capacity should be met by the award of a modest cushion such as $30,000.

49 It is therefore necessary to re-assess the damages which his Honour awarded under this head. On that issue the appellant submitted that there was no basis, either in the evidence or in logic, for his Honour taking as his start point that, uninjured, the respondent as of the date of trial would have been earning $600 net per week.

50 This submission has considerable force. I have no difficulty with his Honour using average weekly earnings as a basis for calculating the likely increase in the respondent’s earnings as a seamstress between May 2000 and the date of trial. Such an approach was reasonable in the circumstances and in accordance with principle (State of NSW v Moss [2000] NSWCA 133, (2000) 54 NSWLR 536 at [87]). This approach produced a figure for the respondent’s earnings as a seamstress as at the date of trial of $500 net per week.

51 Where I have difficulty is in understanding how his Honour arrived at a figure of $600 net per week as the apparent start point for calculating damages for future loss of earning capacity (Red 38J). The correct start point should have been $500 net per week derived in accordance with his Honour’s reasoning previously referred to. In using $600 net per week as the start point for calculating future loss of earning capacity, his Honour was in error.

52 Once that error is corrected one needs to have regard to the respondent’s residual earning capacity which his Honour assessed at between $100 and $200 net per week. His Honour’s finding on that issue has not been challenged. In line with his Honour’s overall approach, I propose to use a figure of $150 for the respondent’s residual earning capacity for the future.

53 On the basis of the above adjustments the revised calculation for the respondent’s entitlement to damages for future loss of earning capacity is $350 net per week for 14 years with a deduction of 15% for vicissitudes and a further deduction of 25% to take into account the chance that the Church would continue to make payments after the conclusion of the case, i.e. $118,100.

Section 151Z(1)(e) WCA

54 The appellant submitted that his Honour was in error in failing to deduct from the respondent’s damages the compensation of $155,795.09 which the appellant had paid to the workers compensation insurer. After some prevarication this ground of appeal was conceded. Nevertheless it is necessary to say something further because of its potential impact on costs.

55 Section 151Z(1) WCA relevantly provides:

“151Z (1) If the injury for which compensation is payable under this Act was caused under circumstances creating a liability in some person other than the worker’s employer to pay damages in respect of the injury, the following provisions have effect:

...

(d) if the worker has recovered compensation under this Act, the person by whom the compensation was paid is entitled to be indemnified by the person so liable to pay those damages (being an indemnity limited to the amount of those damages),

(e) if any payment is made under the 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 is, to the extent of its amount, a defence to proceedings by the worker against that person for damages ...”

56 The parties were unable to refer the Court to any decision in which

s 151Z(1)(e) had been applied. Section 151Z(1)(e) is in identical terms to s 64(1)(c) of the Workers Compensation Act 1926. That section was considered and applied in Norris v Blake (No 2) (1997) 41 NSWLR 49 at 82B-84D. There is no reason to suppose that s 151Z(1)(e) would be applied differently. Like s 64(1)(c) of the 1926 Act, s 151Z(1)(e) is part of a scheme for preventing double recovery by the worker: see I & J Foods Pty Ltd v Bergzam Pty Ltd (1997) 14 NSWCCR 486 (Giles AJA, Priestley JA and Simos AJA agreeing).

57 In the District Court proceedings the defence under s 151Z(1)(e) was not specifically pleaded. The defence filed merely referred to the receipt by the respondent of payments of compensation and asserted (incorrectly) that the defendant raised such payments as a defence. At trial, however, it appears to have been put to his Honour as an agreed fact that a claim for indemnity pursuant to s 151Z(1)(e) had been made by the workers compensation insurer on behalf of the employer against the appellant and that before the hearing commenced, the appellant had paid the amount of $155,795.09 to the workers compensation insurer under the indemnity. His Honour made specific findings to that effect (Red 28B, 40W).

58 At trial no submissions were made to his Honour by the appellant as to the effect of the payment to the workers compensation insurer under the indemnity. No application was made to amend the defence. No application was made for his Honour to give effect to the defence available to the appellant by deducting the moneys paid under the indemnity. No approach was subsequently made to his Honour by the appellant under the slip rule to give effect to the defence. The Notice of Appeal, filed on 13 December 2007, made no reference to the defence. The first time the defence was specifically raised was in the Amended Notice of Appeal filed 16 May 2008.

