Luntz in his book “Assessment of Damages for personal injury and death”[2] says

“The fundamental principle of compensation means that the damages to be recovered are in money terms no more and no less than the plaintiff’s actual loss. The classic, and much quoted, formulation of the principle appears in Livingstone v Rawyards Coal Co, a Scots case in which the defender mistakenly extracted coal to which the pursuer was entitled from under the pursuer’s land. In the course of his speech Lord Blackburn said that ‘where any injury is to be compensated by damages, in settling the sum of money to be given for … damages you should as nearly as possible get at that sum of money which will put the party who has been injured, or who has suffered, in the same position as he would have been in if he had not sustained the wrong for which he is now getting his compensation …’”

However as the amount of compensation awarded increased over time these compensatory principles have been in some jurisdictions reined in by legislation. In South Australia the Civil Liability Act 1936 (formerly the Wrongs Act) contains a number of legislative prescriptions on the manner in which certain heads of damage are to be assessed. The relevant sections only apply to injuries occurring after 1 December 2002.

In order to see what effect if any this has on the amount awarded where there is a catastrophic injury I will compare the New South Wales Supreme Court judgment of Simpson v Diamond and Another (2001) NSWSC 925 with what would happen if the plaintiff’s damages were to be assessed in South Australia today.

Simpson v Diamond and Another – the factual background

Calandre Simpson (“the plaintiff”) was severely disabled at birth through the negligence of her obstetrician. She was left with athetoid cerebral palsy. The Court described her condition as:

“This is a rare type of cerebral palsy characterised by changing tone (dystonia) and abnormal movements which are induced by attempts at normal movement or maintaining posture. Athetoid cerebral palsy typically occurs after a very severe acute hypoxic insult to the mature term brain. The consequence of the resultant loss of oxygen is damage to parts of the grey areas of the brain. One characteristic of this type of cerebral palsy is that intelligence is often preserved. The plaintiff has normal intelligence. … she is unable to speak, is confined to a wheelchair and is totally dependent on others for all her needs.”[3]

As it was necessary for the Court to assess both the plaintiff’s past and future losses it was necessary for the Court to embark on the exercise of estimating the plaintiff’s future life expectancy. This part of the judgment occupies some 42 pages and 230 paragraphs. It was necessary for the Court to attempt to resolve a conflict between the application of scientific statistical data on the one hand and expert clinical assessment on the other. It is not the function of this paper to examine those competing schools of thoughts. At the end of the day the Court still only make an educated guess as there is obviously no certainty. At the time of trial the plaintiff was 22 years of age and the Court determined that she was likely to live for a further 51 years. The trial judge stated:

“I am reinforcing this conclusion by a number of considerations. First, the wide variation in the various statistical estimates gives strength and credence to the likelihood that an accurate and balanced clinical perception of the plaintiff will, in all probability, set her apart from the group. Secondly, a probable life span of a further 51 years from age twenty-two is beyond, but not dramatically beyond, the highest of these statistical estimates. Thirdly, the estimate is, in the end, quite significantly below the life expectancy of a twenty-two year old female according to the Australian life tables 1997-1999 (60.51 additional years). This in my opinion gives due recognition to the plaintiff’s unfortunate condition. It is not so far below the norm, however, as to disregard the fact that the plaintiff has exceptional qualities and characteristics which collectively, posit a longevity prospect greater than many, if not most, cerebral palsy suffers with her range of disabilities and impairments.”[4]

The assessment of the plaintiff’s damages

The Court then went on to assess the plaintiff’s damages. It ultimately calculated the plaintiff’s entitlement by reference to 31 specific heads of loss. For the purposes of this paper I will focus on the major items.

1. General damages

General damages, or damages for non-economic loss as they are sometimes referred to, are designed to compensate the injured party for their pain and suffering and loss of amenities. The phrase “non economic loss” is now defined in section 3 of the Civil Liability Act as follows:

“(a) pain and suffering; or

(b) loss of amenities of life; or

(c) loss of expectation of life; or

(d) disfigurement”.

