Redding v Lee
151 CLR 11747 ALR 241
(Judgment by: WILSON J)
Between: REDDING
And: LEE
Between: EVANS
And: MULLER
Judges:
Gibbs C.J.
Mason J.
Murphy J.
Wilson J.Brennan J.
Deane J.
Dawson J.
Subject References:
Damages
Judgment date: 19 May 1983 NBERRA
Judgment by:
WILSON J
I have had the advantage of reading the reasons for judgment prepared by Mason and Dawson JJ. I agree substantially with the discussion of the principles and authorities which precedes their Honours' particularized consideration of the two cases that are before us. It is sufficient for me to proceed immediately, on the basis of that discussion, to a consideration of the two cases, the facts of which are described by Mason and Dawson JJ.
Redding v. Lee
The appellant accepts that the tests propounded in National Insurance Co. of New Zealand Ltd. v. Espagne (1961) 105 CLR 569 by Dixon C.J. (1961) 105 CLR, at p573 and by Windeyer J. (1961) 105 CLR, at p 600 are authoritative and applicable to this case. He does not seek any review of those principles. In short, those principles emphasize the purpose which underlies the payment of a benefit which the plaintiff does or may receive. Is it intended that the plaintiff should enjoy it in addition to and not in diminution of any claim for damages? The question then is as to the intrinsic character of the invalid pension which was paid to the respondent. What is the purpose which the Social Security Act 1947 (Cth) as amended ("the Act") expresses in authorizing that payment? If the pension were payable by reason of the permanent blindness of the recipient there would be no occasion to doubt the continued correctness and authority of the actual decision in Espagne. Such a pension is payable quite independently of the financial circumstances of the recipient. It is immaterial whether or not the pensioner is affected in his earning capacity by his blindness or is of independent means. Given such clear indications of the intention of the legislature the pension payments are properly seen as an act of bounty extended to him "not only independently of the existence in him of a right of redress against others but so that they may be enjoyed by him although he may enforce that right: they are the product of a disposition in his favour intended for his enjoyment and not provided in relief of any liability in others fully to compensate him" (Espagne (1961) 105 CLR, at p 573 ).
However, the respondent does not qualify for an invalid pension by reason of permanent blindness. His qualification is that he is permanently incapacitated for work (the Act, s. 24(1)). In Espagne, all members of the Court accepted, although it was not necessary to the decision in the case, that the grant of an invalid pension in respect of permanent incapacity for work was not to be regarded in the assessment of damages. The reasoning of their Honours was not entirely uniform. Dixon C.J. (1961) 105 CLR, at p 574 (with whom Fullagar J. agreed) put it on the basis that
"An invalid pension is granted in the exercise of an administrative discretion, though doubtless a discretion exercisable on grounds which are not at large, and it is granted as a benefit to the person after a consideration of his general situation."
McTiernan J. (1961) 105 CLR, at p 576 relied on the causa causans test, a test which did not attract the support of the majority of the members of the Court. Menzies J. relied on the fact that the permanent incapacity merely qualified a person to receive a pension. The pension could then be granted or refused in the exercise of an administrative discretion (1961) 105 CLR, at p 580. Windeyer J. (with whose judgment Fullagar J. also agreed) said that the pension should be disregarded because of its discretionary nature and the fact that its grant, rate and continuance were all dependent on the value of the property that a claimant or pensioner has or may acquire (1961) 105 CLR, at pp 586, 600. There was no support for the distinction which Smith J. had drawn in the course of a trial in the Supreme Court of Victoria (Shuter v. Crosby (1956) VLR 47 ) between invalid pension payments referable to permanent incapacity received prior to trial (which were not refundable) and the prospects of the pension being continued in the future. His Honour directed the jury to take the former into account but not the latter.
