Redding v Lee

151 CLR 117
47 ALR 241

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(Judgment by: MASON J, DAWSON J)

Between: REDDING
And: LEE
Between: EVANS
And: MULLER

Court:

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

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Judgment by:
MASON J
DAWSON J

These appeals, brought by special leave, involve an excursion into a field in which it has been said that "logic is conspicuous by its absence" (see Browning v. The War Office [1963] 1 QB 750 , at p 762 ). In the assessment of damages in an action for personal injury should the damages be reduced by an amount equivalent to unemployment benefits, or an invalid pension, received by the plaintiff subsequent to the occurrence of the injury?

Generally speaking, in an action in tort the plaintiff is entitled to receive that amount which will put him in the same position as he would have been in had he not been injured (British Transport Commission v. Gourley (1956) AC 185, at pp 197, 212 ; Parry v. Cleaver (1970) AC 1, at pp 22, 34, 46-47 ). An alternative formulation is that a plaintiff cannot recover more than he has lost (Parry v. Cleaver (1970) AC, at p 13 ). When the plaintiff's earning capacity has been impaired by his injury he is entitled to damages to compensate him for that loss. In Australia it is well settled that an injured plaintiff is entitled to damages for his loss of earning capacity, whereas in England he receives compensation for his loss of earning. But, as Dixon C.J., Kitto and Taylor JJ. pointed out in Graham v. Baker (1961) 106 CLR 340 , at p 347 "an injured plaintiff recovers not merely because his earning capacity has been diminished but because the diminution of his earning capacity is or may be productive of financial loss". This statement was repeated by Gibbs J. in Griffiths v. Kerkemeyer (1977) 139 CLR 161 at p 165. Accordingly, the plaintiff is entitled to compensation for his loss of earning capacity that is or may be productive of financial loss.

An objective observer, unversed in the law, could be forgiven for thinking that acceptance of this principle necessarily involves the simple approach that an injured plaintiff cannot have compensation for what he has lost in addition to what he has received as a result of the injury but would not have received if there had been no injury. However, since Bradburn v. Great Western Railway Co. (1874) LR 10 Ex 1 , the courts have declined to measure the injured plaintiff's loss by crediting him with all the financial benefits which he may receive following upon his injury - for the most part benefits in the nature of accident insurance, pensions and superannuations have not been brought into account in reduction of the plaintiff's damages. If, on the other hand, the approach of the courts in assessing damages was to disregard all financial benefits received by a plaintiff as a result of his injury, then that approach would exhibit the virtue of uniformity, even though it would involve the problem of deciding in particular cases whether the benefit is received "as a result of" the injury. But this broad approach has also been rejected in favour of a more selective approach.

In Bradburn itself the Court refused to discount the plaintiff's damages by reference to the proceeds of an accident insurance policy which became payable following his injury, declaring that the plaintiff's damages should not be reduced by his receipt of a financial benefit which was, not the consequence of his injury, but the consequence of a contract which he had made with a third party.

The decisions relating to pensions reflect the problems which have arisen in pursuing the selective approach. Pensions have very often been disregarded in assessing damages for loss of earning capacity. Thus, an invalid pension payable under the Social Services Act 1947 (Cth), as amended, ("the Act") (National Insurance Co. of New Zealand Ltd. v. Espagne (1961) 105 CLR 569 ), a pension payable on compulsory retirement pursuant to the Superannuation Act 1916 (NSW), as amended, (Graham v. Baker (1961) 106 CLR 340 ), a disability pension under the Police Regulation (Superannuation) Act 1906 (NSW), as amended, (Paff v. Speed (1961) 105 CLR 549 ) and a superannuation benefit payable under a contributory scheme (Jones v. Gleeson (1965) 39 ALJR 258 ) were disregarded in the assessment of damages. A contrary view was taken by a majority of the English Court of Appeal of a disability pension payable to an injured plaintiff who by reason of injuries caused to him had retired from the United States Air Force (Browning v. The War Office [1963] 1 QB 750 ). But in this Court "a very different view has been taken from that which is expressed in the majority judgments" in Browning (Jones v. Gleeson (1965) 39 ALJR, at p 259 ). More recently the House of Lords refused to follow Browning (Parry v. Cleaver (1970) AC 1 ).