In Calandre’s case the Court said:

“In general terms, the plaintiff has suffered the virtual destruction of many, if not most, of the amenities of normal life. The ability to participate in and enjoy many of the features of normal life that most of us take for granted are lost to Calandre. She has neither the ability to speak nor the ability to communicate easily; she does not have the ability to move around when and where she will. She does not, with the exception of bocce have the ability to play sport, nor the ability to enjoy outdoors activities easily. The ability, capacity and opportunity to attend concerts, the theatre and the movie theatre, aspects of daily living which most of us take for granted, are available only with great difficulty and in limited situations. In short, she has never personally known, has never had and will never have the ability and capacity to enjoy life to the full as normal able bodied people do.”[5]

The plaintiff’s counsel mounted an argument that the plaintiff’s general damages should be assessed in the order of $450,000. The defendant’s counsel on the other hand submitted that a figure of $300,000 would be appropriate. The Court ultimately assessed the plaintiff’s general damages in the sum of $390,000.

If this claim arose in South Australia after 1 December 2002 the plaintiff’s entitlement to general damages would be assessed pursuant to the formula set out in section 52 of the Civil Liability Act:

“52 (1) Damages may only be awarded for non-economic loss if –

(a) the injured person’s ability to lead a normal life was significantly impaired by the injury for a period of at least 7 days; or

(b) medical expenses of at least the prescribed minimum have been reasonably incurred in connection with the injury.

(2) If damages are to be awarded for non-economic loss, they must be assessed as follows:

(a) the injured person’s total non-economic loss is to be assigned a numerical value (the scale value) on a scale running from 0 to 60 (the scale reflecting 60 equal gradations of non-economic loss, from a case in which the non-economic loss is not severe enough to justify any award of damages to a case in which the injured person suffers non-economic loss of the gravest conceivable kind);

(b) the damages for non-economic loss are to be calculated in relating to an injury arising from an accident that occurred during 2002 by multiplying the scale value by $1,710;

(c) the damages for non-economic loss are to be calculated in relation to an injury arising from an accident that occurred during 2003 as follows:

(i) if the scale value is 10 or less – by multiplying the scale value by $1,150;

(ii) if the scale value is 20 or less but more than 10 – by adding to $11,500 an amount calculated by multiplying the number by which the scale value exceeds 10 by $2,300;

(iii) if the scale value is 30 or less but more than 20 – by adding to $34,500 an amount calculated by multiplying the number by which the scale value exceeds 20 by $3,450;

(iv) if the scale value is 40 or less but more than 30 – by adding to $69,000 an amount calculated by multiplying the number by which the scale value exceed 30 by $4,600;

(v) if the scale value is 50 or less but more than 40 – by adding to $115,000 an amount calculated by multiplying the number by which the scale value exceeds 40 by $5,750;

(vi) if the scale value is 60 or less but more than 50 – by adding to $172,500 an amount calculated by multiplying the number by which the scale value exceeds 50 by $6,900;

(d)

the damages for non-economic loss in relation to an injury arising from an accident that occurred in a subsequent calendar year are to be calculated in accordance with paragraph (c) but the amount arrived at is to be adjusted (to the nearest multiple of $10) by multiplying it by a proportion obtained by dividing the Consumer Price Index fo

r the September quarter of the previous calendar year by the Consumer Price Index for the September quarter 2002.”

The effect of that section is to require the Court to fix a notional numerical value to the plaintiff’s general damages in between 0 and 60 points. This figure is then multiplied by the multiplier set out in the section. A similar provision has been in place for motor vehicle claims for a number of years. In assessing damages pursuant to this formula

“the courts are required to assign to a plaintiff a figure that compares the severity of his particular non-economic loss with the worst possible loss that anyone could suffer.”[6]

For instance in Calandre’s case say the Court assesses her general damages at 50 points (and assume that the injury occurred in 2003), this would then have entitled her to $172,000. The maximum figure for a 2003 injury was $241,500[7].

2. Interest on past general damages

As the amount awarded by general damages in Calandre’s case covered by the past and the future. The Court notionally apportioned 50% of the general damages to the past. On this amount for the 22 years that had elapsed to the date of trial the plaintiff was awarded $174,174.