The appellant's case is that the Act has been amended in significant respects since the decision in Espagne and that invalid pensions payable in respect of permanent incapacity ought now to be characterized in a different way. Two matters in particular are relied upon. One is the repeal by Act No. 91 of 1974 of par. (a) of s. 25(1). That paragraph had precluded the grant of an invalid pension to a person "if he is not deserving of a pension". It is likely that it was this provision governing the grant of a pension which Dixon C.J. had principally in mind when he referred to the benefit as one which is granted to a person "after a consideration of his general situation" (1961) 105 CLR, at p 574. In drawing that inference I do not overlook the fact that s. 28(1), which remains unchanged in any relevant respect, confers on the Director-General a discretion to determine, subject to the prescribed maximum rate, a rate of pension "as being reasonable and sufficient, having regard to all the circumstances of the case". The Act draws a distinction between the grant of a pension and the determination of the rate and his Honour's reference to a grant is, I think, instructive. Nevertheless the continued provision of an administrative discretion in the Director-General by virtue both of s. 28(1) and s. 46(1) is a feature of the Act which will require to be considered in the process of characterizing the benefit. At this point I am merely examining the appellant's claim that the statutory basis for the opinions expressed in Espagne has materially changed.
The second matter upon which the appellant relies is the diminished significance of the value of any property possessed by the claimant or pensioner. At the time of the argument in Espagne, par. (f) of s. 25(1) imposed a property means test on the grant of a pension. The paragraph was repealed by Act No. 45 of 1960 which came into force before judgment was delivered, but the significance of the property of a non-blind pensioner was preserved by a new s. 28(2). Section 46 continued to refer to the value of the property of a pensioner, other than a pensioner who is permanently blind, as a factor which may be regarded by the Director-General in the exercise of a discretion to cancel or suspend, or vary the rate of, a pension. This reference, together with the provisions of s. 28(2 ), was removed from the Act by Act No. 111 of 1976, with the result that while an income means test remains relevant to the enjoyment of a pension by a person who is permanently incapacitated there is no longer any express significance attaching to a pensioner's ownership of property. In the light of these changes, it is no longer true to say, as Windeyer J. said in Espagne (1961) 105 CLR, at p 586 :
"The policy of the Act seems clearly enought to be that (except in the case of blind persons) grants of pensions, rates of pensions and continuance of pensions are, within the limits prescribed, dependent upon the value of the property that a claimant or pensioner has or may acquire",
notwithstanding that the discretion which remains in the Director-General with respect to the rate and the continuance of the pension (ss. 28(1), 46(1)) may no doubt be exercised in the light of all the circumstances including the receipt by the pensioner of a substantial award of damages.
In my opinion, the appellant succeeds in freeing himself from the automatic application of the conclusions expressed in Espagne by Dixon C.J. and Windeyer J. in relation to the character of an invalid pension granted on the ground of permanent incapacity for work. It is a question now of taking the principles for which Espagne is authority and applying them to the Act as it presently stands. I turn now to this task, a task which is not free of difficulty. It must be understood that nothing I have said is intended to affect in any way the binding force of the decision in Espagne with respect to persons who receive a pension on account of permanent blindness.
There are some features of the benefit which the respondent has received which lead one naturally to ask why it should not be taken into account in the assessment of damages. There is a close correspondence between the occasion which gives rise to the payment of the benefit and that which attracts one element in the award of damages as compensation for the injury. In each case it is the state of being incapacitated for work and consequently being unable to earn wages. The invalid pension is not received as the fruits of a policy of accident insurance (Bradburn v. Great Western Railway Co. (1874) LR 10 Ex 1 ), nor is it in the nature of superannuation benefits payable consequent on disability or premature retirement (Graham v. Baker (1961) 106 CLR 340 ; Jones v. Gleeson (1965) 39 ALJR 258 ; Parry v. Cleaver (1970) ACI ). It does not find its source in the springs of benevolence, whether of friends or relatives or of the public at large. All these have been held by the common law, in the pursuit of justice, reasonableness and public policy, to be irrelevant to the assessment of damages for personal injury arising from a tort. It is possible of course for public benevolence to find expression in a statute and no doubt the grant of a pension on account of permanent blindness is an example of such benevolence. It might properly be described as an act of bounty on the part of the Commonwealth because it is intended to be enjoyed regardless of the income or means of the recipient, although s. 25(1)(d) is relevant to its categorization. On the other hand there are some additional indications that the Act in qualifying a person who is permanently incapacitated for work to receive an invalid pension does not set out to benefit that person regardless of his or her need, as witness the stringent means test in relation to income coupled with the discretion accorded to the Director-General in ss. 28(1) and 46(1).