The focal point of any discussion of the topic is Espagne. This is because it has been generally recognized as an authoritative declaration of the law on the topic in Australia and because the judgments of Dixon C.J. and Windeyer J., concurred in by Fullagar J., in Espagne were relied upon by the House of Lords in Parry v. Cleaver. The plaintiff in Espagne, having lost his sight in consequence of the tortfeasor's negligence, was awarded a pension for permanent total blindness under the Act. The Court held unanimously that the plaintiff's damages were not to be reduced on this account. Dixon C.J. and Windeyer J. were united in the view that no legal rule exists which could be applied to every case where an advantage accrues to an injured person which would not have been obtained but for his injuries (1961) 105 CLR, at pp 572, 600. They were in agreement too in rejecting as unhelpful the suggestions that the pension could be described as a "collateral" advantage or as res inter alios acta or that the relation of the injury to the advantage could be described as a causa sine qua non . Instead Dixon C.J. gave emphasis to the notion that the plaintiff is entitled to compensation for his "injuries and the incapacities and deterioration involved in them" (1961) 105 CLR, at p 572. Central to his Honour's reasoning was a distinction which he elaborated in this way (1961) 105 CLR, at p 573 :

"There are certain special services, aids, benefits, subventions and the like which in most communities are available to injured people. Simple examples are hospital and pharmaceutical benefits which lighten the monetary burden of illness. If the injured plaintiff has availed himself of these, he cannot establish or calculate his damages on the footing that he did not do so. On the other hand there may be advantages which accrue to the injured plaintiff, whether as a result of legislation or of contract or of benevolence, which have an additional characteristic. It may be true that they are conferred because he is intended to enjoy them in the events which have happened. Yet they have this distinguishing.characteristic, namely they are conferred on 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. This is readily seen in the case of benevolence. If a fund is raised by subscription for the benefit of a badly injured neighbour obviously this cannot operate in relief of the liability of a man who negligently caused the injury. So in a contract of accident insurance; where in the absence of special stipulation the insurer will not succeed by subrogation or otherwise to the insured's right of recourse against others in the case of injury by their negligence."

Windeyer J. thought that the question was not whether a harm that the plaintiff has suffered is a consequence of the defendant's negligence but whether an advantage that the plaintiff has gained should be regarded as mitigating that harm (1961) 105 CLR, at p 597 , causal considerations not being decisive of this question. His Honour went on to say (1961) 105 CLR, at pp 599-600:

"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:

(a)

they were received or are to be received by him as a result of a contract he had made before the loss occurred and by the express or implied terms of that contract they were to be provided notwithstanding any rights of action he might have; or

(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 first description covers accident insurances and also many forms of pensions and similar benefits provided by employers: in those cases it is immaterial that, by subrogation or otherwise, the contract may require a refund of moneys paid, or an adjustment of future benefits, to be made after the recovery of 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."

The subsequent decisions in this Court apply the principles expressed by Dixon C.J. and Windeyer J. in Espagne. They make it clear that the issue turns on the character and purpose of the particular financial benefit which the plaintiff receives: Was the benefit conferred on him independently of any right or redress against others and so that he might enjoy the benefit even if he enforced the right? However, Graham v. Baker (1961) 106 CLR 340 has an additional importance because it shows that the effect of some benefits received by a plaintiff, especially when they are provided by his employer pursuant to the terms and conditions of the plaintiff's employment, is to negate the claim that there has been a relevant financial loss. Thus, the receipt of sick leave payments, when it is the measure of the employee's right to receive ordinary pay, though absent on sick leave, demonstrates that the plaintiff has not pro tanto suffered financial loss (1961) 106 CLR, at p 350.