59 The appellant’s right to rely upon his Amended Notice of Appeal was not disputed. The fact of the payment under the indemnity was agreed by the parties at trial and specific findings to that effect were made by his Honour. The ground of appeal was expressly conceded by the respondent in written submissions and in argument. Section 151Z(1)(e) WCA makes clear that payment under the indemnity operates as a defence to the extent of the amount paid under the indemnity. In those circumstances the appellant is entitled to have deducted from the respondent’s damages the amount paid under the indemnity. This ground of appeal has been made out.

60 Without taking into account the respondent’s cross-appeal, the above analysis requires that the respondent’s damages be re-assessed as follows:

Past economic loss	$ 22,800.00
Future loss of earning capacity	$ 118,100.00
Past and future superannuation loss	$ 12,994.00
Past out-of-pocket expenses	$ 9,109.00
Future out-of-pocket expenses	$ 4,000.00
Past domestic care	$ 6,240.00
Total	$ 173,243.00
Less payment under the indemnity	$ 155,795.09
	$ 17,447.91

Respondent’s Cross-Appeal

61 The respondent sought leave to cross-appeal against his Honour’s refusal to award damages for attendant care services for the future. The granting of leave by the Court was opposed by the appellant on the basis that the cross-appeal had no prospects of success and consequently the granting of leave would be futile. In the circumstances the Court agreed to hear argument on the cross-appeal.

62 In order to understand the respondent’s submissions on the cross-appeal it is necessary to set out s 128 MAC Act and an abbreviated history of its interpretation. Section 128 MAC Act at the time of trial relevantly provided:

“128(1) Compensation, included in an award of damages, for the value of attendant care services:

(a) which have been or are to be provided by another person to the person in whose favour the award is made; and

(b) for which the person in whose favour the award is made has not paid and is not liable to pay,

must not exceed the amount determined in accordance with this section.

(2) No compensation is to be awarded if the services would have been provided to the person even if the person has not been injured by the motor accident.

(3) No compensation is to be awarded if the services are provided, or are to be provided:

(a) for less than 6 hours per week; and

(b) for less than 6 months. ...”

63 When the matter came before his Honour the decision of this Court in Geaghan v D’Aubert [2002] NSWCA 260; (2002) 36 MVR 542 was the leading case on the application of the section. The effect of Geaghan was that for a plaintiff to obtain damages for future attendant care services under the MAC Act, both limbs of s 128(3) had to be satisfied, i.e. such services had to be provided for both at least 6 hours per week and six months concurrently before damages were recoverable with respect to the period in question. In other words, a need that continued for 12 months (or even a lifetime) was to be ignored unless its intensity required 6 or more hours per week of services. So too a need for 6 or more hours per week of services was to be ignored unless it lasted for at least 6 months. The respondent submitted that it was his Honour’s application of Geaghan which led to him refusing to award damages to the respondent for future attendant care services.

64 On 29 May 2008 this Court handed down its decision in Harrison v Melhem [2008] NSWCA 67. The Court comprised a five judge bench which was specifically constituted to reconsider Geaghan. The effect of Harrison v Melhem was to overrule Geaghan so that when applying s 128(3) MAC Act, a plaintiff could recover damages for attendant care services provided he or she could overcome one of the two thresholds by showing either that the gratuitous services were provided for more than 6 months or that they were provided for more than 6 hours per week. If either threshold was met the plaintiff could recover for the whole of the gratuitous services provided or to be provided.

65 In November 2008 the Civil Liability Legislation Amendment Act 2008 was passed by the New South Wales Parliament (the amending Act). The amending Act replaced s 128(3) MAC Act with the following:

“128(3) Further, no compensation is to be awarded unless the services are provided (or to be provided):

(a) for at least 6 hours per week, and

(b) for a period of at least 6 consecutive months.”

The parties agreed that the effect of this amendment was to restore to

s 128(3) MAC Act the meaning given to it in Geaghan.

66 The amending Act provided the following transitional provision:

“Restrictions on compensation for attendant care services

An amendment to this Act by the Civil Liability Legislation Amendment Act 2008 extends to liability arising, and to proceedings commenced, before the commencement of the amendment but does not apply to any proceedings determined before that commencement.”

67 The respondent put her argument as follows. Harrison v Melhem set out how s 128 MAC Act was to be interpreted. His Honour made factual findings which indicated a continuing need for attendant care services by the respondent into the future. In refusing to award damages to the respondent on that basis his Honour had applied Geaghan and in that regard was in error. This Court should apply Harrison v Melhem and award damages for future gratuitous domestic assistance in accordance with his Honour’s findings.