Pursuant to section 56 of the Civil Liability Act interest is no longer awarded on general damages for claims occurring after 1 December 2002.

3. Past loss of earning capacity

The Court in Calandre’s case found that it was highly likely that Calandre would have undertaken some form of part time work between the ages of 15 and 18 and awarded a lump sum for this period of $10,000. For the years after the plaintiff turned 18 the Court awarded the plaintiff one third of the AWE for full time adult applicable during this period. This entitled the plaintiff to $40,880. This made a total award for the past of $50,880.

On appeal it was argued that the appropriate starting point was the AWE for all adult females. This represented a reduction of $80.00 per week. This argument was rejected by the Appeal Court on the basis that the rate that was set was within the “available range”.[8]

Section 54 of the Civil Liability Act now provides a cap on the amount that may be awarded in South Australia for injuries occurring after 1 December 2002 for economic loss. The relevant parts of Section 54 read as follows:

“54 (1) If the injured person was incapacitated for work, damages for loss of earning capacity are not to be awarded in respect of the first week of the incapacity.

(2) Total damages for loss of earning capacity (excluding interest awarded on damages for any past loss) are not to exclude the prescribed maximum.”

It must first be recognised that this cap applies to the total of both past and future economic loss. The prescribed maximum is defined as:

“(a) in relation to an injury arising from an accident that occurred during 2002 – $2.2 million; or

(b) in relation to an injury arising from an accident that occurred in a subsequent calendar year – a sum (calculated to the nearest multiple of $10) that bears to $2.2 million the same proportion as the Consumer Price Index for the September quarter of the preceding year bears to the Consumer Price Index for the September quarter 2001;”

4. Interest on past loss of earnings

In Calandre’s case the Court awarded a lump sum of $20,000 under this heading. As with interest on past general damages a claimant in South Australia would now not receive interest on any past economic loss.

5. Future loss of earning capacity

The Court in Calandre’s case adopted the principle that where the future career path of a plaintiff is entirely speculative the appropriate starting point is the average weekly earnings as identified by the Australian Bureau of Statistics. As the plaintiff will receive this amount by way of a lump sum, it is discounted to reflect the benefit to the plaintiff of receiving this amount now rather than weekly over the remainder of her life. In assessing Calandre’s compensation the Court stated:

“I propose to use the current net AWE for full time adults of $667.08 and to project this rate over the plaintiff’s remaining work life of 43 years using the 3% multiplier 1270.1. I will then apply a discount of 15% for conventional adverse vicissitudes and consider whether any further discount is necessary.”[9]

The Court then decided that no further discounts would apply and awarded Calandre the sum of $720,169.55.

When one then adds the figures for both past and future economic loss together they total $771,049.55. This is far less than the $2.2m cap provided by section 54 of the Civil Liability Act.

However where the Civil Liability Act does impact is in respect of the discount rate that is applied. Section 55 sets the discount rate at 5%. If one applies this to Calandre’s case the future loss of earning capacity would be in the order of $529,027.80, or in other words a reduction of $191,141.75.

6. Additional employment related benefits

• Past loss of employer-funded superannuation contributions

The Court awarded $2,100 by way of a lump sum under this heading.

• Future loss of employer funded superannuation contributions

Under this heading the Court awarded $84,700.

• Long Service Leave

A lump sum of $5,000 was awarded under this heading. The Appeal Court rejected an appeal against this part of the award.

Arguably these amounts form part of the plaintiff’s claim for economic loss and therefore should be taken into account when applying section 54 of the Civil Liability Act. However when these amounts are added to the amounts awarded for economic loss the $2.2m cap is still not reached.

7. Past Gratuitous Services

The concept of gratuitous services is one which has really only developed since the 1970s. Damages under this heading are sometimes referred to as Griffiths and Kerkemeyer damages pursuant to the High Court case which entrenched awards of this nature.[10]

The principles which apply to an award of this nature was summarised by the Court in Calandre’s case as follows:

“(a) Modern principles of assessment of damage will permit, in appropriate circumstances, recovery of damages for a sum which represents the value of services rendered and to be provided gratuitously arising from incapacity or disablement.