In Parry v. Cleaver (1970) AC 1 the House of Lords by majority held that a disability pension payable under a police pension fund to which the plaintiff, a police constable, contributed should be disregarded in the assessment of his damages. The speeches of Lord Morris, Lord Pearce and Lord Wilberforce reflect an acceptance of the approach adopted by this Court in Espagne.

The array of judicial decisions to which we have referred makes it imperative that we continue to pursue and apply the principles expressed in Espagne which are an elaboration of an approach that began with the decision in Bradburn (1874) LR 10 Ex 1.

Indeed, the arguments advanced in the present cases proceed on the footing that the Espagne principles are to be accepted and applied - the issue being whether, according to those principles, the benefits are to be brought to account in the reduction of the plaintiff's damages.

Quite apart from the compelling influence of authority, there are persuasive reasons for thinking that the course marked out by Espagne is correct. It is certainly more attractive than the alternative solutions, such as that based on causation, which were roundly and soundly criticized in the judgments in Espagne and in the speeches in Parry v. Cleaver. And it accords with the approach adopted by the courts to the receipt of proceeds of insurance policies and benevolent gifts.

It would be unjust and unreasonable to reduce the damages of the prudent plaintiff who insures himself against accident by allowing the premiums which he paid and the proceeds of the policy to enure for the benefit of the tortfeasor and make the existence of the insurance the occasion for giving the plaintiff a lesser award of damages than he would have obtained had he not been insured. If he had not taken up the policy his assets would not have been depleted by the payment of premiums and his damages could not then have been reduced by reference to the greater worth of his assets (Parry v. Cleaver (1970) AC, at p 14 ).

Again, it has been acknowledged that it would be unjust and unreasonable to reduce damages on account of benefits received by the plaintiff resulting from benevolence. Benefits of this kind spring from a desire to assist the plaintiff, not from any wish to relieve against the tortfeasor's liability (Espagne (1961) 105 CLR at p 598 ).

A similar comment may be made about pension and superannuation benefits whose purpose is to ameliorate the plaintiff's situation irrespective of his right to recover compensation against the tortfeasor. For this reason no distinction should be drawn between pension and superannuation benefits to which the plaintiff has contributed and those to which he has made no contribution, although there is a stronger reason for refusing to reduce the plaintiff's damages on account of payments which he has himself made, thereby diminishing the assets which he otherwise owns.

Our experience since Espagne enables us now to say that generally speaking the entitlements to, or the conditions for eligibility for, pension and superannuation benefits are so expressed that they do not have regard to the recipient's right to recover compensation from a third party. No doubt there are exceptions to this general rule - where, for example, that situation is expressly referred to or, though not expressly referred to, is necessarily contemplated.

In addition to pension and superannuation benefits and benefits arising from benevolence, all of which may be disregarded provided their purpose is to confer a benefit on the plaintiff irrespective of the plaintiff's right of action against the tortfeasor, it is necessary to identify two other broad categories of benefits, the first of which will in general be disregarded and the second of which will in general have to be brought into account in the assessment of damages.

The first category concerns proceeds from insurance policies, such as those received by the plaintiff in Bradburn (1874) LR 10 Ex 1. The second category comprises benefits provided to the plaintiff which are a substitute, or partial substitute, for wages. The clearest example of such benefits is provided by the receipt of sick leave payments. Graham v. Baker (1961) 106 CLR 340 illustrated that the effect of these payments, because they are provided by the employer pursuant to the terms and conditions of the plaintiff's employment, is to negate the claim that the plaintiff has suffered a relevant financial loss. Other benefits, though not strictly provided pursuant to the terms and conditions of the plaintiff's employment, may be of such a nature that they should be placed in the same category. In the second appeal the question is whether unemployment benefits should be placed in this category.

We turn to consider each appeal in the context of these principles.