68 The respondent submitted that the amending Act did not apply. This was because the amending Act had no application to “any proceedings determined before” its commencement. The respondent submitted that “determined” as used in the transitional provision of the amending Act meant “determined in a court at first instance”. In that regard the respondent relied upon Proust v Blake (1989) 17 NSWLR 267, Mercantile Mutual Insurance (Aust) Ltd v Moulding & Anor (No 3) [1997] NSWCA 201 and the dicta of Ipp JA in State of New South Wales v Bujdoso [2007] NSWCA 44; (2007) 69 NSWLR 302 at [27] – [34].

69 The appellant responded that no point had been taken before the trial judge that the decision in Geaghan was incorrect and that s 128 MAC Act was to be differently interpreted. He submitted that the respondent could not now raise that issue. The appellant relied upon the rule of practice set out in Eggins v Brooms Head Bowling and Recreational Club Ltd (1986) 5 NSWLR 521 at 524:

“The issues at a trial are decided on the basis of the “law” which applies to them at the date of trial. If a party believes that the current state of the law is erroneous, he must object to its application to his case or be bound by it. If he fails to raise the point at the trial, he cannot be allowed to raise it in appeal because of the accident that he has lodged an appeal and that, before the hearing of the appeal, a superior court has decided that the law is different from what it was conceived to be at the date of the trial.” (McHugh JA)

70 In the alternative the appellant submitted that the amending Act applied and that the transitional provisions did not operate to defeat it. In that regard the appellant relied upon the judgments of Hodgson and Basten JJA in Bujdoso. The appellant submitted that the words “proceedings determined before that commencement” in the transitional provisions did not apply to the decision of the trial judge in the circumstances of this case. Those circumstances were that an appeal had been filed before the passing of the amending Act and that if the appeal were successful this Court would be required to apply the law, as it existed at the time of the appeal, i.e. the amended form of s 128(3).

71 The final submission by the appellant was that a proper reading of his Honour’s findings (see [29] above) made it clear that his Honour was not satisfied that the respondent had established an entitlement to attendant care services for the future. Consequently the respondent had not established the factual basis upon which the cross-appeal depended.

72 As to whether there is a factual basis for the cross-appeal it is not clear whether his Honour accepted that the respondent needed attendant care services for the future. It may be that his Honour accepted that she did have a need for assistance with “some heavy lifting and heavy work around her place”. His Honour did not make specific findings in that regard because it was clear that whatever the respondent’s needs were for the future, they were significantly less than 6 hours per week. This highlights the difficulty created by the respondent’s failure to argue at trial that Geaghan was incorrect. It gives weight to the appellant’s submission that the Eggins principle should be applied so as to preclude a departure from the way the respondent ran her case at trial.

73 The principle identified in Eggins invites further elucidation, as it covers a number of different circumstances. First, there is the question of timing: if a ground of appeal is not included in a timely notice of appeal, it should only be permitted with leave, as for an appeal lodged out of time. Secondly, there is the question of novelty: if a point is taken for the first time on appeal, it may be dismissed if it could have been answered, if raised at trial, by evidence: Coulton v Holcombe [1986] HCA 33; (1986) 162 CLR 1 at 7-8. If it raises only an issue equally capable of resolution by the appeal court as by the trial judge, it may be countenanced but subject to an adverse order with respect to wasted costs. Furthermore, a failure to take the point below may be a material matter in considering the exercise of the Court’s power to order a new trial: see Calin v Greater Union Organisation Pty Ltd [1991] HCA 23; (1991) 173 CLR 33 at 39 (Mason CJ, Deane, Toohey and McHugh JJ), citing Eggins as authority for that more limited proposition, together with Morawski v State Rail Authority (1988) 14 NSWLR 374 at 381 (Clarke JA).

74 A change in the law between trial and appeal raises an additional question, namely whether the law, in its new form, applies to the case. Changes to the general law or to statute law may give rise to different answers. A change to the general law will usually operate retrospectively and will mean that the trial judge (albeit unwittingly) applied the wrong rule or principle. Its application on appeal should be determined in accordance with the principles set out above: was the point taken at trial; was it raised within the time to appeal?

75 A change in statute law will operate according to its terms, with such reliance as may be required on the Interpretation Act and general law principles of statutory construction. Whether or not the statutory amendment applies in the present case will depend on the meaning of “proceedings determined”.

76 In State of New South Wales v Bujdoso [2007] NSWCA 44; (2007) 69 NSWLR 302, this Court was required to consider the operation of a transitional provision with respect to an amendment to the Civil Liability Act 2002 (NSW) which applied to proceedings so long as they had not been “finally determined” by a court or tribunal before the commencement of the amendment. In respect of that language, Hodgson JA stated at [16]:

“In my opinion, there is a final determination of proceedings, for the purposes of cl 26(3), when there has been a final judgment at first instance, unless and until that judgment is set aside on appeal, at least unless there has been a stay of the judgment. Clause 26(3) means that such a judgment cannot be set aside on appeal solely on the basis of a change of the law effected by cl 26.”