These considerations tend to the conclusion that the pension in question is to be characterized as a welfare payment payable to a person who is unable to work and who is not in receipt of any or any sufficient income. The fact that it is called a pension rather than, say, a permanent incapacity benefit is immaterial. Save for a distinction between permanent and temporary incapacity, it bears a striking resemblance to a sickness benefit payable in accordance with s. 108 of the Act. That benefit is payable in consideration of temporary incapacity for work by reason of sickness or accident coupled with a loss of salary, wages or other income and is subject to an income means test. The rate of benefit cannot exceed the rate of salary, wages or other income lost by reason of the incapacity (s. 113) and there is provision for recovery or adjustment of the benefit in the event of compensation being received by the beneficiary from any other source (s. 115). Similarly, some analogy may be drawn between the pension and an unemployment benefit payable pursuant to s. 107 of the Act in consideration of an inability to get work. In this case, the payment is again subject to an income means test but there is no provision in the Act for recovery or adjustment of the benefit if compensation is received from another source. In Evans v. Muller, the decision in which is to be delivered with the decision in the present case, I have come to the conclusion that payments of unemployment benefit are in essence moneys paid in lieu of wages and ought therefore to be taken into account when assessing the loss suffered by a plaintiff entitled to an award of damages.
The respondent relies on the provisions of s. 25(1)(d) and s. 115 as indications that the benefit is intended as a bounty and therefore is not to affect the assessment of damages. In Espagne, the former provision was held to have no relation to a claim for damages resulting from negligence (1961) 105 CLR, at pp 578-579, 587. The paragraph has remained unchanged since Espagne was decided, thereby evincing, so it is said, the intention of Parliament to accept as law the proposition that the existence of an enforceable claim for damages in tort is not to affect the grant of a pension.
In my opinion, the argument seeks to wring too much significance from an absence of reaction by the Parliament to a judgment of the Court. Certainly, Parliament could have put this vexed question to rest by a clear statement of legislative intent but its failure to do so simply leaves the Act to be interpreted as it is, though not without regard in case of ambiguity to its legislative and judicial history. Viewing the paragraph in another way and taking it as an express indication that in the circumstances to which it applies there was to be no double benefit arising from the grant of an invalid pension, the question might be asked as to whether such a clear legislative expression, although confined in the range of circumstances to which it applies, did not carry comparable implications to be applied by the courts when assessing the economic loss for which injured plaintiffs were to be compensated. It is difficult to discern any reason for drawing a distinction in principle between compensation for lost earning capacity received by way of damages for personal injury sustained as the result of a tort and the compensation to which the paragraph refers. There is naturally a degree of uncertainty attending the outcome of a common law claim for damages as compared with, say, a claim for workers' compensation. In the former case it probably is inappropriate to speak of "an enforceable claim" and this may supply a reason for the different legislative approach to the two forms of compensation.
Section 115 (since repealed and re-enacted as Pt VII, div. 3A) required that the rate of the sickness benefit to which a person would otherwise be entitled be reduced by the amount per week of any payment by way of compensation in respect of the same incapacity. The section also provided that in the event of the sickness benefit being paid without such a reduction being made the recipient should be liable to make an equivalent repayment to the Director-General. The respondent argues that the absence of a similar provision in relation to an invalid pension of the kind in question here is a clear indication of the intention of the legislature that the latter is to be enjoyed by way of bounty in addition to damages. The argument is not without its force. However, the liability to reduction or repayment of a benefit is not the only way in which the non-bounty character of the benefit may be revealed. The legislature may choose in one case to require a setoff of the compensation payment against the statutory benefit. In that event, it will be the revenue that will be protected. In another case, it may choose to rely upon the courts in the application of common law principles governing the assessment of damages to ensure that the plaintiff is not over-compensated. In such a case, the revenue will remain the poorer, but the award of damages will be less. As I have indicated, I regard the provisions of the Act relating to unemployment benefits as reflecting a legislative intention of this kind and the same may be true of the provisions with which we are concerned. It is no longer always correct to describe such a result as operating to the benefit of a wrongdoer. In these days when compulsory insurance covers the bulk of personal injury cases the reality is that there is a public policy significance attaching to the size of awards. The burden of payment of such damages is now borne largely by the premium-paying community as a whole: Lincoln v. Hayman (1982) 1 WLR 488 , at p 492; (1982) 2 A11 ER 819, at p 822 ; Atlas Tiles Ltd. v. Briers (1978) 144 CLR 202 , at p 232 ; Parry v. Cleaver (1970) AC, at pp 38-39. I doubt whether it is helpful to seek from the Act an explanation of the differing procedures that attend different benefits; it may be pertinent, as counsel for the appellant suggests, to note the diverse legislative history of the benefits in question: Invalid and Old-Age Pensions Act 1908 (Cth); Unemployment and Sickness Benefits Act 1944 (Cth); Social Services Consolidation Act 1947 (Cth). The discretion of the Director-General to require a refund, in whole or in part, of benefits paid where compensation has also been received in respect of the one incapacity is presently confined to sickness benefits. Whether or not the legislature should extend that discretion to encompass other pensions and benefits is a vexed question. The administrative complexities attending such a scheme could be very substantial. On the other hand, a clear expression of a legislative intent that a particular benefit is not intended to be by way of bounty, coupled with the existing discretions to control the grant and rate of benefit received after the making of an award of damages, would allow the courts when applying the common law principles governing compensation for injuries received to take account of any benefits received prior to the award.