Redding v. Lee

In this case the plaintiff claimed damages for negligence arising out of a road accident on 29 January 1976. The assessment of damages included a claim for impairment of earning capacity from the date of the accident until September 1981, when the plaintiff attained the age of sixty-five years. The plaintiff since 1978 has been in receipt of an invalid pension under the Act (which, after an amendment effected by Act No. 37 of 1982, now has the title of the Social Security Act 1947 (Cth)). At the time of the trial before Zelling J. these receipts amounted to over $6,000 and it is only these pre-trial moneys with which we are concerned. Zelling J. was in doubt as to whether he should bring this amount into account in the assessment of damages for the impairment of the plaintiff's earning capacity and stated a case for the Full Court of the Supreme Court of South Australia, asking the following question:

"Should the payments of invalid pension above referred to be deducted from the plaintiff's loss of wages arising out of the accident?"

The Full Court (King C.J., Zelling and Jacobs JJ.) held that the benefits should be disregarded, saying that Espagne concluded the point that invalid pensions should not be deducted when assessing damages for personal injury (1981) 28 SASR 372.

Part III of the Act governs invalid pensions. Under the Act as it stood at the time of the decision in Espagne a person over sixteen years of age who was not receiving an age pension and (a) was permanently incapacitated for work or was permanently blind; and (b) satisfied residence requirements, was "qualified to receive an invalid pension" (s. 24(1)).

Section 25(1) provided that an invalid pension could not be granted to a person in certain circumstances. Those circumstances were (a) that the person be "not deserving" of a pension; (b) that the incapacity or blindness did not occur in Australia or during a temporary absence from Australia; (c) that the incapacity was brought about with a view to obtaining a pension; (d) that the person had "an enforceable claim against any person, under any law or contract, for inadequate compensation in respect of his permanent incapacity or permanent blindness"; or (e) that the person directly or indirectly deprived himself of property or income in order to qualify for a pension. Paragraph (f), which imposed a property test, was repealed between the hearing and judgment in Espagne.

Section 28(1) stated that the rate of the pension should be "a rate determined by the Director-General as being reasonable and sufficient, having regard to all the circumstances of the case", but no greater than a prescribed maximum. Section 28(2) and (2A) provided that the rate of a pension, except that of a permanently blind person, should be reduced if the income or a proportion of the value of the property of the claimant or pensioner exceeded a certain sum. The present s. 28(2), introduced by Act No. 111 of 1976, provides that the rate of a pension as determined shall be reduced by one half of the amount per annum by which the income of the claimant or pensioner exceeds a prescribed amount, except in the case of a person who is permanently blind.

Section 46 gave the Director-General power to cancel, suspend or vary a pension which had been granted. Section 46(1) provided:

"If -

(a)

having regard to the income, or the value of the property, of a pensioner;

(b)

by reason of the failure of a pensioner to comply with either of the last two preceding sections; or

(c)

for any other reason, the Director-General considers that the pension which is being paid to a pensioner should be cancelled or suspended, or that the rate of the pension which is being paid to a pensioner is greater or less than it should be, the Director-General may cancel or suspend the pension, or reduce or increase the rate of the pension, accordingly."

The reference in s 46(1)(b) to "the last two preceding sections", ss. 44 and 45, was a reference to the duty of the pensioner to furnish certain statements and to notify the Director-General of certain matters. Those sections stated that they had no application to a permanently blind person and s. 46(2) stated that s. 46(1)(a) had no application to a pensioner who was permanently blind.

In holding that the plaintiff was entitled to the benefit of both the pension and any damages recovered from the tortfeasor Dixon C.J. considered that the discretionary nature of the pension was important. His Honour said (1961) 105 CLR, at p 574 that the invalid pension "cannot be obtained as of strict right and it is plain that it is granted after a consideration of the position or situation in which the applicant stands and entirely for his use and benefit". Thus the Director-General had to be taken to have considered the possibility of a common law damages claim by the applicant in arriving at his conclusion that the applicant was "deserving" of a pension within s. 25(1)(a).

Dixon C.J. clearly thought that where the exercise of the discretion involves considerations such as whether an applicant is "deserving" of a pension it should be assumed that Parliament intended that successful applicants should enjoy the benefit of the pension notwithstanding, and in addition to, an award of damages in a later common law claim. In considering whether an applicant is "deserving" of a pension the Director-General would advert to the possibility of the later common law claim and take account of it. The Director-General's discretion did not require an arithmetical analysis of the chances of establishing liability but rather some advertence to the possibility that damages would be recovered.