77 The judgment of Ipp JA was to similar effect, both of their Honours referring to the remarks of Sheller JA in New South Wales Insurance Ministerial Corporation v Willis (1995) 35 NSWLR 668 at 678, dealing with the phrase “settled or finally determined” in s 35D of the Motor Vehicles (Third Party Insurance) Act 1942 (NSW), where his Honour stated:

“Accordingly, in the present proceedings the respondents’ claims for damages were finally determined by Kirkham DCJ’s judgment and orders. Only if and when his Honour’s judgment and orders in respect of the claim for damages are set aside or varied on appeal could it be said that the claims were not settled or finally determined by him.”

78 On an appeal by way of rehearing, this Court is required to apply the applicable law in force at the time of the appeal: Bujdoso at [52]. The question is whether the amending Act, whilst in force at the time of this appeal, applies to this case. In the context of the transitional provisions, a case is “determined” upon judgment being given at trial, subject to any appeal. Thus, the matter was “determined” by the trial judge, subject to a contingency. It is doubtful that by use of the word “determined”, the statute intended to allow the rehearing of a case solely on the ground that the new provision had not been applied. The preferable construction, as explained by Hodgson JA in Bujdoso, is that the amendment should apply on a rehearing, but only in cases where the judgment below is to be set aside for other reasons: the contingency should be so understood.

79 This construction does not assist the respondent on her cross-appeal. She wishes the judgment to be set aside so that this Court’s ruling in Harrison can be applied. But immediately that argument is entertained, this case is no longer one which has been “determined” and this Court must apply the statute, with the same result as that achieved by the trial judge. (It is arguable that the same result would have followed regardless of the cross-appeal, once the appeal succeeded in part and the Court was required to reassess damages.) It follows, therefore, that unless Harrison applies, the cross-appeal must fail. But once the issue is re-opened on appeal, it must be determined by reference to the amending Act and not Harrison.

80 The respondent required leave in any event to rely upon her cross-appeal which was filed out of time. Even if leave were granted, the cross-appeal would fail. In those circumstances the respondent’s application to rely upon her cross-appeal should be refused.

Costs

81 Two sets of costs arise for consideration – the costs of the trial and the costs of the appeal.

82 The appellant has largely succeeded on the appeal as a result of which the judgment in the respondent’s favour has been significantly reduced. Should that affect the costs of the trial so that the respondent’s entitlement to costs is governed by the amount of the judgment awarded in her favour after re-assessment by this Court?

83 The reason for the significant reduction in damages as assessed by this Court is the effect given to the defence under s 151Z(1)(e). As indicated, that defence was not raised at trial and was raised late in the appeal. Had it been raised earlier, it may have significantly affected the conduct of the trial on behalf of the respondent. No explanation has been offered to the Court for the delay in raising this defence so that the Court can only infer that the failure to do so at the appropriate time was an oversight on the part of the legal advisers of the appellant.

84 In those circumstances, it would be unfair for the respondent to be penalised in respect of the costs associated with the conduct of the trial. The respondent should have her costs of the trial calculated as if she had obtained judgment for $173,243 against the appellant.

85 In relation to the appeal, the situation is somewhat different. The principal issue argued was the characterisation of the payments made by the Church to the respondent. The appellant has substantially succeeded on that issue. Nevertheless, the most significant reduction in the judgment obtained by the respondent was due to the s 151Z(1)(e) defence raised by the appellant late in the appeal proceedings. Were it not for the concession made on behalf of the respondent the appellant may well have had difficulty in obtaining leave to rely upon that defence in the appeal.

86 It follows that the appellant should not recover all of his costs of the appeal. I assess his entitlement at 50%.

Orders

87 The orders which I propose are as follows:

(1) The appeal is allowed.

(2) The judgment in favour of the respondent in the amount of $300,681 is set side and in substitution thereof judgment is entered for the respondent in the sum of $17,447.91.

(3) The appellant is to pay the respondent’s costs of the trial before Garling DCJ calculated as if judgment had been entered in favour of the respondent in the amount of $173,243.

(4) The respondent is to pay fifty percent of the appellant’s costs of the appeal.

(5) The respondent’s application for leave to rely upon her cross-appeal (filed out of time) is refused with costs.

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LAST UPDATED:
26 February 2009