(b) The relevant loss is the plaintiff’s incapacity to look after himself or herself as demonstrated by the need for caring services. The loss is to be quantified by reference to the value or cost of providing those services.

(c) Damages for such gratuitous assistance should, as a general rule, be assessed by reference to the cost of having the service provided commercially. It is necessary to identify the market cost of providing those services.

(d) In more recent times the High Court of Australia has confirmed that the true basis of a claim for damages of this kind with respect to care or services provided gratuitously for a person who has suffered personal injury is the need of the plaintiff for those services, not the actual financial loss suffered as a result of their provision. Further, the majority of the Court held that where damages are assessed in relation to this aspect of the plaintiff’s claim by reference to costs prevailing from time to time during the period between the cause of action accruing and judgment, the interest calculation should be made in a way that reflects the fact that damages comprise amounts accruing over time, not a simple lump sum. The approach adopted by the High Court in MBP (SA) Pty Ltd v Gogic (1991) 171 CLR 657 was rejected. (Grincelis v House (2000) 74 ALJR 1247 at 12521 para 20).”[11]

The oddity associated with damages awarded under this head is that it is not necessary for the claimant to have spent any money in obtaining these services nor is the amount of compensation awarded to the person who provided the services. The claimant receives the compensation and can if they so chose keep the amount awarded. In Calandre’s case both of her parents provided considerable care to Calandre up to the time of the trial. This care was supplemented by various periods of respite care that the plaintiff received during this period.

The Court ultimately awarded the sum of $119,730 under this heading.

Section 58 of the Civil Liability Act provides:

“58 (1) Damages are not to be awarded-

(a) to allow for the recompense of gratuitous services except services of a parent, spouse or child of the injured person; or

(b) to allow for the reimbursement of expenses, other than reasonable out-of-pocket expenses, voluntarily incurred, or to be voluntarily incurred, by a person rendering gratuitous services to the injured person.

(2) Damages awarded to allow for the recompense of gratuitous services of a parent, spouse or child are not to exceed an amount equivalent to 4 times State average weekly earnings.

(3) However, the court may make an award in excess of the limit prescribed by subsection (2) if satisfied that-

(a) the gratuitous services are reasonably required by the injured person; and

(b) it would be necessary, if the service were not provided gratuitously by a parent, spouse or child of the injured person to engage another person to provide the services for remuneration,

but, in that event, the damages awarded are not to reflect a rate of remuneration for the person providing the services in excess of State average weekly earnings.”

As a general rule where an injured party genuinely requires assistance and that assistance is provided by members of their family. In those circumstances the effect of section 58 is that the amount awarded should not on a weekly basis exceed the State average weekly earnings. It is difficult to apply this formula to the reasoning adopted by the Court in Calandre’s case. However by way of example the net effect would be as follows:

The Court in Calandre’s case adopted a broad brush approach and allowed her mother 26 hours per week of care. On the current rates this would equate to $553.00 for 13 hours of passive and 13 hours of active care. The current State average adult weekly wage is $1,035.90.

8. Interest on past gratuitous services

The prohibition contained in section 56 of the Civil Liability Act on the awarding of interest would not appear to apply to the amounts claimed for past gratuitous services. In Calandre’s case a lump sum award of $310,880 was awarded. This amount was arrived at by taking the full value of the gratuitous services provided by Calandre’s parents before any offset for the respite care she received.

9. Future gratuitous services

As it was Calandre’s intention to live independently of her parents the Court found that it was highly unlikely that there would be any significant level of gratuitous services provided by her parents. The Court therefore allowed $25,000 under this heading. In arriving at this figure the Court applied a nominal weekly amount of 1.5 hours of care. Although this was a very modest amount the Court of Appeal reduced this award to $1,000. This would fall well below the limit imposed under section 58 of the Civil Liability Act.