Another explanation of the relevance of the existence of a discretion in the Director-General is that "in view of the width of discretion given, not only as to the size, but also as to the withholding or termination of a pension, the possibility of a person receiving an invalid pension should be regarded as too speculative a matter to be submitted to the jury" (see Shuter v. Crosby (1956) VLR 47, at p 48 ). However, that explanation is not strictly relevant to the present case, in which we are exclusively concerned with pretrial pension moneys.

Windeyer J.'s analysis of the statutory provisions differed from that of the Chief Justice. He thought that the statutory intention was that the blind pensioner was to enjoy his pension in addition to any right to compensation that he might have. On the other hand Windeyer J. considered that, because the receipt, or the prospect of receiving, damages was a factor to be taken into account in granting, discontinuing or reducing an invalid pension to a person not permanently blind, damages had to be assessed without regard to a plaintiff's invalid pension. In so saying his Honour denied that the pension was intended to be enjoyed in addition to compensation and advanced another reason for concluding that an invalid pension should be disregarded in the assessment of damages.

The question, then, is to what extent amendments to the Act since the decision in Espagne now evince an intention that the plaintiff is not entitled to enjoy the benefit of both the invalid pension and the damages he may recover

Section 24 has been amended since the decision in Espagne, but only in minor and immaterial ways. Paragraphs (a), (e) and (as we earlier noted) (f) of s. 25(1) have been repealed and par. (b) has been amended in a minor way. An important amendment to s. 46 has been to omit the property test from s. 46(1)(a), leaving only an income test, and to modify s. 46(2) accordingly. As we have seen, section 28(2) has been correspondingly amended, but s. 28(1) remains in substantially the same form. "Income" is not defined so as to include damages recovered in an action (see s. 18).

The applicant submits that the consequence of the repeal of s. 25(1)(a) is that under the present Act the applicant is entitled to a pension once he has satisfied the criteria in ss. 24 and 25. The appellant therefore says that the element of general discretion which was considered to be of importance in Espagne no longer exists.

The appellant then argues that s. 46(1)(c), in saying that a pension could be cancelled "for any... reason" other than the reasons specified in pars. (a) and (b) of that sub-section, does not confer a general discretion to cancel as par. (c) must be read in the light of pars. (a) and (b). We have some difficulty with the suggestion that s. 46(1)(c) confers no discretion at all on the Director-General to cancel a pension. It is an interpretation which may unduly narrow the Director-General's power to deal with persons who, for instance, are guilty of certain misconduct which justifies cancellation but which is outside the ambit of other more specific provisions in the Act. But it is a question which, on the view which we take, need not be resolved here.

In our opinion, the appellant's argument fails to deal with s. 28(1). That sub-section, which has, in substance, been unamended since the decision in Espagne, provided, and still provides, a basis for the reasoning which led Dixon C.J. to conclude that the invalid pension should be disregarded in the assessment of damages. The essence of his Honour's reasoning was that a pension could only be granted under the Act "after a consideration of the position or situation in which the applicant stands" (1961) 105 CLR, at p. 574. , a consideration which would take account of any damages claim.

We are prepared to assume, without deciding, that the actual grant of a pension under the present Act has no discretionary element and that the discretion conferred on the Director-General by s. 46(1)(c) to terminate, suspend or reduce a pension "for any other reason" may be limited. But the Director-General is still required by s. 28(1), once he has granted a pension, to have "regard to all the circumstances of the case" in determining what rate of pension is "reasonable and sufficient". That discretion is completely unfettered in its terms and in determining what is a "reasonable and sufficient" rate the Director-General may well have regard to the existence of a damages claim.