The present case is concerned only with pension payments received by the respondent before trail. Construing the Act as it now stands, I conclude that it was not the legislature's intention to provide those payments as an act of bounty to be enjoyed by the respondent in addition to the damages which he has now been awarded. Those damages include an amount by way of compensation for lost earning capacity prior to trial measured by the wages he has lost. In making the assessment, the learned trial judge disregarded the pension. In my opinion, his Honour ought to have deducted the pension payments received prior to the trial from that amount in order to ensure that the plaintiff received full but not excessive compensation.
I have been influenced in coming to my conclusion by the fact that the grant of a pension is now, since the repeal of par. (a) of s. 25(1), virtually as of right. Furthermore, I do not think the continued existence in s. 28(1) of the discretion to determine a rate of pension which is reasonable and sufficient militates against the conclusion. The Director-General must determine what is reasonable and sufficient at the time the pension is granted. As in the present case, this determination will generally take place years before the trial of the action for damages. It is quite unrealistic to think that the Director-General will be in a position at that time to evaluate the likely outcome of the action and the amount of damages which a successful plaintiff may expect to receive. There may be the possibility of a successful allegation of contributory negligence. In any event, even if it were possible to forecast the eventual receipt of a substantial award of damages, the claimant for an invalid pension would still be entitled to a pension. The rate will be that which is reasonable and sufficient in all the circumstances as they exist at the time of the claim. Again, it is unrealistic to suppose that the Director-General would be justified in exercising the discretion accorded to him by s. 46(1) to vary or cancel a pension in anticipation of a damages award which has not yet been made or received. Nor indeed in most cases would he be capable of doing so because the necessary information would not be available. Of course, in the present case he did not do so but I am more concerned with the elucidation of the legislative intent expressed in the Act in order to characterize the pension payments in question consistently with the principles for which Espagne stands as authority.
As I have said, the present case is concerned only with pension payments received before trial. However, it may be of assistance to indicate the view which I think the Act requires courts to take of the prospects of a plaintiff receiving an invalid pension on account of permanent incapacity for work in the future. In my opinion, those prospects must be ignored. The Act furnishes the Director-General with discretions which will ensure that once made an award of damages will form part of the total circumstances of the pensioner or claimant to be taken into account in determining the rate of the pension (if any) or its cancellation (ss. 28(1), 46(1)). This distinction in the relevance which a pension has to the assessment of damages depending upon whether it is paid before or after trial is not derived from any change in the character of the benefit. That character remains constant. It is a benefit paid in consideration of permanent incapacity for work and, subject to the prescribed maximum, is tailored to the present needs of the recipient. It is not intended as an act of bounty to be enjoyed in addition to relevant compensation which may be received from any other source. If paid before trail, the Act by making no provision for recovery in effect declares its intention that the common law rules governing the assessment of damages will provide the safeguard against double compensation. After trail, the Act ensures that the Director-General is empowered to cancel the pension or reduce the rate by reason of the award.
I would allow the appeal, and give an affirmative answer to the question asked in the stated case.
Evans v. Muller
I would allow the appeal, for the reasons given by Mason and Dawson JJ.