10. Future attendant care

The Court found

“The plaintiff requires high calibre care, structured in a regime designed to serve her particular needs, and provided by well qualified, experienced and vigilant carers. As has been described, the plaintiff is unable to perform any of the tasks of daily living on her own, and relies completely upon the assistance of employed carers for dressing, showering and feeding and all aspects of daily living. She requires 24 hour care. There is no dispute about this between the parties, though the form in which this care will be structured, and the costing components, remains a matter of contention.”[12]

In order to meet the plaintiff’s needs a regime of live in carers was proposed. The likely cost of these arrangements was varied between $2,400 per week to $7,000 per week. The Court ultimately fixed a figure of $4,756 per week. This was arrived at by allowing $4,000 for referred care on the basis of two 12 hour shifts for three-quarters of a year or in other words $3,000 per week and $1,756 per week for managed care for the remainder. This was then multiplied using a discount rate of 3% for the remainder of the plaintiff’s life. A figure of $6,518,098 was arrived at.

The Court of Appeal reduced the weekly total to $4,000 on the basis that having allowed for the cost of a case manager it was not necessary to have a level of managed care as high as was allowed. There was then a further reduction of 10% to allow for the contingency that the plaintiff may in fact obtain care at a rate cheaper than that allowed. This produced an overall reduction of $1,584,298 leaving a final figure of $4,933,800.

Once again these figures were arrived at using a multiplier of 3%. If one applies the 5% multiplier to the Court of Appeal’s figures the total award would be in the order of $3,512,520.

11. Home building and architectural costs

As the plaintiff’s accommodation needed to be appropriately configured to take into account her special needs and as modifications also needed to be made to the plaintiff’s parents’ house, the plaintiff was awarded the sum of $502,322. In addition as the plaintiff was obviously not able to maintain her accommodation, $390,606 was awarded for home maintenance and running costs.

On appeal the Court of Appeal disallowed the amounts awarded for the renovations to the plaintiff’s parents’ house and their holiday house. The amount allowed was reduced to $300,000 which represents the cost to the plaintiff of modifying any house she were to purchase.

12. Additional claims

The claimant was awarded the following additional amounts

This last item covered payments made by the plaintiff prior to trial for such things as equipment, education, carers and included a component for interest on the amounts expended. A portion of the amount claimed related to accounts rendered by the NSW Spastic Centre. The Court of Appeal found that there was no obligation to repay these amounts. It further rejected this aspect of the claim on the basis that it represented an inappropriate extension of the Griffiths v Kerkemeyer principle. After excluding these amounts the Court of Appeal allowed $504,205 under this heading. This resulted in a consequential adjustment for interest on this amount to $500,411.60.

A comparison

As you will see from the following table if Calandre’s claim were to be determined pursuant to the provisions of the Civil Liability Act there would be only a minimal impact on the final outcome.

It would appear that the types of claims that are really impacted on by the provisions of the Civil Liability Act are those at the lower end of the scale. Claims for catastrophic injuries are still likely to attract significant awards such as in Calandre’s case.

June 2006

[1] Damages for gratuitous services and attendant care – Mendelson 2005 12 JOL 402 at 403

[2] 4^th Edition para 1.1.4

[3] Paragraph of the judgment

[4] Paragraph 301 of the judgment

[5] Paragraph 303 of the judgment

[6] Per Cox J in Packer v Cameron (1989) 54 SASR 246 at 251-252

[7] A detailed set of tables setting out the entitlements for non-economic loss from 2002 to the present is contained in our website under the General Insurance tab (Areas of Law – General Insurance – Prescribed Sums for Non-Economic Loss)

[8] Para 48 of the judgment

[9] See paragraph 362

[10] (1977) 139 CLR 161

[11] See paragraph 388 of the judgment

[12] See paragraph 466 judgment

[13] This amount was reduced by $13,000 on appeal

[14] This amount was reduced to $200,000 on appeal

[15] As a result of the decrease in figure attendant care the cost of a case manage was increased on appeal by $180,906

[16] All of these amounts would also be subject to the 5% discount but the primary judgment does not allow me to apply this for the purposes of this exercise

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