It may be argued that to concede this power to the Director-General is to indirectly reintroduce the property test which Parliament has seen fit to omit. However, the essence of the reasoning in Espagne of Dixon C.J. in relation to the permanently blind, to whom no property test applied, was that the Director-General did have a discretion to consider the position in which the applicant stood before granting the pension. His Honour appears to have contemplated that the Director-General in exercising his discretion could take into account the existence of a damages claim. In any event, a discretion to take into account the existence of such a claim is not the equivalent of a strict property test. Section 28(1) does not in terms absolutely prohibit any duplication between the pension and the damages. In determining what is a "reasonable and sufficient" rate the existence of the damages claim will only be one of many circumstances to be taken into account.

Accordingly, the existence of s. 28(1) is indicative of a legislative intention that pensions paid under the Act should be disregarded in the assessment of damages, the latter having already been taken into account in the payment of the former.

The reasoning of Windeyer J. in Espagne has been substantially affected by the omission of the property test from the provisions upon which his Honour relied. However, we are inclined to think that the result is that the reasoning his Honour applied to blind pensioners by reason of their specific exemption from the property test provisions becomes universally applicable after the omission of the property test. In other words, just as his Honour discerned a clear policy in the Act as it then stood that a blind pensioner was to have his pension in addition to whatever rights of action or proprietary rights he may have had, the omission of the property test is, it seems to us, indicative of a similar policy in respect of pensioners generally.

We should also note that the continued existence, unamended, of s. 25(1)(d) lends weight to the conclusion that the amendments to the Act since Espagne were not intended to effect an alteration in the purpose for which invalid pensions are paid. Section 25(1)(d) provides, as we have seen, that an invalid pension shall not be granted to a person "if he has an enforceable claim against any person, under any law or contract, for adequate compensation in respect of his permanent incapacity". The words "claim... under any law... for adequate compensation" do not include a common law claim for damages (see Espagne (1961) 105 CLR, at pp. 578-579, 587. ). By this omission the legislature indicated, and has continued to indicate in a manner now underlined by Espagne, an intention that the grant of an invalid pension to an injured person is for the benefit of that person notwithstanding any common law claim for damages which he might have in respect of his injury and that the invalid pension payments are not to operate in relief of the liability of any person liable to pay those damages.

We would therefore dismiss the appeal and answer the question asked on the case stated "No".

Evans v. Muller

The respondent was awarded $52,875 at first instance in an action for negligence against the appellant arising from a road accident between the two parties on 17 December 1974. The primary judge, Connolly J., assessed the respondent's net loss of wages from the date of the accident up to the trial at $30,000. During that period the respondent's earnings in fact totalled $4,653 and, in addition, he received an amount of $7,250 for unemployment benefits. On any view the $4,653 had to be brought into account. In addition the primary judge brought the $7,250 into account, awarding the plaintiff an amount of the order of $18.000 for economic loss up to the trial (1982) Qd R. 139.

The respondent appealed to the Full Court of the Supreme Court of Queensland on several grounds, one of which concerned the bringing into account by the primary judge of the unemployment benefits. The Full Court by majority (Wanstall C.J. and Dunn J., Macrossan J. dissenting) held that the unemployment benefits should have been disregarded, increasing the award of damages to $91,600 (1982) Qd R. 209.

As we indicated earlier, the central question in this appeal is whether the unemployment benefits can be said to be a substitute or partial substitute for wages, justifying the same treatment as wages in terms of assessment of damages.

Some insight into the interrelationship between wages and unemployment benefits is provided by the application of the principle of mitigation of loss to unemployment benefits. It cannot be disputed that the plaintiff had a duty after the accident to seek employment. As MacKenna J. said in Eley v. Bedford (1972) 1 Q.B.155, at p 158. , "a plaintiff must always do what is reasonable to mitigate his loss". If the incapacitated plaintiff fails to find work the duty to mitigate remains imposed upon him. Thus in Parsons v. B.N.M. Laboratories Ltd. (1964)1 Q.B.95, at p 144. , Pearson L.J. thought that the plaintiff had "a duty to mitigate the damage... by seeking other employment and drawing unemployment benefit in the meantime". There the benefit was described as a partial substitute for wages (1964) 1 Q.B., at pp. 122,131,144.

This was the view taken in Tuncel v. Renown Plate Co. Pty. Ltd. (1976) V.R. 501.. In that case the plaintiff claimed that he was unable to obtain employment because of the physical handicap caused by his injury. The Court held that the plaintiff's duty to mitigate his loss did not cease at that point and that the unemployment benefits received by him were very much in the nature of mitigation (1976) V.R., at p. 507.

Under the Act unemployment benefits have the character of a partial substitute for wages. An applicant for an unemployment benefit, among other things, must satisfy the Director-General that he is unemployed and capable of undertaking and willing to undertake suitable paid work and that he has taken reasonable steps to obtain such work (s. 107(1)(c)). True it is that the amount of the benefit bears no relationship to the wages which the recipient could earn if he obtained employment and that the amount of the benefit will be reduced if his income exceeds a prescribed amount which is not large (s. 114). However, these factors do not lead to the conclusion, as the respondent would have it, that the unemployment benefits are merely provided in relief of impecuniosity. Certainly the existence of an income test indicates that some who are unemployed through no fault of their own will not qualify for the benefit by reason of their income from sources other than work. And it is correct to say that the benefit does not spring from the terms and conditions of employment. But the fact remains that payment of unemployment benefits is made to depend on the condition of unemployment. That some persons who are in that condition are excluded by virtue of s 114 from the class of persons who may qualify for payment of the benefits does not alter the fact that the benefits are inherently in the nature of compensation payable in respect of involuntary unemployment. The English Court of Appeal in Parsons was correct in saying that the true nature of an unemployment benefit is that it is a partial substitute for wages. Both the name of the unemployment benefit and the criteria enumerated in s. 107(1)(c) make it clear that it is a benefit paid in lieu of what could have been earned in employment if suitable employment had been available. This was the view taken in Tuncel (1976) V.R., at p. 506.

It is significant that the granting of the unemployment benefit is not dependent upon the exercise of any large area of discretion on the part of the Director-General. Any person who satisfies the three criteria enumerated in s 107(1) is "qualified" to receive the benefit. True it is that s. 107(1)(b)(ii) and (c) require the Director-General to be satisfied of certain matters before granting the benefit. But there is no discretion vested in the Director-General which requires him to consider the general circumstances of the applicant before granting the benefit and there is no discretion of that kind which enables him to determine what rate of benefit would be "reasonable and sufficient" in the light of all the circumstances relevant to the applicant (cf.s. 28(1)). In a real sense, therefore, it may be said that the applicant for an unemployment benefit who satisfies the various criteria laid down in Pt VII is entitled as of right to the payment of the benefit. This distinguishes the case from both Espagne and the first appeal. In those two cases either the granting of or the rate of the pension was dependent on an exercise of discretion by the Director-General, involving an examination of all the circumstances surrounding the applicant, indicating that the pension was paid with the damages claim in mind. In Pt VII, however, even if the Director-General had the damages claim in mind, he could not reflect that fact in the payment of the unemployment benefit.

The respondent submits that there are several matters which, if unemployed benefits were to be brought into account in a common law damages claim, would have to consequentially be taken into account, but which could only be taken into account with a great deal of difficulty. He points to the possibility of expenses of unsuccessful attempts by the plaintiff to find work, saying that the plaintiff would be entitled to an allowance for these expenses before the unemployment benefits were brought into account. The significance of this is said to be that these complexities are indicative of a legislative intention that the benefits should be totally disregarded. Assuming the existence of difficulties of the kind suggested, we do not think that they are so great as to indicate a legislative intention that the benefits should be totally disregarded.

For these reasons we would allow the appeal. The majority of the Full Court would have assessed the total award of damages at $107,000. We would reduce that figure by $7,250, leaving $99,750. Allowing for contributory negligence, 80 per cent of that figure is $79,800. Interest on past economic loss and pain and suffering must be adjusted accordingly and reduced from $6,000 to $4,750. Adding this figure, the total becomes $84,550. In the result we would reduce the damages to that figure.